Gauge of U.S. pending home sales declines to a six-month low

A gauge of U.S. pending home sales fell to a six-month low in January as buyers competed for a limited number of properties.

The National Association of Realtors’ index of pending home sales decreased 2.8% from the prior month to 122.8, according to data released Thursday. December data was revised to a 0.5% gain after a previously reported decline. The median estimate in a Bloomberg survey of economists called for no change in January.

The decline is the latest sign that the housing boom may be starting to cool amid soaring prices, a lack of inventory and rising mortgage rates. The residential real estate market has been a bright spot in the economy as it recovers from the pandemic. Contract signings are still up 8.2% from a year ago on an unadjusted basis.

“There are simply not enough homes to match the demand on the market” Lawrence Yun, chief economist at the NAR, said in a statement. Still, Yun said he expects inventory to rise in the coming months.

The lack of inventory thus far has driven prices upwards, putting homeownership out of reach for some, said Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting.

“Various other data sources have pointed to higher median sales prices and record-high purchase mortgage loan sizes, all of which have started to create affordability challenges in many parts of the country,” he said. “While home building has picked up to attempt to meet the high demand, increased listings of existing homes will be needed in the coming months to alleviate this shortage of housing inventory.”

By region, contract signings fell in the West, Northeast and Midwest. In the South, the index for pending home sales rose to the highest since August.

Source: nationalmortgagenews.com

Texas freeze, rate jump drive a week of stalled mortgage app activity

As interest rates hit the highest levels since September, mortgage application activity dropped for the third week in a row, according to the Mortgage Bankers Association.

Overall loan application volume fell 11.4% for the week ending Feb. 19 on a seasonally-adjusted basis and 10% unadjusted from the week prior. The refinance share of loan activity continues to tumble in contrast with growing mortgage rates, falling to 68.5% from 69.3% week-over-week.

The refi index dropped 11.3% weekly but sat 50% higher than the same time a year ago. The purchase share increased to 31.5% from 30.7% and the index declined 7.8% from last week while rising 7% annually. The average purchase loan size climbed to yet another new record high of $418,000 from $412,200 the previous week.

Brutal weather also contributed to a regional drop in activity. “The severe winter weather in Texas affected many households and lenders, causing more than a 40% drop in both purchase and refinance applications in the state last week,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a press release.

The total application share of loans guaranteed by the Federal Housing Administration jumped to 11.2% from 9% from the week before, the Department of Veterans Affairs loans dipped to 11.9% from 13.2% and U.S. Department of Agriculture loans edged down to 0.3% from 0.4%. The share of adjustable-rate mortgages rose to 2.56% from 2.47%.

Source: nationalmortgagenews.com

Mortgage Application Volume Continues Decline

The volume of
mortgage applications for both home purchase and refinancing fell for the third
straight time during the week ended February 19.
The Mortgage Bankers
Association (MBA) says its Market Composite Index, a measure of that volume,
dropped 11.4 percent on a seasonally adjusted basis. It was the largest single
week decline since the week ended April 3, 2020. On an unadjusted basis the index
was down 10.0 percent.

The Refinancing
Index decreased 11 percent from the previous week but was still 50 percent
higher than the same week one year ago. The refinance share of mortgage
activity decreased to 68.5 percent of total applications from 69.3 percent the
previous week.

The seasonally
adjusted Purchase Index dropped 12 percent and was 8 percent lower before adjustment.
Activity was 7 percent higher than the same week one year ago.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage
rates have increased in six of the last eight weeks, with the benchmark 30-year
fixed rate last week climbing above 3 percent to its highest level since
September 2020. As a result of these higher rates, overall refinance activity
fell 11 percent to its lowest level since December 2020
, but remained 50
percent higher than a year ago,” said Joel Kan, MBA’s Associate Vice President
of Economic and Industry Forecasting. “Additionally, the severe winter weather
in Texas affected many households and lenders, causing more than a 40 percent
drop in both purchase and refinance applications in the state last week.” 

Added
Kan, “The housing market in most of the country remains strong, with activity
last week 7 percent higher than a year ago. The average loan size of purchase
applications increased to a record $418,000, in line with the accelerating
home-price growth caused by very low inventory levels.” 

The
FHA share of total applications jumped to 11.2 percent from 9.0 percent the previous
week while the VA share fell to 11.9 percent from 13.2 percent and the USDA
share dipped 0.1 point to 0.3. The balance of all loans was $344,800, up from
$338,200 and for purchase loans the balance grew from $412,200 to $418,000.

