Apache is functioning normally
Mortgage rates tickets slightly up but remain within the 6% to 7% range, according to Freddie Mac. (iStock)
Mortgage rates tickets slightly up but remain within the 6% to 7% range, according to Freddie Mac. (iStock)
Mortgage rates ticked slightly up, still hovering within the 6% to 7% range, but home sales show buyers are shrugging off the more expensive borrowing costs, according to Freddie Mac.
The average 30-year fixed-rate mortgage increased to 6.71% for the week ending June 29, according to Freddie Mac’s latest Primary Mortgage Market Survey. That’s up from the previous week when it averaged 6.67%. A year ago, the 30-year fixed-rate mortgage averaged 5.7%.
The average rate for a 15-year mortgage was 6.06%, up from 6.03% last week and up from 4.83% last year.
The slight shift marks another week that rates remain within the 6% to 7% range. However, a recovery in home sales may indicate that buyers are accepting the higher borrowing costs as the new normal, according to Freddie Mac Chief Economist Sam Khater.
“Mortgage rates have hovered in the six to seven percent range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year,” Khater said. “New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction.
“The improved demand has led to a firming of prices, which have now increased for several months in a row,” Khater continued.
If you are looking to buy a home, you can take advantage of lower mortgage rates and shop for the best rate on a loan. You can visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
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Federal Reserve Chair Jerome Powell said in a recent statement that inflation remains high and the process of getting it to a 2% target rate “has a long way to go.”
The central bank has already raised rates 10 times in 2022 and 2023 to bring inflation down to a 2% target. In June, it announced a much-anticipated pause on interest rate increases following continued moderation in inflation.
The interest rate increase means the federal funds rate will remain in a targeted range of 5% to 5.25%, the highest level in 16 years.
“With the Fed taking a breather from monetary tightening until its July meeting, capital markets are assessing the outlook for the second half of 2023,” Keeping Current Matters Chief Economist George Ratiu said in a statement. “On the upside, even with interest rates more than double what they were at the start of 2022, the economy continues to expand as consumers – buoyed by jobs and rising wages – manage to spend more on goods and services.
“On the downside, the Federal Reserve has been clear that inflation is still hotter than desired, and additional rate hikes are on the table,” Ratiu continued. “Based on the central bank’s forward guidance, we can expect two more rate increases in the months ahead.”
Despite the continued pressure on interest rates, mortgage rates are still expected to drop near 6% by the end of 2023, Realtor.com Chief Economist Jiayi Xu said in a statement.
If you’re trying to find the best mortgage rate, it can help to shop around. Visit the Credible marketplace to compare options from different lenders at once without affecting your credit score.
MORE STUDENTS TURNING TO FEDERAL AND PRIVATE STUDENT LOANS TO FINANCE COLLEGE: SURVEY
Demand for affordability is driving the construction of more homes priced under $300,000, according to a report by Realtor.com. Early estimates in May indicate that homes within this price range constituted approximately 17% of total sales, marking the highest share since December 2021 (18%).
“Despite this encouraging news, there remains an urgent need for more homes at the most affordable price points, where the shortage of available inventory is most severe,” Xu said.
If you are ready to shop for a mortgage, you could get a better rate by looking at several lenders. Credible can help you compare interest rates from multiple mortgage lenders and choose the one with the best rate for you.
HOMEBUYERS ARE FINDING BETTER DEALS IN THESE CITIES, SURVEY SAYS
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Source: foxbusiness.com
Our experts answer readers’ home-buying questions and write unbiased product reviews (here’s how we assess mortgages). In some cases, we receive a commission from our partners; however, our opinions are our own.
Mortgage rates dropped modestly throughout June, but a spike at the end of the month put them back near where they were at the start of the month. Average 30-year mortgage rates ended June at 6.71%, just eight basis points below their June 1 level, according to Freddie Mac.
In spite of this recent volatility, rates could start trending down more permanently in July. But it all depends on how the latest economic data shakes out.
