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Mortgage rates fall as demand for home loans rises

Oct 02. 2020

By The Washington Post · Michele Lerner · BUSINESS, PERSONAL-FINANCE, US-GLOBAL-MARKETS 

Mortgage rates fell as growing demand for home loans continue to strain lenders’ capacity to process them.

The average for a 30-year fixed-rate mortgage reached 2.88%, down from 2.90%, with an average 0.8 point, according to a Freddie Mac report released Thursday. (A point is a fee buyers pay, in addition to the interest rate, that equals 1% of the loan.) The average rate is substantially down from what it was a year ago – 3.65%.

The 15-year fixed-rate average reached 2.36%, down from 2.40%, with an average 0.7 point. The five-year adjustable-rate average at 2.90%, with an average 0.2 point, was unchanged from the previous week. The 15-year rate was 3.14% and the five-year was 3.38% a year ago.

“Mortgage rates are in a holding pattern because we have lots of big things looming and investors are waiting to see what happens,” said Danielle Hale, chief economist with Realtor.com. “Obviously, they’re waiting on the election results, but also on the next stimulus plan, which seems to start and stall. I expect mortgage rates to stay stable and not go up or down much until we get some of this big news.”

Freddie Mac’s Primary Mortgage Market Survey, from which the averages are derived, is confined to rates on conventional home loans for borrowers who make a 20% down payment and have excellent credit. Rates are likely to be higher for borrowers who make a smaller down payment and who have a lower credit score.

The yield on 10-year Treasury notes, Federal Reserve policies, the stock market and other economic indicators as well as the volume of mortgage applications also all play a role in determining rates individual borrowers are offered from week to week.

Pending home sales, which are homes that are under contract but have not yet gone to closing, rose by 24.2% in August compared to August 2019, according to the National Association of Realtors. They were also up 8.8% compared to July. The buyers of these homes are in the process of finalizing their mortgage loans, which contributes to high loan demand.

At the same time, mortgage applications for the week dropped – not so much from declining demand but from lenders trying to deal with an overwhelming interest from borrowers by curtailing the number of applications they will accept.

Lenders who “have been able to increase business capacity continue to offer more competitive rates than others who have been forced to slow volume with higher, less competitive rate offerings to consumers,” said Paul Buege, president and COO of Inlanta Mortgage in Pewaukee, Wis. “Lenders who have been forced to slow business by offering less competitive rates will usually adjust their refinance price offerings, but not their rates on mortgage loans to purchase a home.”

Because the Federal Reserve intends for at least the next two years to continue buying bundles of mortgages sold to investors called mortgage-backed securities, or MBSs, analysts say they expect home loan rates to remain at near historically low levels for the long term. Still, many lenders advise potential borrowers not to wait.

“The advice offered by most lenders: Act now and take advantage of the historically low rates to finance the purchase of a home or refinance a current mortgage,” Buege said. “Most agree rates will not drop much further, but have a slight chance of increasing. If you have a reason to act, do it now.”

Another possible reason not to wait, according to experts: Rising home prices might offset the savings generated by low mortgage rates.

Borrowers taking out a $400,000 loan at this week’s 2.88% would save about $170 per month, or more than $2,000 per year, compared to borrowers taking out that same loan at 3.65%, the rate this time last year.

“But keep in mind that a $400,000 loan with a 20% down payment would be a $500,000 property, which would look different than a $500,000 property a year ago because prices have risen so dramatically,” Hale said. “If prices are up 10% compared to last year, that $500,000 house would have cost $450,000. So, basically, low rates are saving only about $2 or $3 a month and are just offsetting the price increases. Low rates are helpful, but it depends on how long you’ve been shopping for a home whether they help that much.”

In a statement, Sam Khater, Freddie Mac’s chief economist, added: “We’re seeing potential home buyers who now have more purchasing power and many current homeowners who have the option to refinance their loan for a better rate. However, several factors could disrupt this activity, including high home prices, low inventory and lender capacity.”

The inability of lenders to keep up with the crush of demand for home loans is playing out in the weekly Mortgage Bankers Association report. The market composite index, which measures the total volume of applications, dropped 4.8%. The purchase index slid 2% but was 22% higher than a year ago. The refinance index fell 7% from a week earlier but was 52% higher than a year ago.

“There are indications that refinance rates are not decreasing to the same extent as rates for home purchase loans, and that could explain last week’s decline in refinances,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “Many lenders are still operating at full capacity and working through operational challenges, ultimately limiting the number of applications they are able to accept.”