The average
contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at
or below the current conforming limit of $548,250 increased to 3.08 percent
from 2.98 percent, with points increasing to 0.46 from  0.43. The effective rate was 3.22 percent. 

The
rate for jumbo 30-year fixed-rate mortgages, loans with balances greater than the
conforming limit, increased to 3.23 percent from 3.11 percent, with points increasing to 0.43 from
0.35. The effective rate was 3.35 percent.

Thirty-year
FRM backed by the FHA had an average rate of 3.00 percent with 0.33 point. The
prior week the rate was 2.93 percent with 0.27 point. The effective rate
increased to 3.10 percent.  The rate for
15-year fixed-rate mortgages increased 9 basis points to 2.56 percent and
points grew to 0.40 from 0.36. The effective rate was 2.66 percent.

The
average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) was unchanged
at 2.83 percent, with points
decreasing to 0.36 from 0.70. The effective rate declined to 3.10 percent.  The ARM share of applications increased from
2.4 to 2.7 percent.  

MBA’s Weekly Mortgage Applications
Survey has been conducted since 1990 and covers over 75 percent of all U.S.
retail residential applications Respondents include mortgage bankers,
commercial banks, and thrifts. Base period and value for all indexes is March
16, 1990=100 and interest rate information is based on loans with an 80 percent
loan-to-value ratio and points that include the origination fee.

MBA’s latest Forbearance and Call Volume Survey found a 7-basis point
decline in the total number of loans in forbearance t
o 5.22 percent of all
first liens as of February 14, 2021. According to MBA’s estimate, 2.6 million homeowners
are in forbearance plans.  Of those
loans, 15.9 percent are in the initial forbearance plan stage, while 81.6
percent are in a forbearance extension. The remaining 2.5 percent are re-entries
in the program. 

The
share of Fannie Mae and Freddie Mac (GSE) loans in forbearance decreased to
2.97 percent –
a 4-basis-point improvement. Ginnie Mae (FHA and VA) loans in forbearance ticked
down 2 basis points to 7.32 percent, while the forbearance share for portfolio
loans and private-label securities (PLS) decreased by 20 basis points to 8.94
percent. The percentage of loans in forbearance serviced by independent
mortgage banks (IMB) fell 15 basis points to 5.54 percent, and the percentage
of forborne loans in depository servicers’ portfolios rose 2 basis points to
5.28 percent.

“The share of loans in forbearance has declined for
three weeks in a row, with portfolio and PLS loans decreasing the most this
week. This decline was due to a sharp increase in borrower exits, particularly
for IMB servicers,” said
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Requests for new
forbearances dropped to 6 basis points, matching a survey low.” 

Fratantoni added, “The housing market is
quite strong, with home sales, home construction, and home price data all
testifying to this strength. Policymakers and the mortgage industry have helped
enable this during the pandemic by providing millions of homeowners support in
the form of forbearance. The decision to extend the allowable duration of
forbearance plans should provide for a smoother transition this year as the job
market continues to recover.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from February 8 through February 14, 2021 and
represents 74 percent of the first-mortgage servicing market (37.1 million
loans).

Source: mortgagenewsdaily.com

Texas storm deflates mortgage application numbers

Mortgage applications decreased 11.4% from one week earlier, according to data from the Mortgage Bankers Association’s weekly survey for the week ending Feb. 19.

It’s the lowest level applications have fallen to since December 2020.

Activity decreased across the board, with the unadjusted index (-10%), the refinance index (-11%), the seasonally adjusted purchase index (-12%) and the unadjusted purchase index (-8%) all falling from the previous week.

The severe winter weather in Texas played played a prominent role in the survey’s declining numbers, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.

“[The storm]affected many households and lenders, causing more than a 40% drop in both purchase and refinance applications in the state last week,” Kan said. “Mortgage rates have increased in six of the last eight weeks, with the benchmark 30-year fixed rate last week climbing above 3% to its highest level since September 2020.”

The refinance share of mortgage activity decreased to 68.5% of total applications from 69.3% the previous week. The adjustable-rate mortgage share of activity increased to 2.7% of total applications.

“The housing market in most of the country remains strong, with activity last week 7% higher than a year ago,” Kan said.

The higher-priced segment of the market continues to perform well, Kan said, with the average purchase loan size increasing to a survey-high of $418,000.

