Mortgage Rates Center

Apache is functioning normally

Apache is functioning normally

In the week leading up to the Federal Open Market Committee meeting, mortgage applications finally ticked up.

For the week that ended Sept. 15, mortgage applications rose 5.4% from the prior week, according to data from the Mortgage Bankers Association. 

Last week, purchase applications increased for both conventional and FHA loans but remained 26% lower than the same week a year ago. Meanwhile, refinance applications also increased but are still about 30% lower than the same week last year.

“Mortgage applications increased last week, despite the 30-year fixed rate edging back up to 7.31%, its highest level in four weeks,” Joel Kan, MBA’s vice president and deputy chief economist said.

Also noteworthy, the average loan size on a purchase application was $416,800, the highest level in six weeks. 

“Home prices in many markets have been supported by low inventory and resilient housing demand for available homes,” Kan added.

The refinance share of mortgage activity increased to 31.6% of total applications from 29.1% the previous week. Meanwhile, the adjustable-rate mortgage (ARM) share of activity decreased to 7.2% of total applications from 7.5% last week.

The 30-year fixed mortgage rate increased to 7.31% last week, according to Kan. At HousingWire’s Mortgage Rates Center, Optimal Blue had 30-year fixed-rate mortgage at 7.19% on Sunday. At Mortgage News Daily, 30-year fixed-rate mortgage rates were at 7.30% on Tuesday.

The Federal Housing Administration loans’ share remained unchanged at 14.2%. As homebuyers continue to face higher rates and limited for-sale inventory, purchase conditions are becoming more challenging for buyers. The U.S. Department of Veteran Affairs loans’ share decreased to 11% from 11.3% the week prior. Lastly, the U.S. Department of Agriculture loans’ share remained unchanged at 0.4%.

The average contract interest rate for 5/1 ARMs dropped to 6.42% from 6.59% a week prior.

The FOMC is expected to hold rates steady on Wednesday, though analysts believe one more rate hike remains in the cards this year.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

Mortgage rates remain anchored north of 7% as investors focus on the impact of rising headline inflation ahead of next week’s Fed rate decision. 

Freddie Mac‘s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 7.18% as of Sept. 14, up from last week’s 7.12%. By contrast, the 30-year fixed-rate mortgage was at 6.02% a year ago at this time.

“The reacceleration of inflation and strength in the economy is keeping mortgage rates elevated,” Sam Khater, Freddie Mac’s chief economist said. “However, potential homebuyers can still benefit during these times of high mortgage rates by shopping around for the best rate quote.”

Indeed, Freddie Mac research suggests homebuyers can potentially save $600-$1,200 annually by applying for mortgages from multiple lenders.

Other indices showed different mortgage rates this week.

HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 7.16% on Tuesday, compared to 7.20% the previous week. At Mortgage News Daily on Wednesday, the 30-year fixed rate for conventional loans was 7.22%, down from 7.33% the previous week.

What to expect from the Federal Open Market Committee meeting next week ?

On Wall Street and in Washington, investors believe that the Federal Reserve is poised to steer the economy toward a soft landing. Even if August’s headline inflation was driven up by energy prices, the core CPI provided more evidence that core inflation is trending down toward pre-pandemic levels, Jiayi Xu, economist at Realtor.com said. Overall, she expects that inflation will continue to move in the right direction as shelter costs have moved down for five consecutive months on a year-over-year basis. Additionally, Realtor.com’s median asking-rents indicate rental prices have been gradually declining. 

“Overall, we expect the Fed will maintain its ‘wait-and-see’ approach in its next FOMC meeting and closely monitor future data,” Xu said.

However, some economists also say that the economy is veering toward a contraction, with 10-year yields holding below 3-month yields, Bloomberg reported. On Thursday, the market surpassed the 1980 record to hold that way for the longest consecutive daily stretch since Bloomberg’s records began in 1962.

How are mortgage rates affecting the housing market ?

As many existing homeowners are staying put in today’s elevated mortgage rates environment, the inventory problem persists and puts first-time homebuyers in a difficult position. Indeed, over one-third (34%) of prospective buyers have yet to purchase a home because there are not enough homes for sale in their budget, HousingWire reported on Thursday. 

On the buyers’ side, high mortgage rates continue to subdue demand, with mortgage applications in the first full week of September falling to lows last seen in 1996.