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Capella Bangkok tunes up new luxury riverside resort option

Oct 01. 2020Capella Bangkok 

By The Nation

Capella Bangkok officially opened its doors today, becoming Capella Hotels and Resorts’ first property in Thailand.

Situated within the prestigious Chao Phraya Estate, the urban resort is now inviting visitors to discover the rich cultural heritage of Bangkok’s historic waterfront district.

The resort also boasts the highly-anticipated Côte by Mauro Colagreco, the first Southeast Asian outpost for Chef Mauro, the Italo-Argentinian culinary maestro whose three Michelin-starred restaurant in France, Mirazur, was voted No 1 in the world at the World’s 50 Best Restaurant Awards in 2019. Or there’s Phra Nakhorn, an alfresco riverside restaurant showcasing the time-honoured Thai recipes of this storied district.

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Habitat Group offers new investment property in North Pattaya

Sep 30. 2020

By The Nation

Thailand’s property-for-investment developer, Habitat Group, recently held a ground-breaking ceremony for their luxury low-rise resort-style property, Ramada Mira North Pattaya.

Construction of the condominium is expected to be completed in the fourth quarter of 2022.

Ramada Mira North Pattaya is Habitat Group’s seventh property-for-investment development. The investment proposition is a 30-year period of return on investment with 6 per cent guaranteed return for the first three years, after which returns are shared between investors (70 per cent) and developer (30 per cent).

As part of the lifestyle appeal, buyers can use their units for up to 14 days each year.

Ramada Mira North Pattaya is a two-building, eight-storey low-rise luxury resort-style condominium comprising 330 units, located on 3 rai of land in North Pattaya.

The completed development will be managed by the hotel management group, Wyndham Hotels and Resorts.

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DC launches equity trust to acquire hotels ahead of Thai tourism rebound

Sep 30. 2020From left: Natthapong na Ranong, CEO of KTB Securities (Thailand), James A Kaplan, CEO of Destination Capital, and Thotsaporn Pornvattanasirikul, REIT Trustee Department director of MFC Asset Management 

By The Nation

Destination Capital (DC) has signed an agreement with KTB Securities (Thailand) and MFC Asset Management to capitalise and launch the DESCAP 1 Private Equity Trust, which will acquire hotels in Thailand.

The trust units, which are subject to Securities and Exchange Commission regulations, will be available to both foreign and domestic investors for subscription in October, with target capitalisation of Bt2.5 billion.

The trust has a five-year investment period extendable subject to market conditions by two years, targeting annual returns of up to 15 per cent.

DC will source, acquire, reposition and asset-manage hotels acquired by the trust, with KTB Securities acting as trust settlor and trust manager and MFC as trustee.

The investment strategy is to acquire urban and resort hotels and then renovate, reposition and rebrand to raise their value and generate meaningful returns to investors, utilising Destination Group’s experience gained from its 24-year track record in Thailand of buying, managing and selling hotels – particularly during times of distress.

“We are pleased to play such an important role to support the rejuvenation of the Thai travel and tourism industry with the announcement of the DESCAP 1 Private Equity Trust. This trust will invest in strategic hospitality assets to facilitate re-employment and hotel re-openings to relaunch Thailand as a preferred global travel destination. This could not have been done without the support of our advisor and trust manager, KTBST SEC and MFC as trustee,” said Kaplan.

The trust will give investors the opportunity to participate in the rebound of the Thai hotel and resort industry, he added.

The trust will acquire freehold hotels and resorts located in prime destinations including Bangkok, Pattaya, Hua Hin, and Phuket, as these locations should be the fastest to rebound from the Covid-19 impact.

Fund raising for the trust has two main target investor groups: institutional investors and high net worth individuals.

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Home prices in 20 U.S. cities accelerate the most since 2018

Sep 30. 2020

By Syndication Washington Post,  Bloomberg · Craig Giammona · BUSINESS 

Home prices in 20 U.S. cities gained in July, pushed higher by demand for housing that has been fueled by low mortgage rates.

The S&P CoreLogic Case-Shiller index of property values increased 3.9% from 2019, beating the estimate of 3.6%. It was the biggest year-over-year increase since December 2018.

The housing market has been an unexpected bright spot for the U.S. economy, with Americans eager to take advantage of record-low mortgage rates. A shortage of inventory has helped prop up prices, particularly as Americans look for more space to spread out.

“With buyer demand showing no signs of a slow down, as well as limited inventory, more price increases are inevitably on the horizon,” said Danielle Hale, chief economist at Realtor.com.

