In this Video, Nick Worthing, our Head of Commercial Lending will talk about our loan programs that allow the borrowers to utilise our lending partners to secure commercial loan. He will highlight the commercial property types, typical loan terms, and what to expect during the loan process.
Watch the video to find out more!
Even against the backdrop of a global pandemic, the U.S. real estate market continues to grow faster than the wildest expectations. Several factors, including the lowest mortgage rates in history, positive buying intent, and reduction of the unemployment rate, have pushed the home prices to the point that surpasses the 2005 index.
The latest quarterly report (fourth quarter of 2020) of the National Association of Realtors (NAR) shows a record jump in home prices. Single-family home’s median price took the biggest leap, soaring 14.9% to $315,000 in that period. The housing market has not experienced such a rise since 1990.
What does this record price boost tell us? Does this affect a large number of buyers who have survived the pandemic recession? Will this lead to inflation?
People are moving to suburbs: The flexible work policies amid the COVID-19 breakout and low mortgage rates have allowed thousands of people to leave expensive cities like San Jose, Brooklyn, and New York City. Those people have relocated to less expensive suburbs; a 20.7% price gain in the Northeast supports this trend. The West, Midwest, and South followed with 15.5%, 15.1%, and 14% gain, respectively.
The NAR data shows an increase in prices in every single metro area in the year-to-year index. Also, only 115 metros had a double-digit rise in the third quarter, but it increased to 161 metros in the fourth quarter.
The price hike will discourage the actual homebuyers:Record low mortgage rates have lured many new home buyers to enter the market. However, this trend is unlikely to last long. The NAR’s chief economist Lawrence Yun thinks so. He predicts that the buying power of potential buyers is going to get hit hard by the soaring prices across the country.
Low rates have increased the demand for new homes, which in turn drives up the price. There is also a low inventory that further skyrockets the prices. Despite an improvement in the employment market, most families are still recovering from the pandemic-related economic woes. So, a large position of these households won’t keep up with the growing numbers since the home prices are spiraling out of their financial ability. The current situation may scare off plenty of actual homebuyers.
A possibility of inflation:The Biden Administration has planned to help the hard-hit households with a $1.9 trillion fiscal stimulus package. Some experts apprehend that such a big financial aid will lead consumers to splurge, which may trigger inflation.
Also, if people start spending that stimulus money, the cost of living will increase, driving up the growing home prices even more. Runaway inflation seems quite likely, which shot the 30-year mortgage rates to around 18% in the late 1970s.
However, things may not turn so bleak as it sounds. The chair of the Federal Reserve, Jerome Powell, has dismissed the possibility of sustained or massive inflation. The Economists at Oxford Economics also share the same thought, saying that the inflation outbreak is unlikely to reach 3%.
Sources: Marketwatch & Markets Insider
We are all using more technology: Seesaw, Zoom, Hangouts, Slack, Teams, more Amazon, more Netflix, more online classes, etc. We had to learn to support our children during online classes and create areas in our home for conference calls.
What is interesting about this is that we have seen a very significant shift in how people think about their living space. The old model was “Office was for Work” and “Home was for Family.” This is clearly not the case anymore, and the lines between where we work are no longer visible – even the more senior professionals work at Starbucks, WeWork, and now finally at home.
We have seen a clear shift up in consumption patterns for renters and buyers. In Singapore, where we are based, it’s very difficult to find larger units to rent for professional families. Google, Microsoft, Morgan Stanley, JPMorgan, Capital One, Zillow, Slack, Amazon, PayPal, Salesforce, and other significant companies require staff to work from home.
The requirements are more bedrooms, bigger spaces, quiet areas, etc. Another interesting outcome is that since families are spending more time at home (not traveling), they can invest more, rent or buy larger homes, better vacation homes, etc.
This is being echoed at GMG, where our mortgage demand sees very clear patterns of increased demand and pricing:
| Aspen, Colorado | Total sales were $3bn in 2020. There are only 7,400 living in Aspen! |
| Tampa, Florida | Average home value $270,000 +11% you |
| Big Sky, Montana | Average home value $1.81mn +3% |
| Austin, Texas | Average home value $437,000 +13% you Austin is definitely the hottest city we are seeing in the U.S. for mortgage demand! |
Over the past 12 months, we have funded: 5 loans in Aspen, 1 loan in Montana, 23 loans in Florida, and 9 in Austin alone!
