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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).
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Source: finance.yahoo.com
The last quarter of 2023 saw a noticeable uptick in mortgage delinquencies, signaling a shift in the housing finance landscape, as revealed in the Mortgage Bankers Association’s (MBA) latest findings. The rate of delinquencies for loans on one-to-four-unit residential properties rose to 3.88% of all loans outstanding, showing a modest increase from the third quarter … [Read more…]
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
High mortgage rates and harsh weather are pushing down home sales, but some house hunters are touring and getting a feel for the market.
The bumpy start to 2024’s housing market continues, with daily average mortgage rates posting their biggest one-day increase in over a year on February 2. The jump came after a hotter-than-expected January jobs report and the Fed’s confirmation that they’re unlikely to cut interest rates in the next two months, which means mortgage rates will probably remain elevated near their current level for at least that long.
Rising home prices are exacerbating rising rates, with the typical monthly mortgage payment just about $100 shy of October’s all-time high. The median U.S. sale price rose 5.4% year over year during the four weeks ending February 4, the biggest increase in over a year. High housing costs are pricing out many would-be homebuyers; pending sales are down 8%, the biggest decline in four months. There are also a few other contributors to sales falling: Harsh winter weather in the first half of January delayed a lot of homebuying deals, and pending sales were improving at this time last year as mortgage rates temporarily dropped.
Still, some house hunters are at least getting a feel for the market. Redfin’s Homebuyer Demand Index–a seasonally adjusted measure of requests for tours and other buying services from Redfin agents–has steadily risen since mid-January, and a separate measure of home tours shows they’ve increased 16% since the start of the year, compared with a 10% rise at this time last year. Some sellers are jumping in, too, with new listings up 7% year over year.
“We’re seeing a bit of recovery with house hunters touring homes, but even demand at the earliest stages isn’t up as much as we would expect at this time of year,” said Chen Zhao, Redfin’s economic research lead. “That’s because mortgage rates are climbing again and winter weather has been harsher than usual in much of the country, keeping some house hunters at home.”
Luis Rojas, a Redfin Premier agent in the Viera West, FL area, said today’s housing market is touch and go. “High mortgage rates brought the local market to a near-standstill from August through November, activity picked up when rates dropped a bit in mid-December, and now it’s slowing down again as rates rise,” Rojas said. “I’m advising buyers–especially first-timers–that the mortgage rates they see in the news aren’t the be-all and end-all. Some local lenders are willing to give rates in the 5% range for new construction projects because any business is better than no business.”
Indicators of homebuying demand and activity | ||||
Value (if applicable) | Recent change | Year-over-year change | Source | |
Daily average 30-year fixed mortgage rate | 6.92% (Feb. 7) | Up from 6.75% a week earlier | Up from 6.39% | Mortgage News Daily |
Weekly average 30-year fixed mortgage rate | 6.63% (week ending Feb. 1) | Near lowest level since May | Up from 6.09% | Freddie Mac |
Mortgage-purchase applications (seasonally adjusted) | Down 1% from a week earlier; up 3% from a month earlier (as of week ending Feb. 2) | Down 19% | Mortgage Bankers Association | |
Redfin Homebuyer Demand Index (seasonally adjusted) | Up slightly from a week earlier, but down 7% from a month earlier (as of week ending Feb. 4) | Down 14% | Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents | |
Google searches for “home for sale” | Down 2% from a month earlier (as of Feb. 3) | Down 16% | Google Trends | |
Touring activity | Up 16% from the start of the year (as of Feb. 6) | At this time last year, it was up 10% from the start of 2023 | ShowingTime, a home touring technology company |
U.S. highlights: Four weeks ending February 4, 2024
Redfin’s national metrics include data from 400+ U.S. metro areas, and is based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015. Subject to revision. |
|||
Four weeks ending February 4, 2024 | Year-over-year change | Notes | |
