Some softer than expected inflation data is keeping mortgage rates from moving out of the tight range that they’ve been in all week. Tomorrow we will get more inflation data, bringing with it the possibility of a rate adjustment before we head into the weekend. Read on for more details.
Where are mortgage rates going?
Rates flatten out again
Believe it or not there are some exciting weeks for mortgage rates. This has not been one of those weeks.
It’s not unexpected for the week following the monthly jobs report to be a dull one, so I can’t say I didn’t see it coming.
There just hasn’t been many significant economic reports out this week and the few reports that did get released weren’t much to talk about.
Today, we got the latest Consumer Prices Index reading, which came in slightly below expectations.
That means the inflation hawks will have to wait another day before they can rile up the troops with their talk of a quicker than expected tightening schedule from the Federal Reserve.
Here are the latest numbers in the Freddie Mac Primary Mortgage Market Survey:
The average rate on a 30-year fixed rate mortgage remained unchanged at 4.55% (0.5 points)
The average rate on a 15-year fixed rate mortgage fell two basis points to 4.01% (0.4 points)
The average rate on a 5/1-year adjustable rate mortgage rose eight basis points to 3.77% (0.3 points)
Here’s what their Economic & Housing Research group had to say about rates this week:
“The 30-year fixed mortgage rate remained at 4.55 percent over the past week.
The minimal movement of mortgage rates in these last three weeks reflects the current economic nirvana of a tight labor market, solid economic growth and restrained inflation. As we head into late spring, the demand for purchase credit remains rock solid, which should set us up for another robust summer home sales season.
While this year’s higher rates – up 50 basis points from a year ago – have put pressure on the budgets of some home shoppers, weak inventory levels are what’s keeping the housing market from a stronger sales pace.”
Rate/Float Recommendation
Locking now is likely the smart move
Mortgage rates are staying in a tight range for now but could very well be on track to increase substantially by the time 2019 rolls around.
At the very least, it’s far more likely that mortgage rates will rise than fall in the coming weeks and months.
So if you’re looking to buy a new home or refinance your current mortgage, the better option is likely to lock in a rate sooner rather than later.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Consumer Price Index
The consumer price index rose 0.2% month over month in April, putting it at 2.5% year over year. CPI less food and energy ticked up 0.1%, month over month putting it at 2.1% year over year.
Jobless Claims
Applications filed for U.S. unemployment benefits came in at 211,000 for the week of 5/5/18. That brings the four-week moving average to 216,000.
Bloomberg Consumer Comfort Index
The Bloomberg consumer comfort index hit a 55.8 for the week of 5/6/18.
Notable events this week:
Monday:
Tuesday:
NFIB Small Business Optimism Index
JOLTS
Wednesday:
PPI-FD
10-Yr Note Auction
Fedspeak
Thursday:
Consumer Price Index
Jobless Claims
Bloomberg Consumer Comfort Index
Friday:
Fedspeak
Consumer Sentiment
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
Everyone agrees that the COVID-19 outbreak is set to have a long lasting impact on the U.S. economy, and the housing market is no exception.
In a new report this week, Apartment List has outlined some of the long-term changes it thinks will affect real estate.
1.
Reduced mobility
The
report notes that people’s mobility will be much lower than it was
previously, before spiking.
“Geographic
mobility generally declines during downturns, when a lack of job
opportunities catalyze fewer long-distance moves across market or
housing upgrades,” the report said.
A
moratorium on evictions and foreclosures will also help to reduce
mobility, but analysts say they predict a spike in people moving home
once the outbreak ends.
“Many
upgrade and downgrade moves will be postponed rather than canceled,
creating a reshuffling of households throughout the recovery,” the
researchers note.
There
will also likely be a future wave of movement as people relocate
following the outbreak in search of jobs, or to be closer to their
family. Young people are also likely to want to flee the next to form
their own households.
2.
Less affordable homes on the market
Experts
say affordable rentals and homes for sale are likely to be impacted.
