Mortgage rates climb higher to 2.97%

The average mortgage rate for a 30-year fixed loan is now just 3 basis points away from 3%, after a 16 basis point jump last week pushed mortgage rates to 2.97%, according to Freddie Mac’s Primary Mortgage Market Survey.

The average mortgage rate hasn’t risen this high since the end of July 2020, but Sam Khater, Freddie Mac’s chief economist, noted higher rates signals an economy slowly regaining its footing.

“Though rates continue to rise, they remain near historic lows,” said Khater. “However, when combined with demand-fueled rising home prices and low inventory, these rising rates limit how competitive a potential homebuyer can be and how much house they are able to purchase.”

Rising rates didn’t slow new home sales in January though, after the U.S. censes bureau reported sales of new single-family houses in January were at a seasonally adjusted annual rate of 923,000 — 4.3% above December’s rate.

“However, recent increases in mortgage interest rates threaten to exacerbate existing affordability conditions. Builders are exercising discipline to ensure home prices do not outpace buyer budgets,” said National Association of Home Builders Chief Economist Robert Dietz.


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While purchase demand hasn’t shown any sign of decline, the refi wave is showing more vulnerability. As rates rose, refi activity fell 11% according to data from the Mortgage Bankers Association.

For many potential borrowers, the opportunity to refinance is lost before the chance even arises, while other prospective borrowers are caught in a clogged loan pipeline and don’t get the opportunity to lock in that low rate.

According to HousingWire’s lead analyst Logan Mohtashami, a one-eighth to a quarter turn in mortgage rates (high or low) can move the market substantially.

“There are people who had a 4.00% rate that refinanced to 3.25% and then said, ‘Oh well now that rates are low, I’ll refinance again to 2.75%.’ But if that rate sneaks up a quarter it’s no longer ideal and it’s lost its appeal. They are going to wait for it to come back down, right? And then it doesn’t,” Mohtashami said.

Source: housingwire.com

For the third week in a row, mortgage rates stay at 2.73%

For the third week in a row, the average mortgage rate for a 30-year fixed loan remained unchanged at 2.73%, according to Freddie Mac’s Primary Mortgage Market Survey.

Even though rates remained at their record low levels, mortgage applications dipped, with some economists pointing to overheated home prices and lack of supply for applications seesawing.

“The residential real estate market remains solid given healthy purchase demand while implied real-time home price growth is high, due to the inventory shortage that is plaguing the housing market,” Sam Khater, chief economist at Freddie Mac, said.

According to Joel Kan, Mortgage Bankers Association‘s vice president of economic and industry forecasting, despite some weekly volatility, Treasury rates have been driven higher by expectations of faster economic growth as the COVID-19 vaccine rollout continues.

“New COVID-19 cases are receding, which is encouraging and that has led to a rise in Treasury rates. But, the run-up in Treasury rates has not impacted mortgage rates yet, which have held firm,” Khater said.

A year ago at this time, the 30-year FRM averaged 3.47%, and the 15-year fixed-rate mortgage has also maintained a substantial low compared to last year, dropping to 2.19% last week.

With rates settling below 3% for six months now, homeowners are taking advantage of lowering mortgage rates – the MBA estimates refinances are still making up over 70% of mortgage activity. However, as economists warn that rates will make their way up, loan teams will need to buckle down for a drop in refi activity.

“It’s a tale of two economies. The services economy remains in the doldrums, but the production side of the economy remains strong,” Khater said.

Unemployment numbers for January painted a similar picture, as another month of rising COVID-19 cases left the U.S. unemployment situation virtually unchanged for the third month in a row.

Source: housingwire.com

Forbearance rate slowly descends to 5.35%

The U.S forbearance rate is falling, though not as quickly as it once was.

Data released on Monday by the Mortgage Bankers Association showed that the share of servicers’ portfolio volume in forbearance fell 3 basis points to 5.35% last week.

For the third month in a row, the MBA estimated 2.7 million homeowners are in some form of forbearance, and for almost four months now, forbearance portfolio volume has hovered between 5% and 6% — the longest a percentage range has held since the survey’s origins in May.

However, in the current environment, any sign of forbearance waning is a welcome one. Last week every investor class managed to see declines, with Fannie Mae and Freddie Mac once again claiming the lowest forbearance rate at 3.07%.

Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, also fell 5 basis points to 7.46%. And even though servicers continued to buy out delinquent loans from the Ginnie Mae pool (subsequently reclassifying them as portfolio loans) the forbearance share for portfolio and private-label securities also managed to fall to 9.14%.