The still-overheated economy needs to slow somewhat for mortgage rates to come down. Though inflation has been decelerating for the past 11 months, it’s still above the Federal Reserve’s target rate of 2%. If inflation slows significantly this month and the labor market shows signs of cooling, mortgage rates could drop.
Mortgage type | Average rate today |
Real Estate on Zillow
Mortgage type | Average rate today |
Real Estate on Zillow
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The current average 30-year fixed mortgage rate is 6.71%, according to Freddie Mac. This is a slight increase from the previous week.
The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t change for the life of the loan.
The lengthy 30-year term allows you to spread out your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you’ll have a higher rate than you would with shorter terms or adjustable rates.
The average 15-year fixed mortgage rate is 6.06%, up three basis points from the prior week, according to Freddie Mac data.
If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you’ll have a higher monthly payment than you would with a longer term.
Mortgage rates started ticking up from historic lows in the second half of 2021 and increased over three percentage points in 2022. Though rates had initially been trending down this year, they’ve since ticked back up.
As inflation starts to come down, mortgage rates will recede somewhat as well. If we experience a recession, rates may drop a little faster. But average 30-year fixed rates will likely remain somewhere in the 6% to 7% range throughout 2023.
For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.
Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans.
The Federal Reserve has been increasing the federal funds rate this year to try to slow economic growth and get inflation under control. So far, inflation has slowed, but it’s still above the Fed’s 2% target rate.
Mortgage rates aren’t directly impacted by changes to the federal funds rate, but they often trend up or down ahead of Fed policy moves. This is because mortgage rates change based on investor demand for mortgage-backed securities, and this demand is often impacted by how investors expect Fed hikes to affect the broader economy.
As inflation starts to come down, mortgage rates should, too. But the Fed has indicated that it’s watching for sustained signs of slowing inflation.
Source: businessinsider.com
If you’ve used Zillow’s Marketplace to compare mortgage rates, you may have come across Sebonic Financial.
While they may be unfamiliar to you, they’re actually a dba of Cardinal Financial, which is a top-40 mortgage lender nationally.
So while they might not be as big or as recognizable as other mortgage lenders out there, they’re backed by one the largest mortgage lenders in the country.
You can read my Cardinal Financial review as well if you’re curious about them, but for quick reference, they’re a mortgage bank based out of Charlotte, NC that’s been around since 1987.
Sebonic says it’s a digital startup fueled by tech, new ideas, and fast execution, anchored by the resources of a well-established and experienced mortgage bank.
It’s unclear how long Sebonic Financial has been around, but I recall seeing them for years now, so I would assume nearly a decade or longer despite being known as a newcomer.
I also can’t tell you what the name Sebonic means, whether it’s a made-up word or a surname. I’d like to know the origin and will keep digging on that one.
However, they do appear to be licensed in all 50 states and DC thanks to their relationship with Cardinal Financial, which is a plus.
Additionally, they seem to be the more digitally-oriented division of Cardinal that deals mainly with borrowers looking to apply for a mortgage online, remotely.
So if that’s your thing, they could be a good choice for your mortgage needs, especially if their interest rates and lender fees are low.
Like Cardinal Financial, they offer a proprietary digital mortgage application known as Octane.
It allows you to start the loan process online and complete most things digitally, as opposed to having to fax or email documents.
You can also e-sign documents, scan and upload conditions, check loan progress at any time, and receive status updates as your loan makes its way to the finish line.
You’re able to call them up directly to get started as well, or alternatively request a free rate quote via their website.
Alternatively, you can use the loan officer directory on their website to select an originator to work with, then apply directly via their personal webpage.
As noted, you might also get started if using Zillow’s Marketplace to compare mortgage rates, at which point someone will contact you once you submit your loan request.
Sebonic Financial offers the full suite of loans programs on both home purchases and mortgage refinances.