Even as housing demand cools this fall, inventory will remain low, Bright MLS Chief Economist Lisa Sturtevant said. 

In that context, prospective homebuyers are scrambling to find solutions, she added.

“Some families are buying homes together, with millennials teaming up with their Baby Boomer parents to buy a multigenerational home. Other buyers are looking for opportunities to purchase a home where they rent out part of it to generate additional income.”

Buyers are also pushed to making trade-offs, such as looking for smaller homes and expanding their neighborhood searches.

“MBA expects some of the recent volatility in rates to subside enough that the 30-year fixed rate will fall closer to 6% by the end of the year,” MBA President and CEO Bob Broeksmit said. 

Source: housingwire.com

Apache is functioning normally

The last time mortgage demand was this low, Toni Braxton’s “Un-break my heart” topped the Billboard charts.

For the week that ended Sept. 8, mortgage applications fell 0.8% from the prior week, according to data from the Mortgage Bankers Association. Mortgage applications decreased for the seventh time in eight weeks, down to the lowest levels since December 1996.

Last week, refinance applications recorded a 5% drop. It was the weakest reading for refinance applications since January 2023. Simultaneously, purchase applications increased over the week despite the increase in rates, buoyed by a 2% gain in conventional loans. The unadjusted purchase index decreased 11% compared with the previous week and was 27% lower than the same week one year ago.

“Given how high rates are right now, there continues to be minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate,” said Joel Kan, MBA’s vice president and deputy chief economist.

The refinance share of mortgage activity decreased to 29.1% of total applications from 30% the previous week. Meanwhile, the adjustable-rate mortgage (ARM) share of activity increased to 7.5% of total applications from 6.7% last week.

The 30-year fixed mortgage rate increased to 7.27% last week, according to Kan. At HousingWire’s Mortgage Rates Center, Optimal Blue had 30-year fixed-rate mortgages at 7.17% on Sunday. At Mortgage News Daily, 30-year fixed-rate mortgage rates were at 7.30% on Monday.

The Federal Housing Administration loans’ share increased to 14.2% from 13.7% the week prior. The U.S. Department of Veteran Affairs loans’ share remained unchanged at 11.3%. Lastly, the U.S. Department of Agriculture loans’ share fell  to 0.4% from 0.6% a week prior.

The average contract interest rate for 5/1 ARMs ticked up to 6.59% from 6.33% a week prior.

Source: housingwire.com

Apache is functioning normally

A slight cooling in mortgage rates wasn’t enough to keep mortgage applications from sinking to a 28-year low.

Freddie Mac‘s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 7.12% as of Sept. 7, down from last week’s 7.18%. By contrast, the 30-year fixed-rate mortgage was at 5.89% a year ago at this time.

“The economy remains buoyant, which is encouraging for consumers,” said Sam Khater, Freddie Mac’s chief economist. “Though while inflation has decelerated, firmer economic data have put upward pressure on mortgage rates which, in the face of affordability challenges, are straining potential homebuyers.”

Other indices showed higher mortgage rates this week.

HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 7.20% on Wednesday, compared to 7.07% the previous week. At Mortgage News Daily on Wednesday, the 30-year fixed rate for conventional loans was 7.33%, up from 7.06% the previous week.

Rates should continue to come down from their peaks, as the inflation and the jobs market are cooling, said Bright MLS Chief Economist Lisa Sturtevant.

However, high home prices and growing affordability challenges are the two factors weighing on prospective home buyers, said Sturtevant. She expects a market contraction this fall in the housing sector. 

MBA President and CEO Bob Broeksmit is of the same opinion:

“The housing market appears to be stuck heading into autumn, with sales activity likely to stay stagnant until housing inventory increases and mortgage rates decline to more affordable levels,” he said in a statement. 

In many markets, renting has become more affordable than owning

The balance between renting and owning in many markets has shifted toward renting as more new apartment construction comes online, noted Sturtevant. Moreover, declining rent prices will likely help move inflation back toward its target in the months ahead, added Realtor.com Chief Economist Danielle Hale.

“Looking ahead, the economy is nearing an inflection point, and mortgage rate volatility may continue until it is clear that the economic landing has actually occurred and we are not seeing a touch-and-go on growth that could reignite inflation,” said Hale.

