Instagram Logo LinkFacebook Logo Link
April 25, 2023

The Breakdown:

New Loan Level Price Adjustments Set to Punish Good Behavior

While the housing market calendar last week consisted of home builder optimism reading new construction data, the major news in the industry is the introduction of the new Loan-Level Price Adjustments gifted to us by the current administration. Let's dive into the details on that before reviewing the new construction data.

Starting in May, there will be a nationwide change to the LLPA structure that effectively punishes borrowers with good credit. We can't say much more about this other than that it is an injustice to Americans who have worked hard on their finances. The way they've decided to go about "leveling the playing field" is to reduce the cost of borrowing for risky borrowers by increasing the cost for less-risky borrowers. We can plainly call this what it is - a mistake. Hopefully, this will get reversed in the coming months but until then, we've included a visual for how this breaks down (credit on the y-axis and LTV on the x-axis).

Keep in mind that borrowers who have maintained good credit will STILL be in a better financial position despite the hit to interest rates. Do not fall for this trap which encourages poor financial decisions.

In New Construction news, Housing Starts and Building Permits were reported last week. These two measurements are indicative of future supply, and they both fell in March. Housing Starts for single-family homes have been following a downward trend for the past year and Building Permits have followed the trend.

While prospective homebuyers are feeling pressure from the imbalance of supply and demand, existing homeowners will continue to benefit from the increasing home values. Meanwhile, the measure of builder confidence in the market, The NAHB's Housing Market Index has been steadily increasing in recent months. This is a good indication that supply will alleviate some of the pressure in the coming months. Builder confidence has now risen 14 points from the low of 31 in December. While anything below 50 signals market contraction, we have been steadily moving in the right direction.

It's a big housing and economic news week and we've got quite a bit to review and digest! Yesterday we got a good look at appreciation with the Case Shiller and FHFA indexes. Both New and Pending Home Sales data are included in the lineup as well. In addition, the first reading of Q1 GDP and the Fed's favorite measure of inflation, Personal Consumption Expenditures will also be reported. Stay tuned for next week's breakdown!

Florida Hometown Heroes

The Florida Hometown Heroes Housing Program helps make homeownership more affordable for eligible front-line workers such as law enforcement officers, firefighters, educators, healthcare professionals, childcare employees, and active military or veterans.

The program provides down payment and closing cost assistance to first-time, qualified homebuyers in an eligible occupation to assist them in the purchase of a primary residence.

  • Borrowers can receive up to 5% of the loan amount (capped at $25,000) in down payment and closing cost assistance
  • Down payment and closing cost assistance are available in the form of a 0% interest, non-amortizing,30-year repayable second mortgage.

For a list of approved professions, requirements, or other details about the Florida Hometown Heros program, contact us today!

Smashburger Tacos

Smashburgers in taco form? Sign us up!

The best part about these is how easy they are to customize! Take your favorite burger toppings and turn it into a taco. How could these not be a crowd-favorite?

Get the recipe here