Saturday AM Economist: Mortgage Update & Non-Borrower Contributions!

by Karyn McAlpin

Welcome to this edition of my Saturday Morning Economist, where I'm sharing the latest mortgage market updates, along with additional information and insights that I believe you may find helpful.

Mortgage Market

This week, GDP readings released Thursday revealed that the economy is growing more rapidly than expected, which typically applies upward pressure on rates. However, PCE readings reported Friday were on target, indicating the pace of inflation consistently slowed throughout the last quarter of 2023. A growing economy and slowing inflation have led to increased investor sentiment that the U.S. will likely avoid a recession that had previously seemed inevitable and rates for most programs ended the same as last week.

Next week is loaded with potentially impactful data points being released throughout the week. I'll be specifically paying close attention to the first Federal Reserve meeting of the year on Wednesday for signals on the timing of future rate cuts as well as monitor the important employment report on Friday for any potential impact on mortgage rates.

CNBC: Dec PCE: Pace of Inflation Cooled as 2023 Came to Close

AXIOS: 2024: Signs of Home Sales Rebounding

Did You Know?

Topic: Non-Borrowing Purchaser Contributions

Did You Know that Fannie Mae allows a Non-Borrowing Purchaser to contribute to down payment and closing costs without the funds having to be documented as a gift? It is a standing position of Fannie Mae that funds from a non-borrowing (not on the loan) purchaser taking title to the property are not considered gift funds and therefore do not need to be documented as a gift. Specific documentation is required, but it can be helpful in situations where individuals are unwilling to sign a gift letter or when it is a transaction type that does not allow gifts such as on an Investment property.

The non-borrowing purchaser's funds may be used as the borrower's own funds and no gift letter is required when ALL the following is documented:

Please reach out to me when there are contribution questions. Not all agencies permit documenting non-borrowing purchaser contributions as noted above and typically require execution of a gift form.