Source: housingwire.com

Apache is functioning normally

Despite a slight drop in mortgage rates last week, mortgage applications fell to their lowest level since December 1996. For the week that ended Sept. 1, mortgage applications dropped  2.9% from the prior week, according to data from the Mortgage Bankers Association. 

“Both purchase and refinance applications fell, with the purchase index hitting a 28-year low, as prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates,” said Joel Kan, MBA’s vice president and deputy chief economist.

Meanwhile, the “refinance index dropped to its lowest level since January 2023, driven by a 6% decline in conventional refinances,” added Kan. The refinance index decreased 5% from the previous week and was 30% lower than the same week one year ago.

Though mortgage rates came down to 7.18% last week, they remained more than a full percentage point higher than a year ago. Mixed data on the health of the economy and signs of a cooling job market has not done enough to bring them down, noted Kan.

The refinance share of mortgage activity decreased to 30% of total applications from 30.1% the previous week. Meanwhile, the adjustable-rate mortgage (ARM) share of activity decreased to 6.7% of total applications from 7.5% last week.

At HousingWire’s Mortgage Rates Center, Optimal Blue had 30-year fixed-rate mortgages at 7.15% on Tuesday. At Mortgage News Daily, 30-year fixed-rate mortgage rates were at 7.21%.

The Federal Housing Administration loans’ share increased to 13.7% from 13.2% the week prior. The U.S. Department of Veteran Affairs loans’ share decreased to 11.3% from 11.6% last week. Lastly, the U.S. Department of Agriculture loans’ share rose  to 0.6% from 0.4% a week prior.

The average contract interest rate for 5/1 ARMs fell to 6.33% from 6.48% a week prior.

Source: housingwire.com

Apache is functioning normally

In the face of spiking interest rates and historically high home prices, $3,000 monthly mortgage payments are common in today’s housing market.

According to Black Knight’s mortgage monitor report, the average principal and interest payment among borrowers purchasing a home using a 30-year fixed-rate loan hit its highest point ever in July at $2,306. That’s before taxes and insurance are factored in (an average of $550 a month). It’s up 60% over the past two years. 

“Just two years ago, only 18% of homebuyers were facing that level of payment; as of the end of July that share had grown to 51%,” remarked Black Knight Vice President of enterprise research Andy Walden.

“Beyond that, nearly one in four July homebuyers has payments north of $3,000, up from just 5% in 2021. We’ve been talking about affordability for quite some time now, but this puts the situation in stark relief,” he added.

Beyond purchase affordability, rising interest rates prevent mortgage holders to tab into their home equity

In the second quarter of 2023, mortgage holders tapped $39B in equity through cash-out refis as well as home equity loans and lines of credit. It was up modestly from the first quarter of 2023 but just half the volume of the first quarter in 2022 ($79B), before rates began to rise.

Between 2010 and 2021, mortgage holders withdrew an average 0.92% of available tappable equity each quarter. That share fell to just 0.4% over the past three quarters, researchers found. Overall, it resulted in a roughly 55% decline in equity withdrawals

In other words, since rates began to climb in early 2022, nearly $200 billion in equity that might have otherwise been withdrawn and injected into the broader economy has remained untapped, according to Black Knight. 

Tappable equity levels remain elevated, Walden noted.

HELOC rates have risen along with Fed rate hikes, with the average HELOC offering now above 8.5% for the first time in the 15+ years Black Knight has been tracking that data.

Source: housingwire.com

Apache is functioning normally

Mortgage rates ticked down modestly after job openings data for July came out yesterday, but rates remain elevated. 

Freddie Mac‘s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 7.18% as of Aug. 31, down from last week’s 7.23%. By contrast, the 30-year fixed-rate mortgage was at 5.66% a year ago at this time.

“Despite continued high rates, low inventory is keeping house prices steady,” said Sam Khater, Freddie Mac’s chief economist. “Recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes.”

Other indices showed lower mortgage rates.

HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 7.07% on Wednesday, compared to 7.22% the previous week. At Mortgage News Daily on Wednesday, the 30-year fixed rate for conventional loans was 7.06%, down from 7.36% the previous week.

What to expect with the Fed ?

