Mortgage rates pushed further into the 7% range as the Federal Reserve seems unlikely to reverse its restrictive policy stance anytime soon, according to Freddie Mac.

The average 30-year fixed-rate mortgage was 7.22% for the week ending May 2, according to Freddie Mac’s latest Primary Mortgage Market Survey. That’s an increase from the previous week when it averaged 7.17%. A year ago, the 30-year fixed-rate mortgage averaged 6.39%. 

The average rate for a 15-year mortgage was 6.47%, up from 6.44% last week and up from  5.76% last year.

On Wednesday, the Fed announced it would maintain the federal funds rate at 5.25% to 5.5%, where rates have held steady since last July. Fed officials have said in past meetings that they anticipated rate cuts for 2024 but need more confidence that inflation is heading toward the 2% target rate. Fed Chair Jerome Powell reiterated this sentiment on Wednesday and said it would likely take longer for the central bank to gain this confidence when speaking with reporters.

The delay in rate cuts means mortgage rates will likely stay high longer. With no ease in sight, affordability will continue to be a challenge for homebuyers, who also contend with high home prices. 

“The 30-year fixed-rate mortgage increased for the fifth consecutive week as we enter the heart of Spring Homebuying Season,” Freddie Mac’s Chief Economist Sam Khater said. “On average, more than one-third of home sales for the entire year occur between March and June. With two months left of this historically busy period, potential homebuyers will likely not see relief from rising rates anytime soon.”

If you are ready to shop for the best rate on a new mortgage, consider visiting an online marketplace like Credible to compare rates and get preapproved with multiple lenders at once.

BUY A HOME IN THESE STATES TO GET STUDENT LOAN DEBT RELIEF

How higher rates are impacting housing

Homebuyers are looking for ways to lower their costs as high mortgage rates persist. Recently, there have been an increase in proptech solutions, down payment assistance and even rate buydowns, Percy.AI Founder and CEO Charles Williams said. 

“Homebuyers are looking to use whatever incentives they can score,” Williams said. “We expect some of these initiatives to remain even after rates start heading down meaningfully, which is unlikely this year.”

Buyers have also increasingly turned to adjustable-rate mortgages (ARMs) for a discount. Compared to more traditional mortgage products, ARMs offer lower initial interest rates before adjusting to higher rates in the future. 

“With affordability remaining a challenge, more prospective buyers are turning to adjustable-rate mortgages to lower their monthly payments in the short-term,” Bob Broeksmit, the Mortgage Bankers Association president and CEO, said. “The ARM share of applications last week reached 7.8% – the highest level this year.”

If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.

HOMEOWNERS COULD SAVE TENS OF THOUSANDS IN DAMAGES BY USING SMART DEVICES

Home prices increase

Buyers waiting for relief from high home prices will have to wait longer. Home prices are now 6.4% above their level last year, up from the 6% increase registered in January, according to the latest S&P CoreLogic Case-Shiller national home price index report.  

Fannie Mae readjusted its home price projection and forecasts upward, forecasting prices to increase 4.8% annually in 2024 and 1.5% in 2025.

“Buyers are mainly waiting to see if prices go down, too, to balance things out,” Williams said. “That is not likely to happen soon. So, buyers who can afford a home are buying, but only if they can outcompete in this crazy market.”

One way to use your home’s equity is through a cash-out refinance to help you pay down debt or fund home improvement projects. Visit Credible to find your personalized interest rate without affecting your credit score. 

