Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Mortgage applications for new homes surged in January as a lack of existing homes continued to fuel the demand for new construction.
Mortgage applications for new home purchases rose 19.1% in January on a year-over-year basis, the 12th consecutive month with an annual increase. Applications were up 38% from the previous month, according to the Mortgage Bankers Association (MBA) Builder Application Survey for January.
According to MBA estimates, new single-family home sales were at a seasonally adjusted annual rate of 700,000 units in January, the highest pace since October 2023. The pace was up 16.9% from December’s rate of 599,000 units.
“Applications for new home purchases were strong in January, as newly built homes remained an attractive option for prospective homebuyers who looked to take advantage of lower mortgage rates during the month,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
In January, conventional loans accounted for 64.5% of loan applications for new homes. Federal Housing Administration (FHA) loans accounted for 24.8% of applications, U.S. Department of Veteran Affairs (VA) loans took a 10.3% share and U.S. Department of Agriculture (USDA) loans accounted for 0.4%.
The average loan size for new homes decreased to $401,282 in January, down from $405,368 in December.
Homebuilders are feeling optimistic about the spring buying season. Homebuilder confidence shot up to a five-month high in February, according to the National Association of Home Builders’ most recent survey.
MBA’s survey tracks new home mortgage application volume from mortgage subsidiaries of homebuilders across the country.
Source: housingwire.com
Mortgage demand was weaker last week as interest rates moved higher across the board.
Mortgage applications decreased by 2.3% on a seasonally adjusted basis during the week ending Feb. 9, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.
“Purchase applications remained subdued as elevated rates continue to add to affordability challenges along with still-low existing housing inventory,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “Refinance applications declined and remained depressed, with rates still higher than a year ago.”
Purchase applications decreased by 3% from one week earlier on a seasonally adjusted basis, while refinance applications fell by 2% in the same period. Last week, refis comprised 34.2% of all applications, down from 35.4% the previous week.
The 30-year fixed-rate mortgage averaged 6.64% as of Feb. 8, according to Freddie Mac’s Primary Mortgage Market Survey.
The MBA survey shows that the average mortgage rate for 30-year fixed loans with conforming balances ($766,550 or less) increased to 6.87%, up from 6.80% the week before. Meanwhile, rates on jumbo loans (greater than $766,550) increased to 7%, up from 6.88%.
The Federal Housing Administration’s (FHA) share of total applications increased to 13.4% last week, down from 13.1% the week prior. The U.S. Department of Veterans Affairs (VA) share declined to 13.1%, down from 14.1% the week before. The U.S. Department of Agriculture (USDA) share remained unchanged at 0.4%.
The MBA survey, conducted weekly since 1990, covers more than 75% of all U.S. retail residential mortgage applications.
Source: housingwire.com
The US housing market should experience a warm return this spring, thanks to calming economic data.
The average rate for a 30-year loan declined to 6.63% from 6.69% the week prior, according to Freddie Mac on Thursday. Mortgage rates dropped for the second time in 2024 and are expected to retreat further as inflation moderates, which could help spark a housing rebound.
As most indicators point to interest rate cuts this coming year, housing experts are predicting a busier spring buying season starting in the next couple of months as more supply and demand return to the housing market thanks to the mortgage rate drop.
“So long as core inflation and economic activity continue to moderate, mortgage rates aren’t expected to rise further,” said Orphe Divounguy, senior macroeconomist at Zillow. “If layoffs remain low, and mortgage rates ease, housing market activity should rebound modestly this spring — meaning more listings coming on the market and more sales.”
Read more: Mortgage rates below 7% — is this a good time to buy a house?
Mortgage applications fall
The likelihood of a bustling spring housing market will depend heavily on where mortgage rates head next. Homebuyers have proven again they are rate-sensitive amidst today’s elevated home prices. After last week’s slight rate increase, the volume of mortgage application activity retracted 7.2% on a weekly basis, according to an application survey tracked by the Mortgage Bankers Association (MBA) for the week ending Jan. 26.
“Low existing housing supply is limiting options for prospective buyers and is keeping home price growth elevated, resulting in a one-two punch that continues to constrain home purchase activity,” said Joel Kan, MBA’s deputy chief economist.
Affordability challenges also worsened due to last week’s rate bump. The average loan size for purchase applications increased to $444,100, the largest since May 2022, according to the MBA.
Low application rates and hardship don’t mean homebuyers have disappeared, though. Redfin’s Homebuyer Demand Index — measuring buyers’ requests for home tours and other buying services on Redfin — showed that interest increased 6% over the last seven days in the week ending Jan. 28.
“I believe this year’s market will launch in the spring, once 6% rates are even more entrenched in buyers’ psyches, and more homeowners list their houses,” said Hal Bennett, a Redfin Premier agent.