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The MBA data shows that homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments. According to Mike Fratantoni, the MBA’s chief economist, almost 14%of homeowners in forbearance were reported as current on their payments at the end of last month, but that share has declined nearly every month from 28% in May.

“While new forbearance requests increased slightly at the end of January, the rate of exits picked up somewhat, but remained much lower than in recent months. We are anticipating a sharp increase in exits in March and April as borrowers hit the 12-month expiration of their forbearance plans,” Fratantoni said.

Starting Nov. 2, the MBA began reporting the number of borrowers who continued to make their monthly payments during their forbearance period and have since exited. Since that date, the MBA has revealed that the number of up-to-date borrowers has consistently dropped.

To Fratantoni, servicers and policy makers need to be looking at the long-term unemployed, especially those who have been actively looking for work for 27 weeks or more as reported in January’s job data.

“These are the homeowners who are likely to still be in forbearance and
need additional support until the job market recovers to a greater extent,” Fratantoni said.

But economists are still showing signs of confidence in the market. HousingWire’s lead analyst, Logan Mohtashami, noted with an improving employment situation comes an economic improvement well past forbearance’s peak. Couple that with strong credit profiles from homeowners and nested equity and Mohtashami can outperform on rising home prices.

“This isn’t 2008 all over again. That recovery was slow, but today our demographics are better, and our household balance sheets are healthier. The fiscal and monetary assistance now is hugely improved from what we saw after 2008. We have everything we need to get America back to February 2020 jobs levels; we just need time,” Mohtashami said.

Source: housingwire.com

Fannie Mae reports rising confidence in housing market

Following two months of steady declines, Fannie Mae’s Home Purchase Sentiment Index (HPSI), a composite index designed to track the housing market and consumer confidence to sell or buy a home, rose in January.

The HSPI rose 3.7 points last month to 77.7. Though it’s undoubtedly a positive sign, the HPSI has yet to recover to pre-pandemic levels and is still down 15.3 points year over year.

Doug Duncan, Fannie Mae’s chief economist, noted a slight chasm has formed in confidence among lower and higher- income groups based on recent stimulus and fiscal policies.

According to Duncan, this newfound optimism in lower-income borrowers and renters could indicate those who have been more negatively impacted by the pandemic may be starting to feel the economic recovery.

“Among homeowners in higher income groups, however, the other five components of the index remained relatively flat or slightly negative, suggesting to us that some consumers are waiting to gauge the effectiveness of any new fiscal policies and vaccination distribution programs on both housing and the larger economy,” Duncan said.


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Overall, January’s housing market confidence jump was largely driven by renewed optimism for prospective home sellers, after December’s increasing home prices and tight inventory left homeowners weary that 2020’s record sales may not roll in to the new year. However, the percentage of respondents who say it is a good time to sell a home increased from 50% to 57% in January, while those who believe it is a good time to buy remained unchanged at 52%.

Even though buying sentiment stood idle in the first month of 2021, mortgage applications jumped 8.15% from the week ending Jan. 29, breaking a two-week streak of decreases, according to the Mortgage Bankers Association.

And borrowers are still relatively unsure of how long elevated home prices will hold. The HPSI reported 41% of respondents expect home prices will go up in the next 12 months – unchanged from the month prior – while those who believe it will go down increased from 16% to 17%.

But even if those prices do rise, borrowers can still save on the record low rates the industry has become accustomed to. The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 8% to 9%, while the percentage who expect mortgage rates to go up increased from 43% to 45%.

Though economists are fairly certain all signs indicate to rising mortgage rates, experts said it won’t be a sudden jerk reaction but rather a slow build that will force its way over 3% later in the year. Regardless, LO’s made insane money in 2020 thanks to record low rates, with the jury still out on whether they can swing it again in 2021 if refi’s begin to fall with rising rates.

But rising rates are a sign of a recovering economy, and though that recovery may look slow, the housing market is showing signs its already occurring.

The percentage of respondents who say they are not concerned about losing their job in the next 12 months remained unchanged at 75%, while those who are concerned fell from 25% to 24%. And the percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 20% to 21%, while the percentage who say theirs is significantly lower decreased from 18% to 14%.

January’s unemployment numbers weren’t overly impressive to economists, with the unemployment situation virtually unchanged for the month.

“The number of people on temporary layoff fell slightly in January, while the number of permanent job losers rose, a troubling sign. On the other hand, the number of people working part time but who would prefer full time employment also fell slightly, a positive indicator of labor demand,” Duncan said.

Source: housingwire.com

Mortgage rates continue to stay low at 2.73%

The average mortgage rate for a 30-year fixed loan remained unchanged last week from the week prior at 2.73%, according to Freddie Mac’s Primary Mortgage Market Survey.