The biggest increases came in Phoenix (9.2%), Seattle (7%) and Charlotte (6%). New York (1.3%), Chicago (0.8%) and San Francisco (2.5%) saw the smallest gains in July among the 20 cities tracked by the index.

Still, prices were up in those cities, even as the pandemic created anxiety about dense urban living. The pandemic has fueled a narrative that Americans are fleeing cities for the suburbs.

And while some residents have departed high-cost locations, including New York and San Francisco, the death of urban living is a “myth,” according to a research note from Barclays.

Read more: Mortgage Rates in the U.S. Increase, With 30-Year Loans at 2.9%

The higher homes prices come as the available inventory of properties to buy is tight. Some sellers are reluctant to list during a pandemic, while home builders are being cautious as they grapple with high lumber costs.

And while the homebuying stalled when the pandemic first hit, real estate is showing strength even with high unemployment and mounting bankruptcies putting the economic recovery on shaky ground.

“The housing market has withstood basically every obstacle that the pandemic has thrown its way,” Matthew Speakman, an economist at Zillow, said in a statement. “It appears that upward price pressure should endure into the fall.”

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China’s middle-class dream of a second home in Malaysia dashed by coronavirus and geopolitical tensions

Sep 27. 2020Hot property: Affluent Chinese people are eager to make overseas investments or embrace a new lifestyle abroad, including in Malaysia. Photo credit: The Star 

By The Star

Patricia Li is dismayed and saddened by the exodus of Chinese people she is witnessing in Johor, the southernmost state in Malaysia.

When she moved to the tropical Southeast Asian country from Yunnan province in 2017, the outlook was bright. Thousands of middle-class Chinese investors were flocking to Malaysia to buy property and secure a second home beyond China’s borders.

A number of Chinese developers have also invested heavily in Johor, promoting its proximity to Singapore and developing real-estate projects tailored for affluent Chinese people eager to make overseas investments or embrace a new lifestyle abroad. Since 2011, Guangdong-based developer Country Garden says it has invested close to RM20 billion (US$4.83 billion) in Malaysia, creating more than 1,500 jobs.

For her part, Li opened a teahouse in Johor to serve the Chinese community that was growing there, with many taking advantage of the Malaysia My Second Home (MM2H) programme, which launched in 2002 and offered foreign investors long-stay visas of up to 10 years.

A model of Country Garden’s Forest City development plan is seen in Johor Bahru city, Malaysia, in 2016. Photo: Bloomberg

But so much has changed in such a short time. The coronavirus outbreak and a worsening geopolitical environment have made Chinese investors wary, and the latest blow came last month when Malaysia decided to suspend the MM2H programme, in line with the government’s decision to bar foreigners from entering amid the pandemic.

Amid so much uncertainty, those dreaming of settling down in Johor have been forced to rethink their plans. Many have opted to simply leave Malaysia amid the pandemic. Unsure about when they might be able to return, some are taking the drastic step of selling their Malaysian homes remotely, at a steep loss.

“It’s quite depressing when you see social media posts [on WeChat] trying to sell a 48-square-metre [517 sq ft] apartment for only about 600,000 yuan (US$88,640). I spent more than 1 million yuan for the same type of unit in 2016,” Li said, referring to her teahouse, which she was forced to close as Chinese people left Johor, leaving her with few customers.

If the US and China go to war, whose side is Southeast Asia on?

Whether to sell their property in Johor at a loss has become a worrisome topic of conversation among Li and her fellow middle-class friends who bought Malaysian property in the last few years.

“I once thought assets here would appreciate, and the tea cafe would be full of the growing number of new arrivals of Chinese. But it’s so different from what I expected,” she said.

Wendy Wu, a Beijing resident who also invested in property in Johor, is also worried amid the increasingly murky outlook.

“No new Chinese investor will come to buy property here if there’s no long-stay visa guarantee,” Wu said from Johor.

Migrating Hongkongers lose an exit as Malaysia My Second Home scheme suspended

Between 2002 and 2018, the MM2H programme resulted in the approval of 43,943 visa applications from 131 countries and territories – and about 30 per cent involved mainland Chinese residents. But that door is closed now. When and if it will reopen is anyone’s guess.

According to the Malaysian My Second Home Consultants Association, 90 per cent of the applications they submitted between September and November 2019 – even before the emergence of the coronavirus – were rejected without any reasons or justifications.

Wu added that the pandemic and worsening relations between China and other countries have led to concerns about how safe it is to be living overseas.

Migrating Hongkongers lose an exit as Malaysia’s MM2H scheme put on ice

Many Chinese students studying in Johor’s international schools also returned to China amid the outbreak.