THIS IS THE #1 CITY FOR FIRST-TIME HOMEBUYERS, AND OTHER HOT US HOUSING MARKETS

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

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Compliance, LOS, Best-Ex, MSR Valuation Products; 2nd Mortgage and Conv. Conforming News

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Hey, there is plenty of competition among lenders and among vendors. But, to the best of my knowledge, vendors and lenders aren’t doing this to one another. “There oughta be a law against it!” At the MBA Secondary Conference last week, MBA CEO Bob Broeksmit railed about the regulatory knots that bind the mortgage industry. Attorney Brian Levy agrees that’s a big problem, but disagrees with Bob’s solution in his Mortgage Musings. (Levy also gives some more thoughts on the CFPB funding case.) Regulations, and complying with them, certainly add to the cost of home loans, which in turn are passed onto borrowers of course. For lenders, cutting costs is a full-time gig. The biggest cost, of course, is personnel and LO comp, usually for several thousand dollars per loan. Of course, business models factor into it… How do you produce a loan? What about orginators who aren’t productive? Paying producers who do one loan a quarter… The money has to come from somewhere. (Found here, this week’s podcasts are sponsored by American Financial Resources, the mortgage lender that’s shaking things up by streamlining processes, bringing on the best humans in the business, and putting the customer experience front and center. Hear an interview with Angel Oak’s Tom Hutchens on how loan originators can navigate a competitive market with the increasing demand for niche products like non-QM loans and bank statement HELOCs.)

Training, Products, and Software

“In the movie ‘The Matrix,’ Trinity reminded Keanu Reeves’ character, ‘The answer is out there, Neo, and it’s looking for you, and it will find you if you want it to.’ Chances are she was not talking about MSR valuations, but we are. This is your sign to unlock the “MSR Matrix,” and join Optimal Blue on June 5 at 1 p.m. CT for our MSR 101: How to Value the MSR Asset webinar. MSR experts Vimi Vasudeva, Brad Eskridge, and Tony Paciente will discuss the different assumptions that factor into MSR valuations and how MSR assets can help you optimize profitability. Attendees will gain a thorough understanding of the asset from a valuation perspective, along with the differences between various valuation approaches. It’s time to optimize your MSR assets and retain the most profitable loans in your pipeline. Don’t be a glitch: register for the webinar today!”

The Base Rate Generator is a tool that helps mortgage lenders generate rate sheets in their pricing engine using back-end pricing. It’s as simple as going to the rate sheet tab in MCTlive! and clicking Generate.” In this latest video, MCT’s Director of Product & Pricing, Luke Chang, describes key features of the Base Rate Generator, including specs being passed through the aggregator rate sheet, the best execution process, and advanced granularity benefits. By combining live agency API connections, co-issue executions, aggregator pricing, and custom TBA indications, the MCT Base Rate Generator allows mortgage lenders to improve margin management and competitive performance. Originators interested in learning more about the industry-first features included in Base Rate Generator should register for the upcoming webinar on June 4th.

Vaporware. That’s when you’re sold software that doesn’t end up delivering a fraction of what was promised. Want to supercharge your LOS with software that delivers? Read these reviews on the ICE Mortgage Technology™ Marketplace.

Compliance Experts Report on Q2 2024 Mortgage Compliance Outlook! Join ACES Quality Management’s EVP of Compliance, Mandy Phillips and Ballard Spahr’s Richard J. Andreano, as they share their expert knowledge on the hot topics of mortgage compliance. on June 6th at 11:00AM PDT as they discuss the Supreme Court update and Townstone, FTC banning of non-compete agreements, CFPB view of UDAAP abusive prong, and a Fair lending update. Reserve your spot.

Conventional Conforming Pricing and Processing Changes

Fannie Mae updated Selling and Servicing Guide pages. All topics have new URLs, with temporary redirects in place until January 2025. To avoid disruptions, please update your bookmarked links as soon as possible.

Fannie Mae posted the May Appraiser Quality Monitoring (AQM) list to Fannie Mae Connect. The monthly list will also be available on the AQM page through July 30, 2024, when Fannie Mae Connect will be required for viewing.