Both were in short supply even before the pandemic, and the situation
will get worse, they say.
“Fewer
people moving means fewer homes available,” the report noted. “With
both pandemic and policy keeping people in place, affordable units
will become even more rare through the 2020 peak season.”
Luxury
apartment inventory, on the other hand, may be abundant.
3.
Housing inequality will increase
Those in the higher-earner wage bracket will likely take advantage of lower borrowing costs and refinance in order to reduce their mortgage payments. But lower-income households will struggle with the sluggish economic and rising competition for the remaining low-cost homes available.
“As
shelter-in-place orders cover a growing share of the nation, those
who are able to work remotely are at a distinct economic advantage,”
the report said. “Unfortunately, a correlation between income and
the ability to work from home reveals that the lowest earners will be
hit hardest by these measures. Fifty-two percent of full-time workers
who earn more than $100,000 annually say they can work from home. But
only 15% of workers who earn less than $25,000 are able to work from
home.”
4. Sight-unseen purchases will grow
Experts
say they’re also expecting an increase in the number of people who
buy a new home sight-unseen.
“Many
apartment communities are already enabling virtual tours in response
to the pandemic, and many renters and owners alike may soon be
evaluating their next home through a tablet screen,” the report
found. “Mainstream adoption of sight-unseen moves will bring both
opportunities and challenges for the housing market.”
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
Mortgage rates little changed this week as investors assessed Federal Reserve Chairman Jerome Powell’s latest comments on rate hikes. To sum it up: a very strong labor market remains the main driver behind the Fed’s rate setting decisions and more tightening is still to come.
The 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 6.71% as of June 29, up marginally from last week’s 6.67%. By contrast, the 30-year was at 5.70% a year ago at this time.
Other mortgage indexes also show rates slightly rising.
The 30-year fixed rate for conventional loans was 6.91% at Mortgage News Daily on Thursday morning, up one basis points from the previous week. HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 6.69% on Wednesday, compared to 6.66% the previous week.
“Mortgage rates have hovered in the 6% to 7% range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year,” said Sam Khater, Freddie Mac’s chief economist in a statement. “New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction. The improved demand has led to a firming of prices, which have now increased for several months in a row.”
This week’s consumer confidence and new home sales came strong but investors are still watching the Federal Reserve to understand its next moves after the rate hike pause in June. The central bank’s future decision will indicate what to expect for the remainder of 2023.
At a banking conference in Europe on Thursday, Federal Reserve Chair Jerome Powell said that inflation remains well above the Fed’s longer-run goal of 2%.
“Since early last year, we have raised our policy rate by 5 percentage points. We see the effects of our policy tightening on demand in the most interest rate–sensitive sectors of the economy, particularly housing and investment. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation,” Powell said in his speech.
“With the Fed taking a breather from monetary tightening until its July meeting, capital markets are assessing the outlook for the second half of 2023,” said George Ratiu, chief economist of Keeping Current Matters.
The economy and job markets are still expanding, allowing housing to stabilize, remarks Ratiu.
On the downside, the Federal Reserve has been clear that inflation is still hotter than desired, and additional rate hikes are on the table. Based on the central bank’s forward guidance, most economists expect two more rate increases in the months ahead. The Fed still sees the strong jobs market as an obstacle to taming inflation. It intends to put a bigger dent in payrolls, Ratiu expects, risking to damage consumer confidence and push the economy into a recession.
Even with weekly fluctuations, the 10-year Treasury has been hovering around 3.7% since mid-May, running in a steady 100-basis point range, Ratiu noted. “Investors are welcoming signs of economic resilience at the midpoint of the year following a 12-month period dominated by recession worries. This week’s signs of strength came from consumer confidence numbers which hit a 17-month high, and the jump in new home sales.”
Jiayi Xu, an economist with Realtor.com, said that while the Fed’s rate hikes “may pose near-term upward pressure on interest rates, including for mortgage rates, we expect a gradual decline that could bring rates near 6.0% by year-end.”