You can also get a cash out refinance if you’re looking to tap your home equity.
You can get financing for a primary residence, second home, or investment property, including condos and townhomes and multi-unit properties.
In terms of loan type, you can get a conventional home loan backed by Fannie/Freddie, or a government-backed loan such as an FHA loan, USDA loan, or VA loan.
They also offer non-conforming stuff like jumbo loans up to $3 million loan amounts and an interest-only jumbo ARM.
You can get a fixed-rate mortgage such as a 30-year or 15-year fixed, or an adjustable-rate mortgage, such as a 5/1 or 7/1 ARM.
It’s unclear if they offer renovation or construction loans, such as the FHA 203k.
While they don’t advertise their mortgage rates on their own website, you can often see their daily rates via the Zillow Marketplace.
They seem to be a big advertiser/partner with Zillow, so if you search for mortgage rates via that platform, they’ll often pop up alongside other lenders.
From what I’ve seen personally, their mortgage rates were pretty competitive relative to other lenders on Zillow.
While perhaps not always the very lowest listed, they often advertise their rates with $1 lender fees, compared to other lenders typically charging $1,000 – $2,000.
So while you might see a rate an eighth higher than the cheapest lender listed, don’t forget to factor in the closing costs.
On Zillow, they’ve got a 4.49-star rating out of 5 based on more than 3,000 customer reviews.
That’s close to excellent, but there are some mixed reviews if you scroll through them.
Some past customers have complained about them not following up or communicating effectively, or even making contact to begin with.
But others have said they aren’t pushy and provide exceptionally responsive service – so your mileage may vary here.
As always, take the time to look at individual loan officer reviews to fine-tune who you ultimately work with for the absolutely best experience possible.
On SocialSurvey, they have a 4.62-star rating out of 5 based on more than 5,600 reviews, which is pretty consistent with their Zillow reviews.
While still very good, there are plenty of mortgage companies with even higher reviews on those sites.
There seems to be a consistency issue, with lots of customers very happy, and the occasional one seemingly dismayed.
This could be one of the drawbacks of working with an online mortgage lender without a physical presence.
The good news is their parent company Cardinal Financial is Better Business Bureau (BBB) accredited and has been since 2014.
They currently have an A+ BBB rating and a 4.25 out of 5-star rating based on roughly 200 customer reviews.
The Good
The Possible Bad
Source: thetruthaboutmortgage.com
LOS ANGELES — The average long-term U.S. mortgage rate rose this week, snapping a three-week pullback after reaching a high for the year in early June.
Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan rose to 6.71% from 6.67% last week. A year ago, the rate averaged 5.70%.
The increase brings the average rate back to where it was three weeks ago. On June 1, it averaged 6.79%, its highest level so far this year.
High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market that remains unaffordable to many Americans after years of soaring home prices and limited housing inventory.
The median monthly payment listed on applications for home purchase loans in May rose to $2,165, up 14.1% from a year ago and a 2.5% increase from April, the Mortgage Bankers Association said Thursday.
The average rate on a 30-year home loan is still more than double what it was two years ago, when the ultra-low rates spurred a wave of home sales and refinancing. The far higher rates now are contributing to the low level of available homes by discouraging homeowners who locked in those lower borrowing costs two years ago from selling.
The dearth of properties on the market is also a key reason home sales have been slow this year. Last month, sales of previously occupied U.S. homes were down 20.4% from as year earlier, marking 10 consecutive months of annual declines of 20% or more, according to the National Association of Realtors.
Low mortgage rates helped fuel the housing market for much of the past decade, easing the way for borrowers to finance ever-higher home prices. That trend began to reverse a little over a year ago, when the Federal Reserve began to hike its key short-term rate in a bid to slow the economy to lower inflation.
Global demand for U.S. Treasurys, which lenders use as a guide to pricing loans, investors’ expectations for future inflation and what the Fed does with interest rates influence rates on home loans.