At the last Federal Open Market Committee meeting, Federal Reserve Chair Jerome Powell emphasized the importance of July’s core Personal Consumption Expenditure (PCE) Price Index for the Fed’s future path. The results came in today and the PCE price index jumped slightly from year-ago levels but grew at a mild monthly rate, which is more in line with the Fed’s 2% inflation target.

Meanwhile, the labor market is cooling as U.S. job openings dropped in July. However, more robust data points will be required to confidently assert that inflation is moving in the desired direction, said Realtor.com Economist Jiayi Xu.

“Despite mortgage rates hitting 20-year highs, we still expect them to reverse course and trend lower as we gather more solid evidence of inflation improvements in the coming months,” added Xu.

What does it mean for the housing market ?

Incentivized by return-to-office demands, some buyers have adjusted to the higher mortgage rate environment and are moving forward with their home search, according to Realtor.com’s 2023 Hottest Zip Codes report. However, first-time homebuyers are facing greater challenges to make such adjustments.

“Fortunately, new homes remain an option for many, as builders are continuing to add homes with a somewhat greater focus on affordable price points,” said Xu.

What to expect for the fall ?

Last fall when mortgage rates surged, homebuyers adjusted pretty quickly, noted Bright MLS Chief Economist  Lisa Sturtevant. First, they held back a little, only to come roaring back to the market in 2023. However, this time could be different, she said.

Rates above 7% are now coupled with home prices near record highs.

“The desire for homeownership is still strong, but there are going to be more and more prospective buyers for whom the numbers simply don’t pencil out anymore at 7%+ rates,” added Sturtevant.

That said, mortgage applications rose last week in spite of the rates being at a 22-year high. However, economists expect applications will decline significantly in the weeks ahead, bringing a shift in the housing market. 

“As demand contracts, supply will still remain low, so the slower market will not necessarily translate into significant price declines,” said Sturtevant.

Source: housingwire.com

Apache is functioning normally

Mirroring the trend for new home sales(+4.4%), pending home sales rose 0.9% in July, according to data released Wednesday by the National Association of Realtors (NAR). 

Year over year, pending home sales were down 14%, a smaller decrease than the 15.6% annual drop recorded in June. However, unlike the market for new homes, which has recovered convincingly above last year’s lows (+31.5%), pending home sales continue to lag behind year-ago levels (-14.0%). The NAR’s Pending Home Sales Index climbed to a reading of 77.6 in July. An index of 100 is equal to the level of contract activity in 2001.

“The small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple home buying offers,” said NAR Chief Economist Lawrence Yun. “Jobs are being added and, thereby, enlarging the pool of prospective home buyers. However, rising mortgage rates and limited inventory have temporarily hindered the possibility of buying for many.”

Month over month, contract signings increased in the South and West but decreased in the Northeast and Midwest

Regionally, on a month-over-month basis, the South (95.3) and the West (61.3)  pending home sales climbed and showed the smallest declines from one year ago, according to Realtor.com Chief Economist Danielle Hale. Meanwhile the Northeast (63.2) and the Midwest (77.5) interestingly fell, even though these two regions recently boasted more robust real estate activity and stronger pricing. Compared to a year ago, pending sales activity was down by more than 20% in the Northeast region, the biggest decline in that region over the past year, noted Lisa Sturtevant, Bright MLS chief economist.

“Greater availability of homes for sale in the South and price breaks in the West were likely contributors,” said Hale.

Overall, pending home sales fell in all four U.S. regions compared to one year ago. 

Two consecutive months of increases doesn’t necessarily mean that the housing market is moving

The median existing home price crawled north of $400,000 in July while interest rates inched above 7%.

“These significant affordability challenges, as well as a continued dearth of inventory, lower the likelihood that pending sales will continue to grow,” said Kate Wood, home and mortgage expert at NerdWallet.

While it is common for pending sales to decline between June and July, this year’s situation is tougher, said Sturtevant.

 “Buyers are being forced to lengthen their home search since there are so few properties available for sale,” she said.

In fact, two out of three Mid-Atlantic buyers who purchased in July had to make an offer on more than one home before they were successful, found a  Bright MLS’s recent survey.

Sales activity is expected to remain  slow for the rest of the year, as inventory remains low and mortgage rates remain high, noted Sturtevant. 