Let our team of U.S. mortgage specialists discuss how you can secure a mortgage while living overseas, without any U.S. income, U.S. credit. We only work with Overseas Expat and Foreign Nationals, so we know precisely the solutions required to meet your mortgage needs.
Global Mortgage Group, through its wholly-owned subsidiary, America Mortgages Inc. is a mortgage broker focusing only on U.S. Expats and Foreign Nationals living overseas. We offer over 150 U.S. bank and lender programs direct to our international clients.
Global Mortgage Group Pte. Ltd. is a leading international mortgage specialist. Based in Singapore with offices and partnerships across the globe, we connect our international clients to our network of lenders around the world. GMG offers financing solutions in the U.S., U.K., France, Canada, Australia, Thailand, Hong Kong, and Singapore.
After the nightmarish 2020 year, the country’s overall economy is slowly recovering, and the housing market seems to be at the forefront of that recovery. After the uptick in mortgage applications and continued lower interest rates, the beginning of 2021 has brought more positive trends, including a small leap in the Home Purchase Sentiment Index (HPSI).
Fannie Mae’s composite index showed 77.7 points in the HPSI for January; a clear 3.7 points rise from December 2020. Of course, it’s nothing close to the pre-pandemic indicators since the HPSI still needed 15.3 points to catch up year over year rating.
What does this upward trend mean for buyers, sellers, and the overall housing market? Will this positive sign remain constant for the rest of the year?
According to the Fannie Mae index, a 16% surge in the section of "Selling Conditions" means that a significant number of buyers consider the current month a good time to sell. This newfound confidence is matched with a 5% rise in household income and 2% more consumers reckoning it to be a good time to buy.
Fannie Mae’s Chief Economist, Doug Duncan, stated that the lower-income and renter groups played the catalyst in reversing December’s decline last year. It could mean that these groups are the direct beneficiaries of the household income surge and have put their trust in recent government stimulus packages and fiscal policies.
Similar trends are supported by CoreLogic’s recent monthly report of Loan Performance Insights for November 2020. It shows the highest drop in mortgage delinquencies since the beginning of the COVID-19 pandemic. At the end of November, only 6% of all mortgages were in delinquency, and the rate had been declining since August last year. This downturn will directly influence the number of distressed sales, which is suitable for the market.
The CoreLogic report also shows a sharp decline in the unemployment rate, which was 14.8% in April but dropped to 6.7% at the end of the year. Both these factors indicate financial growth and stability for millions of families.
Some government-funded initiatives also have helped in changing the dynamics. Struggling mortgagors were able to take advantage of some programs that allowed them to delay the monthly installments in three-month increments. Along with the decreasing unemployment rate, many homeowners have found their footing and started making payments again.
All of these trends are positive for the housing market. Both the Fannie Mae index and CoreLogic report portray a condition favorable for both sellers and buyers. Stable household incomes and low mortgage rates have encouraged buyers to make a move in the market. Similarly, high home prices, low housing inventory, and people’s growing interest in buying have worked in favor of the sellers.
Many undecided consumers are waiting for the success of the coronavirus vaccination program and the new fiscal policies. However, the current trends foretell a recovering economy and a healthy housing market.
Sources: fanniemae.com & corelogic.com
February is still cold and snowy, but millions of potential homebuyers will find the low mortgage rates quite heartwarming. Bankrate’s national survey of lenders found the rates ending in January 2021 at an all-time low, while the Mortgage Bankers Association noticed an upswing in mortgage applications. It seems people are lining up to take advantage of the ongoing low-interest rates. Is this the right time for you to make a move in the housing market? Will this trend last for a while for the borrowers to save thousands on their mortgages?
Things in the real estate market did not look so bright even at the beginning of 2021. Battered by the COVID-19 pandemic and ensuing economic recession, people were cautious about applying for home loans. But applications rose 8.15% for the last week of January after slackening for two weeks straight. The same week also witnessed an 11% surge in the refinance index – the highest since March 2020.
According to HousingWire data, the average mortgage rates for 30 and 15-year fixed and 5/1 adjustable rate mortgages have decreased in the week ending on January 29. This slight drop came after a little upturn touching around 3% in the previous weeks.
The rates are still pretty low for investors to make a move right now. With the rolling out of the COVID vaccination and several government steps for returning to normalcy, the rates are unlikely to be at multi-decade lows for the rest of the year.
The experts don’t predict a major surge in the rates anytime soon. However, taking prompt action provides investors with the benefits of the current low rates.