All told, the Fed raised its benchmark rate 10 times, starting in March 2022. The central bank opted to forgo another increase at its meeting of policymakers earlier this month. Still, the Fed warned that it could raise interest rates two more times this year in its battle against inflation.
That open-ended approach has heightened uncertainty about the Fed’s next moves, which could lead to more volatile moves for mortgage rates.
The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, also rose this week, increasing to 6.06% from 6.03% last week. A year ago, it averaged 4.83%, Freddie Mac said.
Source: abcnews.go.com
A new online mortgage lender by the name of “Clara” looks to separate itself from the crowd by touting technology and transparency.
And from the looks of their website, they seem to be appealing to the youth. I might be joking a bit when I refer to them as a hipster mortgage lender, but that’s kind of what I take away when I peruse their site.
They highlight the fact that you can text, e-mail, call, or even video chat with your loan rep during the process.
Clara claims it can “help you finance your home in a modern, intuitive way,” and notes that they’re “powered by tech, supported by humans,” and “designed for you.”
So let’s see what makes Clara so special.
First and foremost, the so-called “loan specialists” at Clara do not get paid a commission. That means they’re available to help you, not steer you into a certain loan product or urge you to do something you aren’t sure you want to do. That’s the idea at least.
I looked at their mortgage rate quotes and they seem to charge a flat $1,000 loan origination fee regardless of loan amount or transaction type, such as refi or purchase. They offer cash out refis as well, but do not offer HELOCs.
They seem to pride themselves on being super transparent with loan pricing, showing you all the fees associated with your loan right on the quote page. You can choose between a lower interest rate with more fees out-of-pocket, or a slightly higher rate with a lender credit.
Either way, it’s all spelled out for you to see with your own eyes to help determine what’s best for your situation.
At the same time, they want to empower the borrower by offering some mortgage education, with explanations on things like LTV and mortgage insurance.
Clara has a page dedicated to their mission, which appears to be fixing the “broken” mortgage industry. We’ve heard this narrative before with the likes of Eave, Lenda, SoFi, and Quicken’s Rocket Mortgage.
But it always seems to be a case of oversimplifying what has become (or maybe always has been) a very regulated and bureaucratic process. Besides, people get upset when you make it too easy to get a mortgage…
As much as we’d all like to text the mortgage lender our details and receive our loan in 30 minutes or less, that’s just not going to be a reality anytime soon. I hope it is eventually, and maybe newcomers like Clara will get us there.
They do seem to have a very seasoned roster consisting of former employees from Yahoo, Google, Lyft, Twitter, Quicken Loans, Blackrock, the US Treasury, and even The White House. So they’ve certainly got the talent to make a difference.
Now let’s talk about what Clara offers aside from transparency and technology.
As noted, the company allows you to purchase a home or refinance an existing mortgage, including tapping home equity.
They say they specialize in conventional, conforming mortgages, which seems to include loan amounts above the traditional $417,000 loan limit.
You can get a fixed-rate mortgage, including a 30-year fixed, 25-year fixed, 20-year fixed, or 15-year fixed, or an ARM, including a 7/1 ARM, 5/1 ARM and 3/1 ARM.
I plugged in a $336,000 loan amount at 80% LTV for a rate and term refinance on a single-family, owner-occupied home for a borrower with excellent credit (720+) and it spit out the rates seen above.
Clara shows you the lender (and third-party) fees in detail as well, which is the transparency piece mentioned earlier.
The process begins when a quote is generated online. If you’re happy with what you see you can create a login, at which point you’ll be assigned a licensed loan specialist.
Their contact information will appear in the online loan portal on the Clara website and you’ll be able to keep track of the loan’s progress from there.
The standard documentation is required for a Clara mortgage just as it is any other mortgage, though I think they allow you to autofill forms and speed through the paperwork a lot faster with their tech platform in place.
That same technology should lower the cost of offering mortgages, meaning origination fees can be contained while also delivering competitive mortgage rates.