With mortgage rates hovering below 3% for over six months now, Sam Khater, Freddie Mac’s chief economist, said this may be a sign of an economy still struggling.

“This rate environment is advantageous for those who are looking to refinance in order to strengthen their financial position,” Khater said. “While many have already refinanced, the evidence suggests that upper-income homeowners have taken advantage of the opportunity more so than lower-income homeowners who could stand to benefit the most by lowering their monthly mortgage payment.”

Overall, record low mortgage rates are still fanning the refi flame regardless of who’s snagging the offer. The Mortgage Bankers Association reported that the refinance index of mortgage applications hit its highest level since March 2020 last week – a whopping 59% higher year-over-year.

And while borrowers are scrambling to snag what’s left of record low inventory, LOs came out on top. Recent data from mortgage software firm LBA Ware revealed that total funded loan volume by LOs in Q4 2020 increased 106% from the fourth quarter of 2019.


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The average LO managed to produce $2.6 million per month in volume in the last quarter, thanks to all those sweet low mortgage rates. That’s a 63% increase and a whopping million dollars more per person than seen in Q4 2019. 

But LBA Ware Founder and CEO Lori Brewer said loan teams should be cautious as signs the refi train slowing down are starting to show.

“As rates are predicted to rise in 2021 and for several years to come, loan teams that wish to maintain their earnings would do well to put a strategy in place that enables them to offset waning refi volume with more purchase volume,” Brewer said.

Source: housingwire.com

Mortgage rates drop even lower to new record of 2.65%

The average U.S. mortgage rate for a 30-year fixed loan fell two basis points this week to 2.65% – the lowest rate in the Freddie Mac’s Primary Mortgage Market Survey’s near 50-year history. This week’s mortgage rate broke the previous record set on Dec. 24.

With this week’s record drop, there have now been 22 consecutive weeks when average mortgage rates have been below 3%, and this is the 17th time this year rates have broken a record.

The average fixed rate for a 15-year mortgage also fell last week to 2.16% from 2.17%. A year ago at this time, the 15-year FRM averaged 3.07%.

Despite a full percentage point decline in rates over the past year, housing affordability is slipping as these low rates have been offset by rising home prices, according to Sam Khater, Freddie Mac’s chief economist.

“The forces behind the drop in rates have been shifting over the last few months and rates are poised to rise modestly this year. The combination of rising mortgage rates and increasing home prices will accelerate the decline in affordability and further squeeze potential homebuyers during the spring home sales season,” Khater said.


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This year’s record low rates may be setting a new norm.

Len Kiefer, Freddie Mac‘s deputy chief economist, noted every decade since the 1980s experienced a 2% drop decade-over-decade. With rates sitting at close to 12% nearly 50 years ago, declining patterns may mean 30-year mortgage rates could average 2% the rest of the 2020s.

“Even just a year ago, that didn’t seem probable, and it’s certainly not my baseline forecast, but we’d have to acknowledge that there is a chance rates could continue their secular decline,” Kiefer said.

However, news of Democrats having won control of the Senate on Tuesday has some economists shifting gears.

The prospects of increased spending and deficits will likely put upward pressure on mortgage rates as the year progresses, said Mortgage Bankers Association Chief Economist Mike Fratantoni. In turn, Fratantoni estimates the massive refinance wave lenders have been riding may be cut short.

Source: housingwire.com

Mortgage rates hold steady at 2.77%

The average mortgage rate for a 30-year fixed loan fell two basis points last week to 2.77%, according to Freddie Mac’s Primary Mortgage Market Survey. Now 12 basis points above the record low set Jan. 7, rates more closely resemble those seen over two months ago.

The 15-year fixed mortgage rate also shifted downward to 2.21 from 2.23 the week prior.

With last week’s data in, mortgage rates have now managed to hover below 3% for nearly six months and have fueled purchase and refinance activity to record-setting levels amid a global health crisis.

But political and economic factors are causing some fluctuation in those rates, putting upward pressure on Treasury yields, said Sam Khater, Freddie Mac’s chief economist.

“However, we forecast rates to remain relatively low this year as the Federal Reserve keeps interest rates anchored near zero for a longer period of time, if needed until the economy rebounds,” Khater said.


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Freddie Mac’s quarterly forecast estimates that the average 30-year fixed-rate mortgage will be 2.9% in 2021 and 3.2% in 2022. However, some economists believe a slow upward path for rates is inevitable in 2021.

Despite the Fed’s vow to keep interest rates low until 2022, Mike Fratantoni, chief economist at the Mortgage Bankers Association, said recent Fed speeches revealed they are less committed to asset purchases, and wouldn’t be surprised if said purchases were reduced by the end of year.