On May 19, the 2024 area median incomes (AMIs) were implemented in Desktop Underwriter® (DU®), Loan Delivery, and the Area Median Income Lookup Tool. At a FIPS-level, 79.6 percent of AMIs increased for 2024, meaning more borrowers may meet AMI requirements. AMI is also used to determine eligibility for certain loan-level price adjustment (LLPA) waivers. Lenders may use this information to determine income eligibility for HomeReady and other loans with AMI requirements. Read the Fannie Mae Selling Notice for additional information.

Pennymac Announcement 24-52 describes Conventional LLPAs update effective for all Best Efforts Commitments taken on or after Friday, May 24, 2024.

AmeriHome Mortgage posted a reminder in 20240513-CL Product Announcement as to the GSEs recently published policy updates related to property insurance requirements. Sellers are reminded that these changes are effective for all Mortgage Loan applications taken on or after June 1, 2024, but are encouraged to implement these changes earlier.

Second Mortgage Programs

The word during the recent capital markets conference was that investors and large lenders will continue to rollout HELOC and 2nd mortgage products. There’s so much equity out there! For example…

Closed-End Seconds (Fixed Rate Home Equity Seconds) are available through Pennymac TPO. While the Pennymac Correspondent Group (PCG) does not currently offer the product, approved PCG clients are eligible to obtain it through its wholesale division, Pennymac TPO. PCG stated they are seeing rates for Fixed Rate Home Equity Seconds mostly in the 8.5-9.5 percent range while they offer a dedicated rate sheet specific to second mortgages that does not expose pricing on other products. Guidelines are straightforward and an appraisal is not required in many cases. You can sign up to broker the product in a few simple steps. Login to P3 for more information.

Recently, Plaza Home Mortgage® rolled out a new program that can significantly benefit your borrowers. Plaza’s Closed-End Seconds program is tailored to help borrowers tap into their property’s equity without affecting their existing first mortgage offering substantial cash-out potential, providing your borrowers with the means to enhance their financial stability. Please note, this program is available in all states except Texas.

Capital Markets

Fixed-income security prices, and therefore interest rates, are driven by supply and demand. The main news this week as far as capital markets staff are concerned has been lackluster sales of new Treasury notes and bonds. Tuesday brought a lousy bond auction of 5-year notes, which sent the 10-year yield back above 4.5 percent. The U.S. Treasury completed this week’s note auction slate yesterday with a poorly received $44 billion 7-year note offering, which pushed the 10-year yield to a monthly high at 4.64 percent.

Like Tuesday’s 5-year auction, the 7-year auction tailed 1.3 basis points, which means that the buyers who barely got the bonds paid much less than the others, a sign of weak demand. As a quick reminder, a “tail” is the difference between the average price and the cut-off price (the lowest price that a bond is sold for). Put another way, a tail indicates a difference between the yield in the auction and the yield in pre-auction trading, meaning that the Treasury had to offer a premium to entice investors to buy the debt.

Both the weak demand for Treasuries and hawkish Fed “speak” this week has forced investors to pivot toward “risk-off” mode, which has pushed rates higher. Yesterday traders also sifted through the Fed’s latest Beige Book, which said economic activity continued expanding from April to mid-May at an uneven pace with most Districts reporting slight or modest growth. Retail spending was little changed while auto sales were also essentially flat. Travel and tourism improved while demand for non-financial services also grew. Lending growth remained constrained by high rates and tight standards, though housing demand rose modestly. The release comes on the heels of Minneapolis Fed President Kashkari saying earlier in the week that Fed policymakers haven’t entirely ruled out rate hikes.

Mortgage rates certainly impact overall origination volume. If you recall, we learned last week that existing home sales fell 1.9 percent in April as higher mortgage rates reduced demand and forced some potential buyers to the sidelines. Supply grew to 3.4 months’ worth over the course of the month, which is up from 3.0 months’ in February. New home sales fell 4.7 percent during the month and new home supply was up to 9.1 months.