When it comes to rate locks, Clara has a default 45-day lock for purchases and a 60-day lock period for refinance transactions. It’s unclear what happens if you exceed these time periods.
While they don’t guarantee a specific time-to-close, they aim to fund loans on your timeline.
Clara also sells all the mortgages it originates, but stresses that it is not a mortgage broker. I guess that makes it a mortgage banker because all of their loan officers, processors, and underwriters are in-house at their San Francisco headquarters.
At the moment, Clara is only offering mortgages to California homeowners. But if things go well, there’s a good chance they’ll expand to other nearby states and eventually nationwide. So if you don’t reside in CA, stay tuned.
Update: Clara was acquired by SoFi in early 2018.
(photo: Manjo.)
Source: thetruthaboutmortgage.com
We made it to Friday once again. The good news for borrowers is that mortgage rates are improving right now. This makes right now a great time for anyone looking to purchase or refinance to lock in a rate. So give us a call or fill out our simple online form to get started. Read on for more details.
Well, we persevered through the week and arrived at Friday once more. The big news today in the market is the Employment Situation for March (a.k.a. the monthly jobs report).
This report is almost always once of the most influential reports every month, and this time around was no different. The headline reading in today’s report showed that 103,000 jobs were added to the U.S. economy in March.
That’s a big miss from the 175,000 that analysts had expected. It’s even below the low end range of 112,000. It’s not all bad, though, as average hourly earnings did hit the expected mark with a 0.3% monthly rise.
Most economists aren’t too troubled by the headline reading either, despite it being the lowest in six months. They see it as a one-off dip that isn’t reflective of the long-term trend.
Nevertheless, that isn’t stopping money from going out of stocks and into bonds, pushing down Treasury yields. The yield on the 10-year Treasury note is down about three basis points to 2.80% today.
Mortgage rates typically move in the same direction as the 10-year yield and are similarly a little lower as we head into the weekend. As we saw in the Freddie Mac Primary Mortgage Market Survey (PMMS) yesterday, rates improved for the second straight week this week.
Here are the numbers:
Here is what the Freddie Mac’s Economic and Housing Research Group had to say about rates this week:
“After dropping earlier this week on trade-related anxiety in financial markets, the benchmark 10-year Treasury stabilized on Wednesday, but at a level slightly lower than from the start of last week. Mortgage rates followed and fell for the second consecutive week; the U.S. weekly average 30-year fixed mortgage was 4.4 percent in our survey this week. Though rates on the 30-year fixed mortgage are up 0.3 percentage points from the same week a year ago, a robust labor marking is helping home purchase demand weather modestly higher rates. The Mortgage Bankers Association reported in their latest Weekly Mortgage Applications Survey that the Purchase Index was up 5 percent from a year ago indicating that this spring is on track for a modest expansion in purchase mortgage activity.”
With mortgage rates moving lower to end the week right now is a great time to lock in a rate on a purchase or refinance.
Long-term, rates are still expected to rise so borrowers who act now are likely going to get the better deal.
It only takes a few minutes with our online mortgage builder or a quick phone call to one of our loan experts to get started.
*Terms and conditions apply.
Source: totalmortgage.com
Fears over the coronavirus have struck fear into investors and rattled financial markets across the world. And with 103 confirmed cases in the U.S. as of Tuesday, there are worries that the near-pandemic will likely impact housing markets too.
So far, coronavirus fears have already resulted in mortgage rates falling, as investors are pulling money from stocks and putting it into safer U.S. Treasury bonds. And when bonds perform well, mortgage rates traditionally fall, realtor.com noted.
National
Association of Realtors Chief Economist Lawrence Yun told realtor.com
that while the coronavirus might affect sales in some markets, the
low mortgage rates are likely to entice more buyers and sellers.
“Mortgage
rates likely will fall to an all-time low, and buyers will want to
lock in, even with growing economic concerns,” Yun said. “But
expect far fewer international buyers because of travel concerns.”
