Archive for January, 2017

Down Payments Eat Up Large Chunk of Income

Posted on January 31, 2017 by Laura Lam

To meet a 20% down payment, homebuyers on average have to spend more than two-thirds of the average annual income, according to a report from Zillow.  A 20% down payment for a median-price home valued at $192,500 will cost $38,500. In some of the larger and more expensive markets, including the San Francisco and Los Angeles metropolitan areas, buyers may need to pay more than 180% of the average annual income to afford a 20% down payment on a median-priced home. “Saving enough cash for a down payment is a major barrier to homeownership, especially in expensive markets, where a…

Tax Deductions: Are You at Risk for an Audit?

Posted on January 27, 2017 by Laura Lam

Like it or not, tax season is upon us.  As you begin to itemize your 2016 deductions, are you concerned that your numbers might be large enough to trigger an audit?  Forbes has the numbers that will help you judge the risks. This table shows average deductions, by income level, in 4 categories: real estate taxes, income taxes, interest and charitable donations. A lot of factors enter into the IRS software that determines which tax returns are worth a close look, and the formulas used are a closely guarded secret. But one of the important elements is deductions that are…

Higher Interest Rates Could Hit Some Homeowners Hard

Posted on January 26, 2017 by Laura Lam

Mortgage rates, while down over the past two weeks, have trended higher since the election of President-elect Donald Trump.  In December, the Federal Reserve made its first and last interest rate hike for 2016, but left the industry with the notion that 3 more could be on the way for 2017. For some, the rise in interest rates means higher profits for the first quarter of 2017, but for those looking to buy a home, it could mean higher payments or smaller homes. MarketWatch used data gathered from the National Association of Realtors (NAR) to show the top 5 counties where homebuyers will see the greatest change if…

Credit Defaults Expected to Slow

Posted on January 25, 2017 by Laura Lam

Credit managers continue to believe credit defaults will increase over the next 12 months, although the overall sentiment is improving, according to the latest quarterly survey from the International Association of Credit Portfolio Managers. The Credit Default Outlook index for the next 12 months is -37.9, up from -48.1. A negative number indicates credit conditions are expected to worsen, while positive numbers mean conditions are expected to improve. The credit default index specifically in the corporate sector rose to -29.6 from -50 the previous quarter, the best of all sectors, while the average retail/consumer mortgage credit default index rose to…

U.S. Economy Will Perform Well in 2017

Posted on January 24, 2017 by Laura Lam

Commercial real estate services firm Cushman & Wakefield predicts that, despite a turbulent 2016, the American economy will perform well under the new Donald Trump administration in 2017.  “The U.S. economy continues to grow, employment continues to increase and real estate markets continue to experience positive absorption and rising values,” said Ken McCarthy, principal economist for Cushman & Wakefield. Under President-elect Trump and a Republican-controlled House and Senate, the real estate services firm predicts fiscal measures that will boost the U.S. economy; however, Cushman & Wakefield also predicts higher interest rates and inflation, which will be affected by a volatile…

FinTech is Changing the Payments Industry

Posted on January 23, 2017 by Laura Lam

The landscape of the payments industry is changing with the introduction of new technologies. Capitalizing on emerging payment methods could give start-ups a competitive edge against larger financial players, allowing those in accounts receivable to grow their bottom line.  The following are some of the trends paying off in the payments and accounts receivable industry this year. Same-day ACH – Traditional ACH payments are conducted over a wire transfer and take anywhere between 1–2 working days to clear, a costly and unpractical solution for smaller payments. In 2016 NACHA launched the first phase of Same Day ACH allowing for faster…

Homeowners and Appraisers Don’t See Eye to Eye

Posted on January 20, 2017 by Laura Lam

For the past few months, homeowners’ estimates of their home prices grew closer and closer to the appraised amount, and in November they nearly hit the mark. However, homeowners couldn’t predict December’s sudden decrease.  But for the first time in six months, the gap between homeowner estimates and the appraised prices widened, according to Quicken Loans’ National Home Price Perception Index. The average appraised value fell 1.33% below homeowners’ expectations in December, a greater gap than November’s 1%.  This sudden reversal could be due to home prices slipping in December by 1.19% monthly. Despite the decrease, however, prices were still up by 3.85% annually….

Will Banks Listen to the Voice of their Customers?

Posted on January 19, 2017 by Laura Lam

Voice recognition technology is rapidly becoming part of our culture, as Apple, Google, Amazon and Microsoft have invested heavily in their Siri, Google Assistant, Alexa and Cortana voice-based assistants.  Banks have taken notice but grapple with new challenges in trying to work with these voice assistants and securing transactions conducted through them. Some are debating whether to work with them at all. Such challenges mean that 2017 won’t be the year that voice banking takes off. Significant customer adoption of voice banking is 3-5 years away, said Emmett Higdon, director of mobile for Javelin Strategy & Research. Still, banks can’t…

Will Higher Interest Rates Lead Buyers to Cheaper Homes?

Posted on January 18, 2017 by Laura Lam

Homebuyers haven’t had it easy lately. Prices were up nearly 8% in November compared to last year while inventory declined.  Add rising mortgage rates to the mix and the outlook starts to appear pretty grim. But, despite rising rates and falling inventory, real estate agents report homebuyers remain optimistic. In a recent Redfin survey, real estate agents were asked to describe the general attitude of today’s homebuyer in one word. More than one in three agents described buyers as being “hopeful,” which outranked other choices such as “fatigued,” “disappointed” and “rushed.” When asked if now is a good time to…

Mortgage Credit Loosens in December

Posted on January 17, 2017 by Laura Lam

The recent upward trend in mortgage credit availability didn’t let up in December, according to the latest report from the Mortgage Bankers Association.  The newest Mortgage Credit Availability Index shows a 0.6% increase to 175.2 in December, marking the fourth consecutive month of credit loosening. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.  The MCAI is a report from the MBA that analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool. The chart below shows the monthly changes in…