Anecdotal data suggest that builders have once again stepped up their use of incentives and interest rate buydowns to lure buyers back to the market. That comes as messaging from the Fed continues to reiterate the “higher for longer” mantra, as it is taking longer than anticipated for FOMC members to gain confidence that inflation is on a sure path to two percent. If there is a rate cut this year, it will likely not be until the fourth quarter.

The second look at Q1 GDP (+1.3 percent) kicked off today’s economic calendar. Real GDP growth in the first quarter of 2024 was expected to be revised lower to 1.4 percent in the second estimate’s release, from 1.6 percent originally, reflecting downward revisions to consumer spending. The GDP Price Index was +3.0 percent on an annualized basis, slightly lower than expected. Core PCE was +3.6 percent, as expected. Initial Jobless Claims were +219k, also about as expected. Overall, there were no surprises.

Later today brings the Pending Home Sales Index for April, Freddie Mac’s Primary Mortgage Market Survey, and two Fed speakers are currently scheduled: New York President Williams and Dallas President Logan. We begin the day with Agency MBS prices slightly better than Wednesday’s close, the 10-year yielding 4.59 after closing yesterday at 4.62 percent, and the 2-year at 4.95.

Employment

In the Northwest and California, Banner Bank is searching for Mortgage Loan Officers looking to create lasting Realtor and builder relationships at a bank focused on the market today. Banner has opportunities for lenders looking for local decision making with FHA, VA, USDA, state bond and true Portfolio lending opportunities along with servicing retained Fannie and Freddie loans to assist in client retention. Additional highlighted products cover CRA lending with private label no payment down payment assistance to help assist all borrowers with the right opportunity. Banner is the right fit for an established team, or the individual looking to grow their business and take the next step in their career. Please send resumes to Aaron Miller.

Kind Lending appointed 40-year industry vet Tammy Richards as its new Chief Operating Officer. (She remains the CEO of LendArch, a consulting firm she founded in 2021.) Tammy will “leverage her deep industry expertise and proven history of success to oversee all operational aspects of the company. Her focus will be on scaling Kind Lending’s infrastructure and processes to support its rapid growth while ensuring the company upholds its commitment to social impact.”

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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Hedging, TPO, ROV, Fee Collection Tools; STRATMOR on Bank Strengths; Training and Webinars

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Hedging, TPO, ROV, Fee Collection Tools; STRATMOR on Bank Strengths; Training and Webinars

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Thu, May 23 2024, 11:45 AM

Some people say, “You’re crazy to stay in residential lending in this environment, and it’s not going to improve dramatically in the near future.” No, this is crazy. Owners of vendors and lenders who are barely eking by, or losing money quarter after quarter, aside, there is plenty of sanity remaining. Given what I heard in Manhattan, we can expect many, many offerings of 2nd mortgage programs and HELOCs from investors and therefore the lenders that sell to them, given the amount of equity that’s out there. LOs know that these are homes, not houses, and many owners focus on their life there at that address and need to be shown how a 2nd may make sense. But if your client wants to treat house prices like shares of stock, here’s a zip code map showing price appreciation in this part of the business cycle. Speaking of business cycles, Bill Dallas has been through a few, and joins The Big Picture today at 3PM ET to discuss Rohit Chopra firing a missile across the bow of the credit reporting agencies, the evolving post-NAR settlement landscape, and more. (Found here, this week’s podcasts are Sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Today’s has an interview with Experian’s Ken Tromer and Jamie Norris on helping mortgage companies optimize their business expenses and protect prospects using Experian Verify and Power Profile Plus.)

Lender and Broker Services and Products

Operations Masterclass for lenders looking to drive change in their organizations: Do you want to know how the pros, category 1 operations leaders, implement new technologies? This is your event. From Vision to Reality: Driving Large Scale Transformation with Change Experts. Join Liz Short (CEO of Short Solutions and former SVP at Fairway Independent Mortgage Corporation), Misti Snow (Founder of GRITT and former SVP at loanDepot), and Kristin Broadley (Founder of Excelerate Advisors and former VP at Rocket Mortgage) along with Richard Grieser (VP of Marketing at Truv), as they share a framework with tangible paybooks for success, and apply it to Truv’s cutting edge income and employment verifications platform as a real world example. May 29 at 1pm CT. All attendees will receive an exclusive Change Management Playbook to download after the live webinar! Start driving transformational change today! Register here.