The FHA share of total mortgage applications increased to 11.2% from 9% the week prior. The VA share of total mortgage applications decreased to 11.9% from 13.2% the week prior.

Here is a more detailed breakdown of this week’s mortgage application data:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.08% from 2.98%
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.23% from 3.11% – the fifth straight week of decreases
  • The average contract interest rate for 30-year fixed-rate mortgages increased to 3% from 2.93%
  • The average contract interest rate for 15-year fixed-rate mortgages increased to 2.56% from 2.47%
  • The average contract interest rate for 5/1 ARMs remained unchanged at 2.83%

Source: housingwire.com

Mortgage rates hit (another) all-time low – CNN

The average 30-year fixed-rate mortgage fell to a record low of 3.07% this past week, according to Freddie Mac. That’s the lowest level in the nearly 50 years of the mortgage giant’s survey. The 15-year fixed-rate mortgage dropped to 2.56%.
The average rate for a 30 year-fixed mortgage dropped below the previous record low of 3.13% that was set in June and marks the fifth new low since March. A year ago, the rate was 3.75%.
The data suggests the recent rebound in economic activity has come to a halt over the last couple of weeks, with some declines in consumer spending and a pullback in purchase activity, according to Freddie Mac.
“Today’s report shows mortgage rates declined as investors reacted to the surge in Covid cases and the Federal Reserve’s concerned outlook for economic recovery,” said George Ratiu, senior economist at Realtor.com
Even with rates moving toward the 3% mark, lenders maintained tight underwriting standards which contributed to a decline in mortgage applications for the second consecutive week, he said.
“Mortgage rates this low, coupled with current demographics favoring homeownership, would normally lead to strong sales activity,” he said. “However, getting approved for a loan is proving to be a difficult challenge for many, especially first-time homebuyers who struggle to come up with a 20% down payment.”
The national housing market saw a glimmer of hope this week as an index measuring homes in contract to sell, or pending sales, jumped by a record 44% in May, according to the National Association of Realtors.
But the longer term picture is murkier. Ratiu said real estate markets are moving through a transition period.
“On one hand, buyers are clearly returning to the market, eager to take advantage of low interest rates while moving toward a new normal,” he said. “On the other hand, the strong resurgence in Covid cases, especially in Sun Belt states, along with broader economic uncertainty during the current recession, is holding many sellers back from entering the market.”
These people bought homes without ever stepping insideThese people bought homes without ever stepping inside
This week mortgage applications dropped 1.8% from the week before, according to the Mortgage Bankers Association’s weekly application survey.
“Investors are contemplating the risks of the recent resurgence of Covid-19 cases to the labor market and economy, and Treasury rates and mortgage rates are moving lower as a result,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“The weakening in activity is potentially a signal that pent-up demand is starting to wane and that low housing supply is limiting prospective buyers’ options,” he said.

Source: cnn.com

Weekly mortgage refinance demand drops 5% after rates hit highest level since November – CNBC

An ‘Open House’ sign is displayed as potential home buyers arrive at a property for sale in Columbus, Ohio.

Ty Wright | Bloomberg | Getty Images

Record-low mortgage rates may now be a headline of the past.

Now, several weeks of rising rates are dousing what was incredibly high demand for refinancing. That pulled total weekly mortgage application volume down 1.9% last week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.92% from 2.88%, with points increasing to 0.37 from 0.33 (including the origination fee) for loans with a 20% down payment. The rate was 95 basis points higher one year ago.

The average rate on the 15-year fixed rose for the first time in seven weeks, to 2.48%.

With higher rates now offering less potential savings, applications to refinance a home loan fell 5% for the week but were 87% higher than a year ago. That annual comparison had been more than 100% just last week.

“Market expectations of a larger than anticipated fiscal relief package, which is expected to further boost economic growth and lower unemployment, have driven Treasury yields higher the last two weeks,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “After a post-holiday surge of refinances, higher rates chipped away at refinance demand.”

Demand from homebuyers, however, increased despite the higher rates. Mortgage applications to purchase a home rose 3% for the week and were 15% higher than a year ago. The coronavirus pandemic spurred strong demand for larger, suburban homes. Despite the vaccine rollout, that demand does not appear to be abating. The biggest hurdles for homebuyers right now are high prices and record-low inventory of homes for sale.