However,
others said the situation with the stock market is a concern.
“People
don’t make big decisions in a vacuum, and buying a home is a big
one,” said Danielle Hale, realtor.com’s chief economist. “If
the stock market is flashing a sign that an economic slowdown is on
the way, that’s when Main Street will feel it. And it could lead to
a slowdown in home sales.”
The
most vulnerable segment of the market could be the luxury home
sector, as wealthier buyers tend to have more money invested in
stocks. And if they’re feeling less wealthy, that makes them less
likely to splurge on a new home, Hale said.
Still,
the shortfall of wealthy and foreign buyers could be made up by those
who’re enticed by the lower mortgage rates. Last week, the NAR
reported that contract signings in January were up 5.2% compared to
the month before, and up 5.7% from a year ago. The 30-year fixed-rate
mortgage fell to 3.45% last Thursday, Freddie Mac reported.
“Buyers
right now are trying to juggle whether or not they should jump in
when mortgage rates are this low,” said Ali Wolf, director of
economic research at Meyers Research. “What looks like a home
that’s out of reach may actually be very affordable on a monthly
payment schedule.”
Low
mortgage rates could cause a boost in home sales in the short term,
Hale said, but it depends on how much the virus continues to spread
in the U.S.
“At
the very least, the coronavirus could cause some people to put home
sales on hold,” Hale said.
Source: realtybiznews.com
The average 30-year-fixed mortgage rate averaged 3.89% for the week ending Feb. 24, down three basis points from the prior week, according to Freddie Mac‘s latest mortgage survey.
“Even with this week’s decline, mortgage rates have increased more than a full percent over the last six months,” said Sam Khater, Freddie Mac’s chief economist. “Overall economic growth remains strong, but rising inflation is already impacting consumer sentiment, which has markedly declined in recent months. As we enter the spring homebuying season with higher mortgage rates and continued low inventory, we expect home price growth to remain firm before cooling off later this year.”
At this time last year, the 30-year fixed-rate mortgage averaged 2.97% and originators were pumping out near-record volume, largely due to the strength of refinancings. Today, refis have mostly dried up and originators are desperately slashing costs to rescue falling margins.
Mortgage rates typically move in concert with the 10-year Treasury yield, which notched 1.94% on Wednesday, down from 2.03% the prior week. The 15-year-fixed-rate mortgage averaged 3.15% last week, up from 2.93% the week prior. A year ago at this time, it averaged 2.21%.
Mortgage applications decreased 13.1% for the week ending Feb. 18 to the lowest level since December 2019, as mortgage rates eclipsed the 4% mark.
The Mortgage Bankers Association‘s seasonally adjusted refi index fell 15.6% from the previous week, bringing its share of total applications to almost equal the purchases share at 50%. Meanwhile, the purchase index dropped 10.1%, falling again for the third straight week.
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Compared to the same week one year ago, mortgage apps overall dropped 41%, with a sharp decline in refi (-56.4%) compared to purchase (-5.4%). The survey, conducted weekly since 1990, covers over 75% of all U.S. retail residential mortgage applications.
Economists had predicted rates would gradually increase in 2022 as the overall economy stabilized – but would still be below 4% for much of the year. However, rates rose faster than expected.
Rates, however, could quickly head in the other direction given Russia’s invasion of Ukraine this week.
“Bad news for the general economy is paradoxically good for the housing market in so far as rates would decline,” Len Kiefer, deputy chief economist of Freddie Mac, told HousingWire last week.
Source: housingwire.com
Mortgage applications increased 12% from the previous week due to a surprising uptick in demand for “refis” as borrowers try to secure a lower rate, according to the Mortgage Bankers Association (MBA) survey for the week ending Jan. 28.
The seasonally adjusted Refinance Index rose 18.4% in the same period. Meanwhile, the Purchase Index increased 4%.