In addition to persistently high mortgage rates and housing prices, the shortage of housing supply has worsened the conditions faced by first-time home buyers.
“Thankfully, builders are taking note of the market need and are making efforts to catch up to demand through new construction, especially of homes at lower price tiers. After dropping below 10% in 2022, the proportion of new homes sold that are priced under $300,000 is on an upward trajectory,” said Xu.
After three weeks of declines, the 30-year fixed-rate mortgage (FRM) moved up modestly from last week’s average of 6.67% to an average of 6.71% this week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers:
30-year fixed-rate mortgage averaged 6.71% as of June 29, 2023, up from last week when it averaged 6.67%. A year ago at this time, the 30-year FRM averaged 5.70%.
15-year fixed-rate mortgage averaged 6.06%, up from last week when it averaged 6.03%. A year ago at this time, the 15-year FRM averaged 4.83%.
What the experts are saying: “Mortgage rates have hovered in the six to seven percent range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year,” said Sam Khater, Freddie Mac’s chief economist. “New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction. The improved demand has led to a firming of prices, which have now increased for several months in a row.”
Realtor.com economist Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year mortgage increased by 0.04 percentage points to 6.71% this weekas investors assessed Powell’s latest comments on rate hikes. Two weeks ago, the FOMC signaled that the projected policy rate would be 50 basis points higher than previously expected by the end of 2023, which is also half a point higher than the current rate. Powell’s recent comments remarked that the very strong labor market is the main driver behind the Fed’s rate setting decisions and that there’s more restriction coming. While this may pose near-term upward pressure on interest rates, including for mortgage rates, we expect a gradual decline that could bring rates near 6.0% by year-end.
“In addition to still-high mortgage rates and housing prices, the shortage of housing supply has worsened the conditions faced by first-time home buyers, creating an especially challenging situation for those dreaming of homeownership. While smaller entry-level homes may not meet the criteria of a dream home, there is strong demand, but very few homes available that fit the bill. Thankfully, builders are taking note of the market need and are making efforts to catch up to demand through new construction, especially of homes at lower price tiers. After dropping below 10% in 2022, the proportion of new homes sold that are priced under $300,000 is on an upward trajectory. Early estimates in May indicate that homes within this price range constituted approximately 17% of total sales, marking the highest share since December 2021 (18%). Despite this encouraging news, there remains an urgent need for more homes at the most affordable price points, where the shortage of available inventory is most severe.”
Forget “love.” Today data hurts. Durable Goods fired a warning shot at 8:30am. Consumer Confidence and New Home Sales finished the job at 10am. With that, a modestly stronger start has given way to a red morning. The losses aren’t extreme and merely take bonds back into the same old range.
Forget “love.” Today data hurts. Durable Goods fired a warning shot at 8:30am. Consumer Confidence and New Home Sales finished the job at 10am. With that, a modestly stronger start gave way to a logical sell-off of moderate proportions. By 11:30am, the losses had run their course and bonds drifted sideways for the rest of the session–perfectly inside the prevailing range.
Durable Goods
1.7 vs -1.0 f’cast, 1.1 prev
Durables, nondefense, excluding aircraft
0.7 vs 0.0 f’cast
New Home Sales
763k vs 675k f’cast, 683k prev
Consumer Confidence
109.7 vs 104.0 f’cast, 102.5 prev
09:24 AM
Decent recovery after initial morning weakness. 10yr down half a bp at 3.717. MBS up 1 tick (.03)
10:07 AM
Weaker after New Home Sales data and consumer confidence. 10yr up 2.2bps at 3.745. MBS down nearly an eighth.
02:48 PM
Flat all afternoon after AM losses. 10yr up 4.5bps at 3.768. MBS down just over an eighth.
Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.
Most mornings after Stephen Garten wakes up at his home in Austin, Texas, he goes into his backyard and starts pacing, preparing himself for what’s next. “It’s brutal,” says Garten, 37, the founder and CEO of social impact company Charity Charge. “It’s a real challenge every day.”