For Li, those schools were among the enticing elements of life in Malaysia. Four years ago, when she first visited Johor on a free “investment tour” with a number of other middle-class Chinese residents looking to buy property, the region seemed like the perfect fit for their dreams of owning a home overseas and providing their children international educations.

Back then, China’s overseas investment was still booming among mainland enterprises as well as rich and middle-class individuals. Besides Li, a large number of Chinese middle-class citizens were attracted by the tropical environment and clean air. Many put money down on a new home during their first trip to Johor, especially after learning that the average property prices there were about a quarter of those in downtown Beijing.

Most of these Chinese individual investors are not prepared – financially or psychologically – for the risks of overseas investment

Simon Zhao

Buying a home abroad was seen as a short cut to a better life for Chinese families. Not only did people see an asset that would appreciate over time, they were also enticed by a tropical environment that appeared to be conducive to raising a family, while still being relatively close to mainland China and Singapore.

Simon Zhao, an associate dean with BNU-HKBU United International College’s Division of Humanities and Social Sciences, says the scale of Chinese middle-class investments overseas has dropped sharply due to the pandemic, particularly as the spending power of many people has taken a big hit in the economic downturn.

“Most of these Chinese individual investors are not prepared – financially or psychologically – for the risks of overseas investment,” Zhao said. “They have experienced only economic growth and a booming property market on the mainland for decades, and they lack the funds and risk awareness to deal with the downside [of the economic cycle].” — South China Morning Post

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Regent Group unveils Vala luxury boutique resort in Hua Hin

Sep 22. 2020

By The NationThe Regent Group is expanding its portfolio with the launch of Vala Hua Hin – Nu Chapter Hotels, a five-star beachfront boutique resort.

Vala is a member of Small Luxury Hotels of the World, affirming its unique character, outstanding architectural design, discreet luxury and high standards, the company said.

Managed by new generation group, Nu Chapter Hotels, Vala Hua Hin’s distinctive character draws on the “Nature’s Touch with a Modern Design” concept. Occupying a large area of land, the resort offers both space and privacy, along with five-star service standards, the company said.

Vasuma Kanathanavanich

Executive director of The Regent Group, Vasuma Kanathanavanich, said that Vala, which means the power of nature, offered a new alternative to visitors to the Hua Hin-Cha-Am area, and was specifically designed to respond to the lifestyle of the modern tourist who prefers to stay in a boutique resort.

“Vala is nestled in a creative space within a private, tranquil and cool environment. It is surrounded by an abundance of lush trees and overlooks an extensive stretch of beach 260-metres long,” Vasuma said.

The resort has been built on a large, forested plot that has been in the family for generations. In designing the landscape, the company took care to preserve as many of these large trees in position as possible, relocating a few to a new area where they would continue to flourish, she added.

The resort features only 97 rooms, of which 84 deluxe rooms and suites are in the three-storey building. All the rooms boast a sea view and spacious terrace. The deluxe beachfront room on the third floor offers a panoramic sea view through floor-to-ceiling glass windows and sliding doors, she said.

Vala Villas feature 13 secluded pool villas with uninterrupted sea views, designed in the ‘Glamping’ style with maximum privacy. Each villa has a private saltwater chlorinated swimming pool.

Vala Hua Hin also offers a range of activities including morning meditation, yoga on the beach, Thai massage, tai chi, boxing, cooking/cocktail class, art for kids and a visit to an organic farm.

“Nu Chapter Hotels Management is committed to sustainable operations that preserve the environment including reducing food waste, organic farming, bio-fertilizer as well as using local raw materials and seasonal vegetables and fruits. Our aim is to allow our guests to engage in sustainable development through creative activities,” Vasuma said.

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Home builder optimism hits record, fueled by low mortgage rates

Sep 17. 2020New homes under construction by Pardee Construction are seen in this aerial photograph taken over the Pacific Highlands Ranch master planned community in San Diego, California on Aug. 31, 2020. MUST CREDIT: Bloomberg photo by Bing Guan. 

By Syndication Washington Post, Bloomberg · Craig Giammona · BUSINESS 
 U.S. home builder optimism rose to a record in September, with low mortgage rates driving a housing boom that has boosted the pandemic economy.

A gauge of builder sentiment jumped five points from a month earlier to 83, beating estimates and hitting the highest level in 35 years of the survey, according to the National Association of Home Builders/Wells Fargo Market Index. It was 78 last month, which matched the previous record from 1998.