“Are you a lender seeking to help customers realize the dream of homeownership and grow your business? Partner with Ameris Bank for your warehouse lending needs, and we’ll ensure you receive the resources, support, and service you need to close loans and grow your business. In fact, our warehouse customers have one-on-one access to specialty treasury management professionals who offer tailored financial solutions for their business. With Warehouse lines of credit ranging from $1.5 million to $150 million, we offer competitive interest rates, low fees and industry-leading technology to our customers. Contact Jill Gainer or Jessica Lapresi to learn why their clients trust Ameris Bank for their Warehouse lending needs and how we can help your business grow in today’s market.”

“Approximately 200 originators have turned to MAXEX for better liquidity on Agency-eligible NOO, second homes and high balance loans. Avoid costly LLPAs. Trade it mandatory bulk or best-efforts flow. Get competitive bids from FIVE leading non-agency buyers with ONE contract and ONE set of guidelines. Get access to another premium buyer this summer, available exclusively through MAXEX. Visit us at maxex.com/conforming to learn more.”

Walking around Times Square this week for the MBA Secondary conference, one thing was very clear: the guys selling knock-off purses have a better payment collection system than most lenders. Fortunately, Fee Chaser lets lenders collect appraisals, credit reports, or any other fee with a click of a button. Borrower gets a text message, pays on their device, and the LOS is updated immediately. Give your borrowers the 5th Avenue treatment with Fee Chaser.

On May 1, 2024, Fannie Mae and Freddie Mac, along with the FHFA, announced new requirements for reconsiderations of value (ROVs). The requirements help educate the borrower on the right to appeal an appraisal and how to do it. They also help create uniform industry-wide expectations for how to manage ROVs. Watch this complimentary webinar hosted by ICE to hear directly from Fannie Mae and Freddie Mac about their implementation of these new ROV requirements, followed by a demo of ICE’s ValidateROV, a new solution that can help lenders address these changes. *Check with your compliance or legal department for information on complying with applicable law.

Correspondent and Broker Products

“Elevate your non-QM investments with Planet’s expert asset management and commercial servicing offerings. If you’re an investor in non-QM, Residential Transition Loans (RTL/fix-and-flip), DSCR, multifamily, or Single-Family Rentals (SFR), seize the opportunity to meet with us at IMN’s 5th Annual Non-QM Forum June 13-14 in Dana Point, CA. Discover how Planet’s specialized platform and veteran advisors can help you maximize returns by reducing risk, providing real-time insights, and maximizing recovery, all at competitive pricing. Don’t miss out on this chance to gain a strategic edge. Contact Jim DePalma, Samantha Manfer, or Caitlin Moynihan or (585) 512-1030. Let’s connect in Dana Point and elevate your non-QM portfolios.”

“Newrez Correspondent is thrilled to announce that Co-Issue has been added to our suite of delivery methods. If you are interested in Newrez’s Co-Issue program, please contact your Regional Sales Manager. In addition to Co-Issue, we have several other delivery methods and executions that will help you succeed in today’s market. We have also added Delegated Non-QM and Closed-end Home Equity products to enhance your product offering. Not approved? Sign up today! A big thank you to all of our clients, prospects and industry partners for spending your valuable time with our team at the National Secondary in NY. You can meet Tom Van Auken, Alex Weems and Chris Nobile at the upcoming 40th Regional Conferences of the MBAs in Atlantic City, NJ, June 4-7 at the Hard Rock Hotel and Casino to discuss all that Newrez has to offer.”