Source: housingwire.com

Apache is functioning normally

Mortgage applications for home purchases and refinances increased for the first time in five weeks but remain at low levels. For the week that ended Aug. 25, mortgage applications picked up 2.3% from the prior week, according to data from the Mortgage Bankers Association. 

 “Mortgage rates were mostly unchanged last week, with the 30-year fixed rate remaining at 7.31 percent – the highest since December 2000. Treasury yields peaked early in the week and did move lower by the end, which may have spurred some activity,” said Joel Kan, MBA’s vice president and deputy chief economist.

The seasonally adjusted purchase index increased 2% from one week earlier while the unadjusted purchase index was 27% lower than the same week one year ago.

“Purchase applications increased but were still 27 percent lower than a year ago, as elevated mortgage rates and tight housing inventory continue to weigh on home-buying activity,” Kan added.

Refinance index increased 3% from the previous week, but is still 28% lower than the same week one year ago. Also noteworthy, a 7.9% spike in conventional refinances drove up the whole market last week, but the refinance market remains slow, said Kan. Government refinance applications dropped more than 10% last week.

The refinance share of mortgage activity increased to 30.1% of total applications from 29.5% the previous week. Meanwhile, the adjustable-rate mortgage (ARM) share of activity decreased to 7.5% of total applications from 7.6% last week.

At Mortgage News Daily, 30-year fixed-rate mortgage rates were at 7.12% on Tuesday. At HousingWire’s Mortgage Rates Center, Optimal Blue had rates at 7.21% on Monday.

The Federal Housing Administration loans’ share decreased to 13.2% from 14.3% the week prior. The U.S. Department of Veteran Affairs loans’ share remained unchanged at 11.6%. Lastly, the U.S. Department of Agriculture loans’ share fell to 0.4% from 0.5% a week prior.

The average contract interest rate for 5/1 ARMs fell to 6.48% from 6.50% a week prior.

Source: housingwire.com

Apache is functioning normally

In 2022, the price of the typical home purchased in “high-opportunity” U.S. neighborhoods — where poor children have the best shot at upward mobility — was $470,000. That’s $130,000 more than the typical home in low-opportunity areas, according to a Redfin report. 

Redfin analyzed home sales in 100 of the most populous U.S. metropolitan areas, sorting each neighborhood into one of three tiers—low opportunity, intermediate opportunity and high opportunity. The brokerage defined a high-opportunity neighborhood as “one where children who grew up in low-earning households went on to become higher earning adults than the typical person who grew up in their metro at the same time.”

Redfin found that people in high-opportunity neighborhoods have better chances to attend highly rated schools and to access better professional networking opportunities. Those neighborhoods often feature large numbers of college graduates and low rates of poverty and crime. However, only 13% of homes in high-opportunity neighborhoods are affordable, down from 37% a decade ago, Redfin shows. 

There are a lot of homes for sale in high-opportunity neighborhoods but they are less affordable, especially for people of color

More than a quarter (39.5%) of U.S. homes for sale are located in high-opportunity neighborhoods. However, very few of them are affordable. According to Redfin, only 13% of homes for sale in high-opportunity neighborhoods in 2022 were affordable on their metro area’s median income, compared with 31.7% in low-opportunity neighborhoods. 

Overall, affordability fell across the board due to surging home prices. The median sale price in high-opportunity neighborhoods grew 100% since 2012, while the median sale price in low-opportunity neighborhoods  jumped 174%.

Meanwhile, it remains easier for white families to access these high opportunity areas. Only 4.2% of these homes were affordable for the typical Black household in 2022. The share was nearly five times higher (19.1%) for the typical white household.

The price premium for opportunity is the highest in segregated Midwestern and Southern metros

Detroit shows the highest premium for high opportunity neighborhoods out of all the metros Redfin analyzed. There, the median home sale price in high-opportunity neighborhoods jumped to $240,000 in 2022. That’s up 269% from the $65,00 median sale price in Detroit’s low-opportunity neighborhoods. Memphis, TN, Akron, OH, Milwaukee and Birmingham, AL  followed suit with respective premiums of 187%, 169%, 149% and 143%.

Also noteworthy, many of the metros where high-opportunity neighborhoods carry hefty home-price premiums grapple with relatively high levels of segregation. Milwaukee and Detroit both rank among the five most segregated metros based on 2020 Census data, Memphis and Birmingham are also near the top of the list. 

Source: housingwire.com