Sources: Housingwire.com & Bankrate.com
Our client was referred to us by a friend of Global Mortgage Group. He’s been living in London for five years and has slowly accumulated a rental portfolio in the U.S. His thesis is that college towns offer the best rental yield opportunities. Our client did his MBA at the University of Chicago, so he was very familiar with the landscape.
Finding mortgage options as a U.S. citizen living overseas can be challenging, especially if you have been away from home for an extended period. The good thing about our client is that he still maintained an almost-perfect credit score of 810 and was a very high (and stable) earner - exactly what a bank wants to lend to!
| Nationality | Property Value | Loan Amount | LTV | Rate |
| U.S. Citizen | $750,000 | $600,000 | 80% | 3.35% |
| Term | State | Property Type | Purpose | Loan Type |
| 30 year fixed | Chicago, Illinois | Condo | Refinance | Residential |
| Nationality | U.S. Citizen |
| Property Value | $750,000 |
| Loan Amount | $600,000 |
| LTV | 80% |
| Rate | 3.35% |
| Term | 30 year fixed |
| State | Chicago, Illinois |
| Property Type | Condo |
| Purpose | Refinance |
| Loan Type | Residential |
International school mathematics teacher purchased a home in 2019 with a high-interest rate. Since she had long term tenants and the rent was covering the mortgage, she hadn’t thought about refinancing until one of her colleagues mentioned lowering their mortgage rate using Global Mortgage Group.
Although we gave her a very detailed report on the various options, including releasing up to $68,000 in cash out of her property, her priority was to get the lowest rate possible and maximize the rental yield.
| Nationality | Property Value | Loan Amount | LTV | Rate |
| U.S. Citizen | $313,000 | $181,540 | 58% | 3.35% |
| Term | State | Property Type | Purpose | Loan Type |
| 30 year fixed | Tampa, Florida | Single-Family Residence (SFR) | Refinance | Residential |
| Nationality | U.S. Citizen |
| Property Value | $313,000 |
| Loan Amount | $181,540 |
| LTV | 58% |
| Rate | 3.35% |
| Term | 30-year fixed |
| State | Tampa, Florida |
| Property Type | Single Family Residence |
| Purpose | Refinance |
| Loan Type | Residential |
Since our client had business monthly in Boston, buying a home there seemed to make sense rather than staying in a hotel.
With only 20% down, no W2 income, and self-employed tax returns, we were able to get the loan closed in 30 days.
| Nationality | Property Value | Loan Amount | LTV | Rate |
| U.S. Citizen | $887,000 | $709,600 | 80% | 2.75% |
| Term | State | Property Type | Purpose | Loan Type |
| 30 year fixed | Boston, Massachusetts | Apartment | Purchase | Residential |
| Nationality | U.S. Citizen |
| Property Value | $887,000 |
| Loan Amount | $709,600 |
| LTV | 80% |
| Rate | 2.75% |
| Term | 30-year fixed |
| State | Boston, Massachusetts |
| Property Type | Apartment |
| Purpose | Purchase |
| Loan Type | Residential |
Your down payment is the first payment you make on your mortgage loan. For example, if your house is worth $150,000, the lender requires you to pay a portion of that price upfront, called the down payment. Typically, it could be anything between 20% to 50% of the asset's price. So, at 20%, you have to pay $30,000 in advance to obtain the loan. Most financial institutions make it obligatory for the borrowers to pay the down payment.
You can pay the down payment from your personal savings or other legal sources. This payment for a home purchase is possibly the biggest single cash expenditure in most people's lives.
To obtain competitive mortgage rates, you'll need to pay at least 20% to 25% of your home's purchase price in a down payment. Some financial institutions require the borrowers to pay a mandatory minimum deposit in addition to the down payment.
Mortgages are price-sensitive, so one with a lower down payment has higher risk factors, which will warrant a higher interest rate. Plus, a low down payment can cause you to pay for private mortgage insurance. So, to get the best option at a reasonable interest rate, be prepared to pay out of your pocket in advance.
To get an overseas loan from Global Mortgage Group as a Foreign National, you will be required to pay only 25% in down payment. U.S. Expats get an unbelievably lower rate, which can be as little as 10% in down payment.
Global Mortgage Group Pte. Ltd. is the world's leading international mortgage specialist. Based in Singapore with offices and partnerships across the globe, we connect our international clients to our network of lenders around the world. GMG offers financing solutions in the United States, United Kingdom, France, Canada, Australia and Singapore.
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