He’s talking about lowering himself into a 66-inch-long and 24-inch-wide stainless steel tub clad in customized zebrawood and submerging himself up to his neck in water that he sets at 39 degrees Fahrenheit, with water circulating at 1,400 gallons a minute. “It’s like being in a river,” he says of the flow rate produced by this particular vessel, a Blue Cube cold plunge.
It’s an experience that Garten typically tolerates for less than two minutes at a time, once or twice a day. And it comes at a price of $19,000. Blue Cube, based in Redmond, Ore., makes cold plunge units that cost between around $18,000 and $29,000.
“Cold plunging has made a profound difference in my life,” Garten says. He says it has brought him health benefits including stress management.
Previously the domain of athletes, bathing in cold water or ice has become a mainstream wellness trend across the U.S. The practice goes by many terms, like cold plunging, ice bathing and cold-immersion therapy. Water temperature below 59 degrees Fahrenheit is generally considered cold immersion. People who swear by it say they have experienced wide-ranging health benefits, like reduced anxiety, alleviated joint and muscle pain and boosted energy and focus.
But while many people are experimenting with do-it-yourself methods—like taking cold showers or filling kiddie pools, horse troughs and unplugged chest freezers with cold water or ice—some enthusiasts have leveled-up their at-home cold plunging setups with sophisticated receptacles priced at tens of thousands of dollars and up.
Developers, meanwhile, are adding cold plunges to amenity-rich luxury complexes like 53 West 53 in New York and Cipriani Residences Miami, betting that cold immersion is here to stay.
“Ice bathing seems like a trend, but people have been doing this for thousands of years,” says Jonathan Coon, co-founder of Austin Capital Partners, which is the developer of Four Seasons Private Residences Lake Austin, 20 minutes from downtown Austin, slated to open in 2026.
In addition to 188 residential units starting at $4.1 million, the Lake Austin property on 145 acres will have 76,000 square feet of indoor wellness and sports facilities, including a 12,000-square-foot orangery, 82-foot swimming pool, sauna, steam room and, of course, cold and hot thermal baths.
Amenities covering 100,000 square feet is a key reason that Onyx W.D. Johnson and Cristian Santangelo bought a $2.2 million two-bedroom, 1,123-square-foot apartment in New York’s One Manhattan Square, an 80-story building located on the Lower East Side. Facilities include a spa with a tranquility garden, 75-foot saltwater swimming pool, hot tub, sauna, steam room and hammam with a cold plunge set between 55 and 58 degrees Fahrenheit. The couple moved into the apartment in May 2021.
Johnson and Santangelo quivered at the idea of cold plunging until they started seeing other people dipping and discussing the health benefits. “We decided to give it a try,” Johnson says.
Now cold plunging is part of their wellness regimen. Johnson, 50, who runs a management consulting firm, uses the hot pool, steam room and sauna, and then cold plunges for 45 seconds to a minute. He says this routine speeds up his training recovery time, helps him think clearer and improves his alertness and mood. Santangelo, 45, who is a management consultant, says the ritual helps him calm down and fight anxiety and stress.
Diamond Spas & Pools, based in Frederick, Colo., is a custom manufacturer of luxury pools, spas and soaking tubs for homeowners globally. The company added cold plunges to its portfolio in 2015 and saw one or two orders annually until 2019, when it experienced a sales surge. “Our cold plunge projects have increased 10 times since then,” says Mitch Martinek, the company’s design manager.
Martinek attributes the uptick to several factors. Today’s homeowners want gym and spa amenities at home and on-demand, cold therapy health benefits are better known now, and there are lingering pandemic concerns over public wellness facilities.
The company’s cold plunges, which chill water to between 40 and 55 degrees Fahrenheit, are made from stainless steel or copper and can be camouflaged in tile, stone or wood. The pools can go indoors or outdoors, come in any size and can work with home automation systems. The average cold plunge costs about $45,000, with elaborate projects running closer to about $65,000.