Wall Street banks and industry experts expect cuts. Wells Fargo said in its 2024 annual outlook that the economy will moderate by mid-2024, prompting the Fed to cut rates by 225 basis points by early 2025. Housing experts at Fannie Mae are predicting mortgage rates will decline below 6% by the end of 2024, leveling off at about 5.8%.
During yesterday’s Federal Open Market Committee meeting, the Fed announced it is keeping its benchmark rate steady in an effort to suppress inflation to 2%. Even so, Fed Chair Jerome Powell expressed optimism that rates have peaked and a cut could come soon. But any drop is not a guarantee.
“Inflation is still too high, ongoing progress in bringing it down is not assured, and the path forward is uncertain,” Powell said during the FOMC conference.
Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards
The latest Personal Consumption Expenditures (PCE) index — the Fed’s preferred inflation measurement — increased 2.6% annually in December, falling below 3% for the first time since March 2021. More importantly, though, is that an annualized PCE using data from the prior three to six months is now below 2%.
“The lower inflation readings over the second half of last year are welcome,” Powell added, “but we will need to see continuing evidence to build confidence that inflation is moving down sustainably toward our goal.”
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more
Read the latest financial and business news from Yahoo Finance
Source: finance.yahoo.com
The availability of mortgage credit increased in January, according to a report issued by the Mortgage Bankers Association (MBA) based on data sourced from ICE Mortgage Technology.
The MBA’s Mortgage Credit Availability Index (MCAI) increased in January to 92.7, or by 0.7% over December’s figure, based on initial benchmarking of the index to 100 in 2012. Rising figures indicate that credit standards are loosening, while tightened conditions are occurring when the MCAI trends downward.
The MCAI for conventional loans increased by 1.3% while the index for government loans stayed flat compared to December, the MBA explained in its data release. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 1.9% and the Conforming MCAI rose by 0.2%
The modest increase in mortgage credit availability stems from a greater number of conventional loan offerings, according to MBA senior vice president and deputy chief economist Joel Kan.
“However, overall credit availability remained close to 2012 lows, and the conventional index was close to its record low in the series dating back to 2011,” he said.
There are still other active headwinds to monitor despite the rise in these programs, however.
“Even though there was an increase in cash-out refinance programs available, credit supply overall is tight,” Kan explained. “The challenging lending environment has pushed many lenders to reduce costs by cutting back on certain aspects of their business, including exiting origination channels, which has contributed to lower credit supply.”
Source: housingwire.com
Refinancing activity rebounded for the week ending February 2 after declining the previous week, as mortgage rates stabilize in the under-7 percent level, contributing to a rise in home loans application, the Mortgage Bankers Association (MBA) said on Wednesday.
The Refinance Index jumped 12 percent from the week before February and also rose by a percent compared to one year ago, according to MBA. Meanwhile, mortgage applications jumped by nearly 4 percent in the same time span.
The average cost of a 30-year fixed rate mortgage for a loan of $766,550 ticked up slightly to 6.80 percent compared to 6.78 the previous week.
“Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market,” Joel Kan, MBA’s deputy chief economist, said in a statement shared with Newsweek. “Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates.”
Mortgage rates peaked at about 8 percent in the fall of 2023, making the cost of a home loan the highest it had been since the turn of the century. The elevated rate environment discouraged both buyers and sellers to step into the housing market who were reluctant to incur higher monthly payments of their housing loan.
Part of the reason rates jumped so high was due to the Federal Reserve’s hiking of its funds rate to battle soaring inflation. The rise in prices is cooling giving confidence that policymakers will slash rates but a strong jobs market is creating uncertainty on how quickly those cuts will happen.
But to begin the year, there is evidence that buyers are showing interest in dipping into the housing market, according to real estate platform Redfin, as rates have fallen over the last few weeks.
Redfin’s Homebuyer Demand Index, which tracks requests for tours, went up 6 percent for the week ending January 28, the platform said. Real estate agents say, however, that that increase in interest has yet to translate to a substantial jump in sales.
MBA experts are seeing a similar bubbling up of buyer interest.
“Purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply,” MBA’s Kan said.
Supply of homes is a huge challenge for the housing market. Housing economists have told Newsweek in the past that the market is 4 million homes short of demand, contributing to a jump in prices.
Some economists suggest that as mortgage rates fall, the used homes market may pick-up as sellers would begin to come out of the sidelines and finally put their homes in the market.
“Once they start moving, and I suspect we’ll see more and more of those folks moving in the coming year, they’ll have to become somewhat aggressive on pricing, they’re going to have to lower their price,” Mark Zandi, chief economist at Moody’s Analytics, told Newsweek last week.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
Mortgage application volume rose modestly during the week as mortgage rates marked time. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, increased 3.7 percent on a seasonally adjusted basis compared to the previous period, a week in which the data contained an adjustment to account for the MLK holiday. On an unadjusted basis, the Index increased 8.0 percent week-over-week.