STRATMOR on Banks Playing to Their Strengths

According to STRATMOR, there are several strategies banks and credit unions can work on right now that don’t directly relate to pricing discipline, cost cutting or operational efficiency, but that can move the dial in terms of gaining market share and improving profitability. Most revolve around improved execution of critical business development activities, rather than on new investments in technology or systems. In STRATMOR’s May InFocus article, “All Hands on Deck: Action Ideas for Banks Navigating This Tough Mortgage Market,” Principal Tom Finnegan outlines a roadmap for banks to leverage their strengths and regain their competitive edge. He offers recommendations for uncovering new leads and shares strategies for creating an improved operating model that will pay dividends both today and in future, more robust volume periods. To learn more about strategies for banks and credit unions, check out STRATMOR’s May Insights Report.

Training, Events, and Conferences

A good place for longer term conference planning is to start is here, and click on “Conference List” for in-person events in the future.

Today at 3PM ET, Rich Swerbinsky is interviewing industry vet Bill Dallas on The Big Picture.

Join MBA as they delve into the fundamentals and complexities of mortgage accounting. Anyone who desires to increase their knowledge of mortgage loan accounting will benefit from this session that is designed for business owners, executive management, accountants, and non-CPA accounting managers. Complete the full series, and you’ll have the information necessary to master mortgage accounting. Mortgage Accounting Webinar Series: Part IV: Hedge Accounting and GAAP Reporting today from 2:00 PM-3:30 PM.

Join Lisa Green from Atlantic Bay as she hosts Katherine Campbell Chief Marketing Officer from Shape Software for a session on “Adapting to AI.” May 23 at 11:00 EST. Discover how to embrace AI’s capabilities instead of viewing it as competition. Learn how to leverage AI to support sales, improve customer service, and streamline operational tasks. Explore the use of tools like CRMs and social media to boost lead generation.

Tomorrow we’ll see an episode of The Mortgage Collaborative’s Rundown covering current events in the mortgage market for 30 minutes starting at noon PT, 3PM ET, in “The Rundown”. Tomorrow’s co-host is Mike Pulver, the incoming NY MBA President and the SVP of Mortgage for GRB Bank.

Webinar: Surprise: First-time home buyers are on the rise. Here’s how to earn their business. Interest rates and housing inventory haven’t been hospitable for first-time buyers. Despite challenges, this segment made a notable jump in Q1 2024. What drove first-time buyers onto the property ladder, and how can lenders win their business? In this webinar, presented by Maxwell on May 29 at 1 p.m. CT, we’ll dig into Maxwell’s exclusive data to better understand today’s first-time buyers and explore how to cater to this valuable segment. Click here to save your seat (and if you can’t make the live event, you can still register for the on-demand recording!).

There’s the 2024 NRMLA Eastern Regional Meeting May 29th, 9:30 am – 5:30 pm. A representative from the CFPB’s Mortgage Markets division will address the 2024 Eastern Regional Meeting in Washington, DC on May 29 to discuss marketplace issues and trends that the CFPB is closely monitoring, and other initiatives related to reverse mortgages. In addition to the CFPB, you’ll hear from FHA, Ginnie Mae, Urban Institute, NRMLA’s legislative team, and other subject matter experts.

Looking for more in-depth commentary on weekly mortgage news? Register here for “Mortgage Matters: The Weekly Roundup” presented by Lenders One. Every Wednesday at 2:00 PM EST/11:00 AM PT join Robbie Chrisman and Justin Demola for a dive into a range of mortgage-related topics, including market trends, interest rate fluctuations, innovative mortgage products, and industry advancements.