Median sale price | $361,498 | 5.4% | Biggest increase since Oct. 2022 |
Median asking price | $395,949 | 7% | Biggest increase since Sept. 2022 |
Median monthly mortgage payment | $2,607 at a 6.63% mortgage rate | 11.5% | Down roughly $110 from all-time high set in October 2023, but up roughly $250 from the four weeks ending Dec. 31 |
Pending sales | 68,872 | -7.8% | Biggest decline since October 2023 |
New listings | 70,415 | 6.6% | |
Active listings | 740,834 | -3.5% | |
Months of supply | 4.2 months | Unchanged | 4 to 5 months of supply is considered balanced, with a lower number indicating seller’s market conditions. |
Share of homes off market in two weeks | 33.3% | Up from 32% | |
Median days on market | 48 | -2 days | |
Share of homes sold above list price | 22.4% | Up from 20% | |
Share of homes with a price drop | 5.5% | +1 pt. | |
Average sale-to-list price ratio | 98.2% | +0.5 pts. |
Metro-level highlights: Four weeks ending February 4, 2024 Redfin’s metro-level data includes the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy. |
|||
---|---|---|---|
Metros with biggest year-over-year increases | Metros with biggest year-over-year decreases | Notes | |
Median sale price |
Miami (13.4%) Anaheim, CA (13.4%) Detroit (13.3%) Warren, MI (12.1%) Chicago (11.3%) |
San Antonio, TX (-4.7%) Austin, TX (-3.7%) |
Declined in 2 metros |
Pending sales | San Jose, CA (13.8%)
San Francisco, CA (6%) Anaheim, CA (4.5%) Riverside, CA (0.4%) Columbus, OH (0.2%) |
San Antonio, TX (-33.2%)
Portland, OR (-30.2%) Nashville, TN (-21.5%) New Brunswick, TN (-19.4%) Houston (-18.5%) |
Increased in 5 metros |
New listings | Dallas, TX (27.1%)
Miami (26.9%) Jacksonville, FL (26.3%) Fort Lauderdale, FL (23.6%) San Diego, CA (22.1%) |
Chicago (-17.8%)
Atlanta (-16%) Milwaukee, WI (-14%) Portland, OR (-13.6%) Nashville, TN (-10.4%) |
Declined in 14 metros |
Refer to our metrics definition page for explanations of all the metrics used in this report.
Source: redfin.com
This week, Mortgage Cadence announced that it had appointed longtime reverse mortgage industry professional George Morales to serve on its sales team. The company is aiming to bring more reverse mortgage technology solutions to potential partners already in the industry and those that have yet to enter it.
To understand the dynamics of his new role, RMD sat down with Morales to learn more about his individual and company goals, including the potential for a large national bank to become involved in the reverse mortgage business for the first time since the early 2010s.
Editor’s note: This Q&A has been edited and condensed for clarity.
George Morales: My new role is really designed to bring reverse mortgage insights and perspectives to the company. They already have some pretty key people here already who’ve been in reverse for a while, but they needed to broaden and expand that. So, the new role is going from the product management side to the sales side of the business. It’s an interesting role, because I feel like the opportunity for me is to be a “door-opener,” if you will.
I’m standing in a place where I’ve got all this reverse experience, but I’ve also got a lot of forward experience, [having] been in the mortgage industry since 1999. The reverse experience is particularly interesting right now, because we’re seeing traditional forward mortgage companies really starting to come around on the reverse product a little more than we’ve seen in a while. And so for me, I feel like it’s an opportunity to kind of open the door via technology, to how and what is happening in the reverse space.
Morales: We’re in some talks with reverse-only companies that are out there, who are starting to look into expanding into the forward world. That one’s a little more unusual, since we’re normally used to having people “kick the tires” of the reverse business. The whole idea is to just broaden distribution.
I’m part of the Mortgage Bankers Association (MBA) MISMO work group for reverse, where we’re working on creating some MISMO standards that will apply to reverse. Again, the same goal is to broaden distribution of the reverse mortgage products to anybody who wants it out there. That means that data can be exchanged within technology that’s usable in both forward and reverse. That would be pretty cool to be able to see that data transmitted.
Mortgage Cadence is a great spot for me because it provides that platform where you can do forward and reverse on the exact same tech stack. You don’t really need a forward LOS and then a separate reverse LOS to do both; you can do it all in one space.