The Refinance Index gained 12.0 percent from the previous week and was 1.0 percent higher than the same week in 2023. Refinancing accounted for 35.4 percent of the week’s volume, up from 34.2 percent the previous week.
The seasonally adjusted Purchase Index ticked down 1.0 percent and was 6.0 percent higher before adjustment. Volume was 19 percent below its level during the same week one year ago.
“Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market. The 30-year fixed mortgage rate was 6.8 percent, a slight increase from last week,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates. However, purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply.”
Other Data from MBA’s Weekly Mortgage Applications Survey
Source: mortgagenewsdaily.com
Mark your calendars for the ultimate real estate experiences with Inman’s upcoming events! Dive into the future at Connect Miami, immerse in luxury at Luxury Connect, and converge with industry leaders at Inman Connect Las Vegas. Discover more and join the industry’s best at inman.com/events.
Homebuyer demand for mortgages fell for the second week in a row last week as firming rates put a damper on the surge in mortgage applications seen in January, a weekly survey of lenders by the Mortgage Bankers Association (MBA) shows.
The MBA’s Weekly Mortgage Applications Survey showed applications for purchase loans fell by a seasonally adjusted 1 percent last week when compared to the week before and were down 19 percent from a year ago. Requests to refinance were up 12 percent week over week but only 1 percent from a year ago.
“Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market,” MBA Deputy Chief Economist Joel Kan said in a statement.
At 6.68 percent Tuesday, rates on 30-year fixed-rate conforming mortgages were up 12 basis points from a recent low of 6.56 percent registered on Dec. 27, according to loan lock data collected by Optimal Blue.
That’s still a 1.15 percentage point drop from last year’s peak of 7.83 percent, seen on Oct. 25. However, a record number of Americans polled by Fannie Mae in January — many of whom have been priced out of markets where listings remain scarce — said they’re expecting mortgage rates to come down even more in the year ahead.
“Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates,” Kan said. “Purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply.”
Applications for purchase mortgages picked up during the first three weeks of January after rates pulled back from 2023 highs. But with mortgage rates now slightly higher than they were at the end of the year, the MBA’s surveys show demand for purchase loans contracting during the weeks ending Jan. 26 and Feb. 2.
Bond market investors’ bets that the Federal Reserve would begin cutting rates in March had been helping bring rates down. But at the central bank’s first meeting of the year, Fed Chairman Jerome Powell warned that a March rate cut was unlikely, and Fed policymakers indicated they intend to continue “quantitative tightening” that’s trimmed $1.3 trillion from the Fed’s balance sheet.
A blowout jobs report released Feb. 2 seemed to validate the Fed’s cautious approach to fighting inflation, showing U.S. businesses and government agencies added close to twice as many jobs as expected in January.
(A survey by the National Federation of Independent Business (NFIB) that’s considered to be a leading indicator of future employment trends points to slower job growth in the second quarter of this year, economists at Pantheon Macroeconomics said Tuesday in a note to clients.)
In an interview with the CBS News program 60 Minutes that aired Sunday, Powell reiterated that while almost all 19 members of the Federal Open Market Committee expect to cut rates this year, the first cut isn’t likely to come until the middle of the year.
Inflation “has been falling steadily for 11 months,” 60 Minutes reporter Scott Pelley pointed out to Powell. “You’ve avoided a recession. Why not cut the rates now?”
Powell said that with the economy still on strong footing, “we feel like we can approach the question of when to begin to reduce interest rates carefully.”
The Fed wants to see “more evidence that inflation is moving sustainably down to 2 percent,” Powell said. “We have some confidence in that. Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”
At 7.29 percent, rates on jumbo mortgages that exceed Fannie Mae and Freddie Mac’s $766,550 conforming loan limit are up 73 basis points from a recent low of 6.56 percent registered by Optimal Blue on Dec. 29.
The growing “spread” between conforming and jumbo mortgage rates coincides with renewed worries that falling commercial real estate values could lead to problems for regional banks that have traditionally been a leading provider of jumbo loans.
Asked by 60 Minutes about the likelihood of real estate sparking a banking crisis on the magnitude of the 2008 financial crisis, Powell said he doesn’t think that’s likely.
“We’ve looked at the larger banks’ balance sheets, and it appears to be a manageable problem,” Powell said. “There are some smaller and regional banks that have concentrated exposures in these areas that are challenged. And, you know, we’re working with them.”
While he doesn’t see a repeat of the 2008 financial crisis, Powell does expect “there will be some banks that have to be closed or merged out of existence because of this. That’ll be smaller banks, I suspect, for the most part.”
Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.
Email Matt Carter
Source: inman.com
“Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market. The 30-year fixed-mortgage rate was 6.8%, a slight increase from last week,” MBA deputy chief economist Joel Kan said in the report. Kan noted that … [Read more…]