Operations Masterclass for lenders looking to drive change in their organizations! Join Liz Short (CEO of Short Solutions and former SVP at Fairway Independent Mortgage Corporation), Misti Snow (Founder of GRITT and former SVP at loanDepot), and Kristin Broadley (Founder of Excelerate Advisors and former VP at Rocket Mortgage) along with Richard Grieser (VP of Marketing at Truv), as they share a framework with tangible paybooks for success, and apply it to Truv’s cutting edge income and employment verifications platform as a real world example. May 29 at 1pm CT. Register here.

Webinar: Surprise: First-time home buyers are on the rise. Here’s how to earn their business. In this webinar, presented by Maxwell on May 29 at 1 p.m. CT, we’ll dig into Maxwell’s exclusive data to better understand today’s first-time buyers and explore how to cater to this valuable segment. Click here to save your seat (and if you can’t make the live event, you can still register for the on-demand recording!).

Register for American Banker’s webinar on Thursday, May 30, 2:00 p.m. ET / 11:00 a.m. PT. Executives from Plaid and American Bankers Association will discuss the impact open banking could have on the digital financial ecosystem, challenges and opportunities for small and medium sized financial institutions, and what they can be doing now to prepare.

Thursday the 30th will be another episode of The Big Picture at 3PM ET, Rich Swerbinsky is interviewing industry vet Sue Woodard from The STRATMOR Group.

Friday the 31st will see an episode of The Mortgage Collaborative’s Rundown with Melissa Langdale and me covering current events in the mortgage market for 30 minutes starting at noon PT, 3PM ET, in “The Rundown”.

Capital Markets

“The base rate generator allows you to be more efficient on your lock desk, particularly with hedgeable production. You can auto-lock anything that’s priced to that hedgeable product that you’re powering with your backend execution.” In this latest video, MCT’s CAO, Chris Anderson, describes how the Base Rate Generator allows mortgage lenders to directly inform their front-end rate sheet pricing with their back-end capital markets executions. By combining live agency API connections, co-issue executions, aggregator pricing, and custom TBA indications, the MCT Base Rate Generator allows mortgage lenders to improve margin management and competitive performance. Originators interested in learning more about the industry-first features included in Base Rate Generator should register for the upcoming webinar on June 4th.

The Minutes from the May FOMC meeting released yesterday showed that policymakers are still expecting inflation to return to target, but at a slower pace than previously thought. On aggregate, the minutes were deemed hawkish after ‘various’ Fed officials mentioned the willingness to tighten policy further should risks to the outlook materialize in causing such action. However, Fed Chairman Powell said last week that he does not anticipate that a rate hike will be the next policy move.

No surprise here, but higher mortgage rates are pouring cold water on the resale market. Existing home sales dipped for the second consecutive month in April, down both 1.9 percent month-over-month and year-over-year to 4.14 million, corresponding with an increase in the 30-year fixed rate over the months prior. The median existing-home sales price grew 5.7 percent from a year ago to a new April-record $407,600, the tenth consecutive month of year-over-year price gains. The inventory of unsold existing homes climbed 9 percent from one month ago to 1.21 million at the end of April, or the equivalent of 3.5 months’ supply at the current monthly sales pace. Sales activity was much stronger amongst homes priced $1 million or more, with inventory up 34 percent year-over-year and sales up 40 percent year-over-year. This gives some validity to the theory that pent-up demand will be unleashed when more inventory for lower-priced homes becomes available.

The Chicago Fed National Activity Index for April and weekly jobless claims (215k, about as expected… slight drop in continuing claims to 1.794 million) kicked off today’s calendar. Later today brings S&P Global flash PMIs, new home sales for April, KC Fed manufacturing for May, Treasury announcing month-end supply (consisting of 2-year, 5-year and 7-year notes, a Treasury auction or $16 billion reopened 10-year TIPS, Freddie Mac’s Primary Mortgage Market Survey, and remarks from Atlanta Fed President Bostic. We begin Thursday with Agency MBS prices hardly different than Wednesday’s close, the 10-year yielding 4.41 after closing yesterday at 4.43 percent, and the 2-year at 4.86.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

(Bloomberg) — UK house prices fell at the sharpest pace in eight months after the cost of mortgages crept higher, one of the country’s biggest lenders said, underscoring continued cost-of-living pressures on consumers ahead of a general election later this year.

