FICO Algorithm Update, Rates Improve, New Homes Selling

FICO Scores – are about to change and 40,000 million Americans will see a 20+ point drop and a similar number will see a comparable increase. The FICO algorithm is updated roughly every 5 years and this time the update focuses on personal loans. Currently personal loans are growing faster than any other debt category and now FICO is breaking them into a separate category to ensure they are being used responsibly.

Rates – improved this week as investors have been moving from stocks to bonds in response to the Coronavirus outbreak. Rates are approximately 1% lower than this time last year – the lowest level since November 2016 (pre-election).

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Appreciation – the Case-Shiller Home Price Index reported a 3.5% year-over-year gain in November (up 0.3% from October). This Index is the best representation of appreciation as it measure value gains on individual homes over time. A 3.5% gain on a $300,000 is a gain of $10,500 over the course of one year.

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New Home sales are up a up 23% on a year-over-year basis. The median price was $331,400 and there is currently 5.7 months of inventory available. New construction makes up approximately 10% of the market.

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