“While for some time people thought that mortgage rates might be less impacted than Treasury rates, the spread between mortgage rates and Treasury rates has narrowed substantially. Going forward, any increases in Treasury rates are really going to be matched by increases in mortgage rates,” Fratantoni said.

The Treasury is now expected to auction close to $3 trillion worth of bonds this year, and with that amount of supply hitting the market, a historically inverse relationship will see bond prices dropping and yields on the rise.

Source: housingwire.com

Biden’s executive order will extend foreclosure moratorium

Following his inauguration on Wednesday, President Joe Biden revealed that he plans to sign 17 executive orders his first day in office, including a further extension of the eviction and foreclosure moratorium to at least March 31.

Brian Deese, Biden’s choice to lead the National Economic Council, said the president will call upon the Centers for Disease Control and Prevention and the departments of Veterans Affairs, Agriculture and Housing and Housing and Urban Development, to aid in an immediate extension of their federally backed mortgages.

“These emergency measures are important,” Deese said. “There are more than 11 million mortgages guaranteed by the VA, Department of Agriculture and HUD that would be affected by the extension of the foreclosure moratorium.”

Biden had previously outlined strategies to mitigate foreclosures and evictions in his housing agenda, which included a Bill of Rights that will prevent mortgage servicers from advancing a foreclosure when the homeowner is in the process of receiving a loan modification.

The agenda also outlined plans to build upon the Obama-Biden Administration’s Protecting Tenants at Foreclosure Act, that includes a law prohibiting landlords from discriminating against renters receiving federal housing benefits.


Low mortgage rates fuel the demand for valuation and settlement services  

VRM Mortgage Services CEO shares how the company is navigating a difficult year, and how its services are impacted by the different national, state and local directives on foreclosure.

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On Tuesday, the Federal Housing Finance Agency extended for a fifth time moratoriums on single-family foreclosures and real estate owned evictions for loans backed by Fannie Mae and Freddie Mac until Feb. 28, 2021.

HUD had previously extended its moratoriums for loans backed by the Federal Housing Administration in late December – also through the end of February.

“Today’s foreclosure moratorium and forbearance extensions for single family homeowners ensure American homeowners continue to have the critical relief and support they need to get back to financial stability,” said HUD Secretary Ben Carson following the December extension.

Although foreclosures have remained at record lows due to the widespread moratoriums, data analytics giant Black Knight estimated seriously past-due mortgages (90+ day delinquencies) were still 1.8 million above pre-pandemic levels in November.

Source: housingwire.com

Alongside rising yields, mortgage rates increase to 2.79%

The average mortgage rate for a 30-year fixed loan rose from its previous record low by 14 basis points this week to 2.79%, according to Freddie Mac’s Primary Mortgage Market Survey. This marks the first time mortgage rates have risen in almost two months.

The 15-year fixed rate also rose slightly this week from 2.16% to 2.23%.

Even with this week’s uptick, there have still been 23 consecutive weeks when average mortgage rates have been below 3%.

According to Sam Khater, Freddie Mac’s chief economist, rising treasury yields have been putting pressure on rates to finally move up again.

“While mortgage rates are expected to increase modestly in 2021, they will remain inarguably low, supporting homebuyer demand and leading to continued refinance activity,” Khater said. “Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result.”

And take advantage they have.


Leveraging eClosings to effectively manage increased loan volumes

With no end in sight to record low mortgage rates and the increased loan volume, lenders must streamline workflows and accelerate time to close. Evolving from traditional closings to hybrid closings to full eClosings can help lenders process more loans at a faster pace without overwhelming their resources.

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Mortgage applications jumped 16.7% last week according to the Mortgage Bankers Association, and refi’s hit a massive 93% year-over-year mark as government loans experienced their strongest week in nearly eight years.

The jump underlines the seasonality behind the decrease in mortgage rates the week prior, coupled with expectations of additional fiscal stimulus from the incoming administration, according to MBA Associate Vice President of Economic and Industry Forecasting Joel Kan.

While purchase borrowers have been scrambling for months now to battle it out for the lowest possible rate on the limited inventory available, the Federal Reserve may have given borrowers until the end of 2021 to snap one up.

In a speech on Friday, Fed. Vice Chairman Richard Clarida said he expects the central bank to maintain the pace of its bond purchases through 2021. Those purchases are what prevented a credit crunch and made borrowing cheaper back in March.

Now, at an average of $120 billion a month — split between $80 billion in Treasuries and $40 billion in MBS — Fed holdings have surpassed $7 trillion, and Clarida doesn’t see a pullback anytime this year.

Source: housingwire.com