“Homebuyers in early 2021 continue to seek newer, larger homes,” Kan said. “The average loan size for purchase loans jumped to $384,000, the second highest level in the survey,” which dates to 1990.

The incoming Biden administration is preparing to make multiple moves in the housing market that could favor both homebuyers and builders. Mortgage rates, however, started the week flat, as traders are likely awaiting the first major economic policy announcements before making a move.

Source: cnbc.com

Mortgage applications drop for second week

As mortgage rates come off of their historic lows, mortgage applications dropped for the second week, according to data from the Mortgage Bankers Association.

Mortgage applications dropped 5.1% for the week ending Feb. 12, after falling 4.1% the week prior. Notably, the refinance share of activity dropped to 69.3%, the first time it’s been below 70% since October.

“Expectations of faster economic growth and inflation continue to push Treasury yields and mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, and last week climbed to its highest level since November 2020,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

On an unadjusted basis, the Market Composite Index decreased 4% compared with the previous week. The Refinance Index decreased 5% from the previous week but was still 51% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 6% from one week earlier. The unadjusted Purchase Index decreased 1% compared with the previous week and was 15% higher than the same week one year ago.

“The housing market in early 2021 continues to be constrained by low inventory and higher prices. Conventional and government applications to buy a home declined last week, but purchase activity overall is still strong – up 15% from last year,” Kand said. “The average purchase loan size hit another survey high at $412,200, partly due to a larger drop in FHA mortgage applications, which tend to have smaller-than- average loan sizes.”

The FHA share of total applications decreased to 9% from 9.5% the week prior. The VA share of total mortgage applications decreased to 13.2% from 13.3% the week prior. The USDA share of total mortgage applications remained unchanged from 0.4% the week prior.

Here is a more detailed breakdown of this week’s mortgage application data:

  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 2.98% from 2.96%
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) remained unchanged at 3.11%
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 2.93% from 2.97%
  • The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.47% from 2.5%
  • The average contract interest rate for 5/1 ARMs decreased to 2.83% from 2.92%

Source: housingwire.com

Mortgage demand drops as interest rates hit a three-month high – CNBC

An ‘Open House’ sign is displayed in the front yard of a home for sale in Columbus, Ohio.

Ty Wright | Bloomberg | Getty Images

Mortgage interest rates have increased in four of the first six weeks of 2021, putting a chill on mortgage demand.

Overall mortgage application volume fell 4.1% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The move down came as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $548,250 increased to 2.96% from 2.92%, for loans with a 20% down payment. The rate was 76 basis points higher a year ago.

Refinance demand, which is most sensitive to weekly rate fluctuations, fell 4% for the week but were 46% higher than a year ago. That annual comparison had been over 100% at the start of this year but has been shrinking.

“Despite some weekly volatility, Treasury rates have been driven higher by expectations of faster economic growth as the Covid-19 vaccine rollout continues,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting.

The refinance share of mortgage activity decreased to 70.2% of total applications from 71.4% the previous week, the lowest level in three months.

Homebuyers are also pulling back, but less because of rising mortgage rates and more because of low supply and overheating home prices. Mortgage applications to purchase a home fell 5% for the week but were still 17% higher year over year.

“Purchase applications cooled the first week of February, but homebuyers are still very active,” Kan said. “The average purchase loan size continued to increase, reaching another survey high of $402,200, as the higher-priced segment of the market continues to perform well.” The MBA began its weekly survey nearly 31 years ago.

The higher-priced segment is doing so well because there is so much more supply. The low end of the market is incredibly slim, and that is forcing first-time buyers to the sidelines. The total number of homes for sale in January hit a new low, down nearly 43% from a year earlier, according to realtor.com. Homes also sold on average 10 days faster.

Source: cnbc.com

Slight Rate Increases Dampen Mortgage Application Volume

Mortgage
application activity gave back much of the previous week’s gains as interest
rates increased. The Mortgage Bankers Association (MBA) said its Market
Composite Index, a measure of mortgage loan application volume, decreased 4.1
percent
on a seasonally adjusted basis during the week ended February 5 and was
down 3 percent before adjustment.

The
Refinance Index, which had surged by 11 percent during the last week in
January, was down 4 percent last week but was still 46 percent higher than the
same week one year ago. The refinancing share of overall activity decreased to
70.2 percent from 71.4 percent the previous week.