Most Read from Bloomberg

The figures from Nationwide Building Society followed a scaling back of bets on Bank of England interest rate cuts this year, which pushed up the cost of home loans in markets. That’s strained the ability of people to afford to buy a property and held back a recovery from last year’s slump.

Higher borrowing costs have hurt Prime Minister Rishi Sunak’s government in the eyes of voters and reminded voters of the big jump in mortgage rates that Liz Truss triggered during her short term as premier in late 2022. The UK slipped into a recession last year, and the weak recovery so is reflected in the housing market.

“Though mortgage affordability is much better than it was last summer, it remains very stretched relative to historical norms,” said Peter Arnold, chief economist at EY UK. “A strong recovery in house prices and activity is unlikely.”

The Conservatives are defending seats in local authorities including mayors in West Midlands and Tees Valley in key local elections on Thursday. Sunak is widely expected to call a general election in the autumn.

Nationwide estimated house prices fell 0.4% in April after an 0.2% decline the month before. Economists had expected a 0.1% monthly increase. The average cost of a home is now £261,962 ($326,680), which is about 4% below the peak in the summer of 2022.

What Bloomberg Economics Says …

“The shift in the interest rate outlook was the catalyst for the change in sentiment at the start of the year, encouraging buyers to enter the market. However, borrowing costs have risen recently as investors reappraise how far the Bank of England will cut interest rates over concerns about persistent price pressures in both the UK and US. The best-buy five-year fix are above 4.1% having dropped below 4% at the start of the year. That will hit affordability.”

—Niraj Shah, Bloomberg Ecoomics. Click for the REACT.

Home prices have stagnated over the past year, up just 0.6%. That’s much less than the 1.2% gain economists had expected.

“The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year,” Robert Gardner, chief economist at Nationwide, said in a report Wednesday.

Nationwide said research it did with Censuswide found that almost half of the prospective first-time buyers looking to secure a home in the next five years have delayed their plans.

“Among this group, the most commonly cited reason for delaying their purchase is that house prices are too high (53%), but it is also notable that 41% said that higher mortgage costs were preventing them from buying,” Nationwide said.

Another 55% of people said they’d be willing to buy in a cheaper area of the country or where they could get a bigger property — half willing to move more than 30 miles away.

The UK housing market has defied expectations of a sharp downturn last year, yet its recovery over the last few months has remained weak. Prospective buyers are still finding it hard to come up with the money for a deposit, while the benchmark lending rate is at a 16-year high.

BOE officials warning of lingering price pressures have pushed up two- and five-year swap rates, used to set the bulk of mortgage products. That suggests households would still be spending a higher share of their incomes on mortgage payments than they did in the decade to 2007, according to Bloomberg Economics.

Nationwide’s figures contrast with more upbeat data from the BOE showing mortgage approvals rose to the highest in 18 months in March. Banks and building societies authorized 61,325 home loans, up from 60,497 in February and the most since September 2022.

Separate data released Tuesday from HM Revenue & Customs, the UK tax authority, showed property transactions climbing for a third month to 84,200 in March.

However, a recent resurgence in borrowing costs has raised questions over whether the recovery can continue. Natwest, Santander and Nationwide all have increased mortgage rates this month in response to rising swap rates, which are used to set the bulk of mortgage products.

For the 1 million households due to refinance fixed-rate mortgages by end of the year, new loans will be pricier than the ones they are currently on.

“Buyers and sellers are starting to accept the new reality of the housing market in the face of current interest rate levels,” said Nathan Emerson, CEO of Propertymark.

–With assistance from Andrew Atkinson.

(Updates with comment and context from first paragraph.)

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Source: finance.yahoo.com