The index ended 2019 at a 20-year high but plunged in April after social-distancing measures froze home purchases. Builders have bounced back since then, with the housing market an unexpected bright spot in the pandemic-battered economy.

Record-low mortgage rates are driving demand for housing, particularly as millennials enter the market and Americans seek space in the suburbs for home offices and remote learning. With some sellers not eager to list properties, a shortage of inventory has propped up prices and fueled optimism about the home-building industry.

“The suburban shift is keeping builders busy, supported on the demand side by low interest rates,” Robert Dietz, NAHB’s chief economist, said in a statement.

An S&P index of home builder stocks has more than doubled since March 23 and is near a record high.

Builders still face challenges. With a new stimulus package stalled in Congress, the housing recovery could be threatened by mounting economic fallout from the coronavirus. And while low rates have fueled a surge in mortgage applications, potential buyers could struggle to find affordable properties.

Higher costs are also hitting profit margins for home builders. Lumber prices have surged, adding more than $16,000 to the price of a typical new single-family home, according to NAHB.

“Many in the industry are worried about rising costs and delays for building material, especially lumber,” said Chuck Fowke, chairman of NAHB.

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Silom lands are the costliest in Bangkok

Sep 12. 2020

By THE NATION

Lands on Silom Road are the priciest, according to data on estimates in Bangkok gathered from 2016-2019 and reported by the Treasury Department on its website.

Silom had the highest estimated price at Bt700,000-Bt1 million per square wah (4 square metres), followed by lands on Phloen Chit Road (Bt900,000 per sq.wah) and lands on Rajdamri Road (Bt750,000-Bt900,000 per sq.wah).

Meanwhile, the cheapest lands in Bangkok are farmlands in Bangkhuntian district, which are estimated at Bt500-Bt10,000 per sq.wah.

The 10 roads with the costliest lands in Bangkok are:

1. Silom Road (Bt700,000-Bt1 million per sq.wah)

2. Phloen Chit Road (Bt900,000 per sq.wah)

3. Rajdamri Road (Bt750,000-Bt900,000 per sq.wah)

4. Rama I Road (Bt400,000-Bt900,000 per sq.wah)

5. Wireless Road (Bt500,000-Bt750,000 per sq.wah)

6. Sathorn Road (Bt450,000-Bt750,000 per sq.wah)

7. Yaowarat Road (Bt700,000 per sq.wah)

8. Thaniya Road, Pattanapong Road, Pattanapong II Road (Bt600,000 per sq.wah)

9. Narathiwas Rajanakarin Road (Bt280,000-Bt600,000 per sq.wah)

10. Ratchawong Road, Sampeng Road (Bt550,000 per sq.wah)

Properties on Silom Road are also one of the costliest in Bangkok. A four-storey office of 170 sq.wah on Silom Road could go for up to Bt155 million, or around Bt900,000 per sq.wah. Meanwhile, the recorded highest asking price of land and property sale in Bangkok is a 37-storey office building on Sathorn Road, area 4 rai and 8 sq.wah, with asking price of Bt7 billion or Bt4.35 million per sq.wah.

The department also mentioned that it had recorded only the asking prices of land and property, which might go down during negotiations.

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Developer Risland confident about Thai market, launches high-rise condo project

Sep 11. 2020

By THE NATION

Hong Kong-headquartered real estate developer Risland Thailand has expressed confidence in Thailand’s property growth with the consecutive launch of seven projects worth a total of more than Bt44 billion.

The company is turning its focus to online sales. It recently launched the high-rise condo, “The Livin Ramkhamhaeng” to tap extension business district location, a new prime area on Ramkhamhaeng Road, targeting students and first jobbers.

The project is situated only 100 metres from Lam Salee MRT Interchange Station with prices starting from only Bt1.6 million a unit.

Maneekarn Issareekosol, regional director of marketing strategy and corporate communication at Risland (Thailand) Co Ltd, a real estate development giant from Hong Kong which has developed property projects in seven countries worldwide, said that the company in the first half of 2020 was inevitably affected by the Covid-19 crisis.

The most recent project, launched on Friday, is The Livin Ramkhamhaeng worth Bt4.9 billion, as a result, the company’s investment this year totals more than Bt23.5 billion, ranking among Thailand’s top three developers.

As overseas tourists are unable to travel to Thailand, the company has delayed a Bt58-billion project (Phase 1) in Phuket.

The company said it remained confident in the domestic market as purchasing power in the country is strong. This customer group has a different point of view, thinking that it is a good time to buy a house or a condominium unit as selling prices and promotions are the best in history, Maneekarn said.