The
seasonally adjusted Purchase Index dropped 5 percent from one week earlier but
was up 2 percent from the prior week and 17 percent year-over-year on an
unadjusted basis.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage rates
have increased in four of the first six weeks of 2021, with jumbo rates being
the only loan type that saw a decline last week. Despite some weekly
volatility, Treasury rates have been driven higher by expectations of faster
economic growth as the COVID-19 vaccine rollout continues,” said Joel Kan,
MBA’s Associate Vice President of Economic and Industry Forecasting. “With the
30-year fixed rate increasing to 2.96 percent – a high not seen since last
November – refinances declined, and their share of total applications dipped to
the lowest level in three months. Government refinance applications did buck
the trend and increase, and overall activity was still 46 percent higher than a
year ago.
Demand for refinances is still very strong this winter.” 

Added Kan, “Purchase applications cooled the first week of February, but homebuyers are
still very active. Purchase activity was 17 percent higher than last year, and
the average purchase loan size continued to increase, reaching another survey
high of $402,200, as the higher-priced segment of the market continues to
perform well.”

The
FHA share of total applications increased to 9.5 percent from 9.1 percent the
previous week and the VA share grew to 13.3 percent from 12.1 percent. The USDA
share was unchanged at 0.4 percent. The average purchase price dipped to
$332,400 from $332,100 and the balance of a purchase mortgage grew from
$398,600 to $402,200.

The
average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances
at or below the conforming limit of $548,250 increased to 2.96 percent from
2.92 percent; Points increased to 0.36 from 
0.32 and the effective rate increased. 

The rate for jumbo 30-year
FRM, loans with balances exceeding the conforming limit, declined 1 basis point
to 3.11 percent. Points decreased to 0.29 from 0.32 and the effective rate also
moved lower.

Thirty-year FRM backed by
the FHA had a rate of 2.97 percent with 0.36 point. The prior week the rate was
2.94 percent with 0.29 point. The effective rate increased.  

The rate for 15-year FRM was
2.50 percent, up from 2.44 percent, with points decreasing to 0.29 from 0.32.
The effective rate increased from last week.

The average contract
interest rate for 5/1 adjustable-rate mortgages (ARMs) increased 4 basis points
to 2.92 percent and points declined to 0.36 from 0.46, leaving the effective
rate unchanged. The ARM share of activity increased to 2.3 percent of total
applications.

MBA’s Weekly
Mortgage Applications Survey has been conducted since 1990 and covers over 75
percent of all U.S. retail residential applications Respondents include
mortgage bankers, commercial banks, and thrifts. Base period and value for all
indexes is March 16, 1990=100 and interest rate information is based on loans
with an 80 percent loan-to-value ratio and points that include the origination
fee.

MBA’s latest Forbearance and Call Volume Survey showed
that the total number of loans now in forbearance decreased by 3 basis points
over the prior week. As of January 31, 5.35 percent of servicers’ portfolios
were in active plans, down from  5.38
percent a week earlier and equating to an estimated total of 2.7 million homeowners.
By stage, 16.52 percent of forborne loans are in their initial plan stage,
while 80.98 are in a forbearance extension. The remaining 2.50 percent are
forbearance re-entries. 

The
share of Fannie Mae and Freddie Mac loans in forbearance decreased to 3.07
percent – a 3-basis-point
improvement. The Ginnie Mae (FHA and VA) share of loans in forbearance
decreased 5 basis points to 7.46 percent. The forbearance share for portfolio
loans and private-label securities (PLS) decreased by 2 basis points to 9.14
percent. The percentage of loans in forbearance for independent mortgage bank
(IMB) servicers decreased 4 basis points to 5.73 percent, and those for depository
servicers decreased 1 basis point to 5.36 percent.

“The share of loans in forbearance decreased at the end
of January across all investor categories. Almost 14 percent of homeowners in
forbearance were reported as current on their payments at the end of last
month, but the share has declined nearly every month from 28 percent in May,” said Mike Fratantoni,
MBA’s Senior Vice President and Chief
Economist. “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 added, “The job market rebounded
slightly in January following a decline in December, but there are still 6.5
percent fewer jobs in the U.S. economy compared to February 2020. The
proportion of long-term unemployed also remains troubling, with 4 million
people who have been actively looking for work for 27 weeks or more. 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.”

MBA’s latest Forbearance and Call Volume
Survey covers the period from January 25 through January 31, 2021 and
represents 74 percent of the 37.0 million loans in the servicing market.

Source: mortgagenewsdaily.com