There’s a reason that we haven’t gone past that 2% penetration rate in the reverse mortgage industry, and part of that is because we tend to huddle in [with ourselves]. And all these endeavors that I get to be a part of are a lot about cracking that open, inviting the forward lender community into the space, while at the same time providing the reverse folks another outlet into the forward space.
Morales: Technology has been a cool way to have those discussions. I can’t say whom yet, but we’re in very, very early stages [of discussion] with a large U.S. national bank, a large bank [that is considering entering] reverse. We’re very early on, but the key for them is to be able to originate [the mortgages] that they do already, and then add reverse without having to make reverse a separate business, per se.
They were looking at making reverse a product that they want to integrate, and how do you do that? You’ve got to have the right technology partner, which I think is why our discussions have gotten off the ground. That would be a big benefit for the reverse industry to have a national banking brand’s marketing, advertising and reach. Talk about broader distribution —that’s going to really help, and hopefully that could invite other big banks and IMBs to get back into reverse as well.
My role as a salesperson is interesting. Sales is an interesting word because my goal at the company is obviously to get some new deals — that’s the bottom line. But in doing that, it’s a lot about having the reverse side and the forward side, liaising between the two in that conversation, and getting us to finally broaden that reach that we haven’t been able to in reverse for a while.
Morales: No. It would be brand-new blood and brand-new investment. The macroeconomic situation is starting to shift slowly, so that’s signaling to some folks [that they may want to consider] reinvestment. Technology is one spot, but [they may want to] reinvest in different products (e.g., reverse) as well.
Currently, we’re the LOS system of record for Finance of America Reverse (FAR)/American Advisors Group (AAG), the largest reverse lender in the U.S. A large percentage of all reverse mortgages are currently on our platform, so that helps the new players to understand that if they’re going to enter into a new market, this being reverse, and especially a big bank that may have a lot of concerns about information security, they want to make sure that we already know what we’re doing in both forward and reverse.
Source: housingwire.com
Mortgage delinquencies kept rising slightly in the fourth quarter of 2023 as Americans continued to indulge in personal spending. But delinquency rates remain well below historic averages, according to new data from the Mortgage Bankers Association (MBA).
Delinquent home loans on one- to four-unit properties rose to a seasonally adjusted rate of 3.88% of all loans outstanding at the end of Q4 2023, up from 3.62% in the previous quarter but slightly below the rate of 3.96% a year earlier, according to MBA’s National Delinquency Survey.
The historic average for the seasonally adjusted mortgage delinquency rate from 1979 through 2023 is 5.25%.
“Mortgage delinquencies increased across all product types for the second consecutive quarter,” Marina Walsh, MBA’s vice president of industry analysis, said in a statement.
“While the overall delinquency rate is still very low compared to the historical average, the pace of new loans entering delinquency picked up and some loans moved into later stages of delinquency. The resumption of student loan payments, robust personal spending, and rising balances on credit cards and other forms of consumer debt, paired with declining savings rates, are likely behind some borrowers falling behind at the end of 2023.”
The 30-day delinquency rate increased by 7 basis points (bps) between the third and fourth quarters to 2.10%. The 60-day delinquency rate increased to 0.73%, up from 0.62% in Q3, while the 90-day rate increased to 1.05%, up from 0.98%.
By loan type, the delinquency rate for conventional loans reached 2.61%, up from 2.5% in the previous quarter. The Federal Housing Administration (FHA) delinquency rate recorded a larger jump to 10.81%, up from 9.5%, the highest level since the third quarter of 2021. And the past-due rate for U.S. Department of Veterans Affairs (VA) loans rose to 4.07%, up from 3.76%.
Additionally, the percentage of loans in the foreclosure process decreased to 0.47%, down 2 bps from the prior quarter and down 10 bps year over year. This is the lowest foreclosure inventory rate since the fourth quarter of 2021.
Last Friday, the January jobs report showed that the national economy added 353,000 new jobs, exceeding the monthly average of 255,000 new jobs per month in 2023. But any weakening in employment conditions would likely lead to further increases in mortgage delinquencies in the coming quarters, Walsh added.
Louisiana, West Virginia, Illinois, Texas and New Mexico posted the largest quarterly increases in their overall mortgage delinquency rates.
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