Need-to-Know Updates: Agent Commissions Clarified & Economic Trends Explored!

Hope your weekend was fantastic! This week, we dive into the recent buzz around agent commissions and touch on some key economic indicators that could influence our market. Let’s get started!

Read time: ~3 minutes

Rates ended FLAT compared to last week, and volatility was HIGH. Rates are now in the mid 7’s for most loan types without paying discount points. Paying discount points can get you in the high 6’s/low 7’s.

Agent Commission Clarifications by Fannie Mae and Freddie Mac

Last week, the real estate community was buzzing on social media about what appeared to be "new" guidelines from Fannie Mae and Freddie Mac regarding agent commissions. However, it turns out there was no change at all. What Fannie and Freddie did was simply reaffirm the existing rules.

To clarify, buyer's agent commissions are not included in the calculations for allowable interested party contributions (IPCs). This guideline has been in place and what was shared last week was merely a clarification, not an update.

Under current guidelines, sellers can offer concessions toward the borrower's closing costs, with limits ranging from 2-9% depending on the loan program. Since buyer agent fees are considered customary and typically paid by the seller, there's no immediate concern here. Similarly, FHA provided analogous guidance last week, while we're still waiting to hear from the VA.

Reminder to Reassess Your Pre-Approved Clients

Here’s a friendly reminder for all our realtor partners—if you have clients who were pre-approved early in 2024 and are still house hunting or have re-entered the market, now’s a crucial time to touch base with their lenders. Interest rates have recently hit the highest points of the year, with some experiencing increases of up to 1%. This kind of shift can significantly affect purchasing power, so it’s wise to secure an updated pre-approval.

Always consider obtaining a property-specific pre-approval letter before placing any offers. This ensures that the latest rates are considered and provides peace of mind for all parties involved, including the sellers.

Economic Indicators to Watch This Week

This Friday, keep an eye out for the March Personal Consumption Expenditures (PCE) index. Unlike the CPI, which focuses solely on household expenses, the PCE index provides a broader view of economic activity, including employer-provided benefits, giving the Fed a comprehensive look at spending.

Moreover, this week marks the start of Q1 earnings reports for some major players in the S&P 500, including tech giants like Microsoft, Google, Meta, and Tesla. We’ll also see the US Q1 GDP figures on Thursday, expected around +2.8%. Continuously reporting above 2% for seven quarters hasn't happened in over two decades—a testament to sustained economic growth.

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Don’t hesitate to reach out if you need anything at all. Have a wonderful week!