Compared to the same week one year ago, mortgage apps overall dropped 37%, with a sharp decline in refinance (-50.4%) compared to purchase (-6.7%).
According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, mortgage rates continued to climb, with the 30-year fixed rate rising for the sixth consecutive week to its highest level since March 2020.
The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased to 3.75% from 3.72% the week prior. For jumbo mortgage loans (greater than $647,200), rates climbed to 3.59% from 3.56% the week prior.
“Despite the increase in rates, refinance applications were up 18%, driven mainly by a 22% jump in conventional applications,” Kan said in a statement. “There has likely been some recent volatility in application counts due to holiday-impacted weeks, as well as from borrowers trying to secure a refinance before rates go even higher.”
How lenders can continue to serve borrowers despite housing affordability challenges
Potential borrowers who’ve been priced out of the housing market need to be able to compete with an increasingly growing share of cash buyers and investors who are beating them in bidding wars.
Regarding purchases applications, the average loan size hit a new record level at $441,100. “Stubbornly low inventory levels and swift home-price growth continue to push average loan sizes higher,” Kan said.
The survey showed that the refinance share of mortgage activity increased to 57.3% of total applications last week, from 55.8% the previous week. The VA apps dropped to 9.1% from 9.9% in the same period.
The FHA share of total applications decreased to 7.7% from 8.6% the prior week Meanwhile, the adjustable-rate mortgage share of activity increased from 4.4% of total applications to 4.5%. The USDA share of total applications went from 0.5% to 0.4%.
Source: housingwire.com
Mortgage applications decreased 5.4% for the week ending Feb. 11, reflecting what the mortgage market looks like when rates eclipse 4% for the first time since 2019.
The Mortgage Bankers Association‘s seasonally adjusted refi index fell 8.9% from the previous week, bringing its share of total applications to the lowest level in 19 months. Meanwhile, the purchase index dropped a mere 1.2%.
Compared to the same week one year ago, mortgage apps overall dropped 39.8%, with a sharp decline in refi (-54.1%) compared to purchase (-6.8%). The survey, conducted weekly since 1990, covers over 75% of all U.S. retail residential mortgage applications.
According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, an unrelenting inflationary pressure increased market expectations of more aggressive policy moves by the Federal Reserve. It moved Treasury yields and, consequently, mortgage rates higher.
The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased to 4.05% from 3.83% the week prior, above the 4% mark for the first time since 2019. For jumbo mortgage loans (greater than $647,200), rates climbed to 3.81% from 3.62% the week prior.
The keys to lending in a post-refi boom world
As record refinance volumes disappear, lenders need to get intimately familiar with their database of customers. Being a resource for all real estate financing needs for your customers will become more important in the next few years than ever before.
“Consistent with this period of higher mortgage rates, refinance applications fell 9% last week and stood at around half of last year’s pace. The refinance share of applications was also at its lowest level since July 2019,” Kan said.
The survey showed that the refi share of mortgage activity decreased to 52.8% of total applications last week, from 56.2% the previous week. The VA apps fell to 9.3% from 10% in the same period.
The FHA share of total applications increased to 8.3% from 8% the prior week. Meanwhile, the adjustable-rate mortgage share of activity increased from 4.5% to 5% and the USDA held steady at 0.4%.
Regarding purchases applications, the modest decline over the week was mainly due to the fall in government purchase applications. “Prospective buyers still face elevated sales prices in addition to higher mortgage rates. The heavier mix of conventional applications again contributed to another record average loan size at $453,000.”
Economists had predicted rates would rise in 2022 as the overall economy stabilized, reducing mortgage applications.
For the coming weeks, Kan told HousingWire that If conditions stay in the current state, we’ll certainly see higher rates. However, rates could quickly head in the other direction, “if something abroad rocks the boat,” such as an armed conflict with Russia and Ukraine, an emergent Covid variant, or a sudden change in certain commodity prices.
Source: housingwire.com