One of the company’s more unique cold plunges had an acrylic bottom and was in a high-rise building. “It was on a deck with a fire pit below,” Martinek says. “The homeowner wanted to be able to look up through the cold plunge.”
John Thorbahn bought a four-bedroom, 5,500-square-foot single-family home in Hingham, Mass., south of Boston, in March 2020 for $1.6 million. He owns a cold plunge from Phoenix-based company Morozko Forge, founded in 2018. Morozko Forge’s entry-level unit costs $12,850; its upgraded version costs $19,900.
Morozko Forge’s ice baths make ice. While the stainless steel tub is filled with cold water, an ice slab starts building at the tank’s bottom. At about 1-inch thick, the ice detaches and floats to the water’s surface. The ice can be broken up with an implement like a rubber mallet if needed.
Thorbahn, 63, who is the managing director at consulting company NFP, ice bathes most days for two to three minutes at 33 to 34 degrees Fahrenheit. His wife, Jana Thorbahn, 59, ice bathes, too. “The older you get, the more you want to live longer,” says Thorbahn, whose home also has a gym, sauna, red light therapy room and hot tub. “You start investing in protocols to help you be healthy.”
While many cold plungers have developed their own ice bathing rituals, choosing everything from their preferred water temperatures to time limits, Dr. Susanna Søberg, a Danish Ph.D. metabolic scientist and founder of the Soeberg Institute, is one of the world’s experts on the health benefits of cold immersion, which she has been studying for nine years.
In 2021, Søberg published research on cold exposure and hot exposure, which is called “contrast therapy” if the cold and hot exposures are performed in succession. Studying Danish winter swimmers, Søberg identified that a short plunge in cold, moving water combined with sauna use shifts the body’s nervous system and creates physiological changes, like boosting metabolism, lowering inflammation and releasing neurotransmitters that improve cognitive performance and mental health. “You are activating your whole body system,” Søberg says.
In a field that hasn’t been widely studied by the medical community, Søberg has developed what she says is the only scientifically backed cold immersion protocol for reducing stress using contrast therapy and breathing: 11 total minutes of cold immersion combined with 57 total minutes of heat, across two to three days a week. The goal of her method is to expose the body to the smallest amount of healthy stress needed to reap health benefits. “Staying in cold water or heat longer may not be beneficial or necessary,” she says.
Søberg says cold immersion carries the rare risk of cold water shock that can cause confusion or fainting, but the risk increases if a person does hyperventilating breathwork before or during cold water immersion. She also says cold plunging might not be good for people with heart disease or high blood pressure. Søberg advocates for cold plunging with others, and practicing slow, nasal breathing in the water.
Contrast therapy is why Sausalito, Calif.-based company Yardzen says most of its cold plunge projects involve saunas. Yardzen is an online landscape and home-exterior design company that works with homeowners across the U.S. The company’s co-founder and CEO Allison Messner says wellness yards—encompassing everything from cold plunges to saunas to meditation spaces to forest bathing—is one of Yardzen’s top 2023 trends.
“Peak luxury is having both a cold plunge and a sauna in your yard so you can experience cold and hot therapy,” Messner says.
Tobias Lawry, 51, and his wife, Christine Lawry, 50, live in a three-bedroom 1963 Midcentury Modern house in Dana Point, Calif. They purchased it in October 2018. Between July 2021 and October 2022, they worked with architect Chris Light, designer Frank Berry and builder Crawford Custom Homes to renovate their 3,000-square-foot house to honor its original period intention while modernizing it. This included turning a bedroom into a wellness room, which opens into a backyard with a pool, sauna and Blue Cube cold plunge.
The Lawrys, who run an estate-management and concierge services company called LPM, keep their Blue Cube at 47 degrees Fahrenheit. They typically cold plunge in the evening and on weekend mornings.
Stephen Garten in Austin also has a tricked-out wellness yard: In addition to his Blue Cube, he has a barrel sauna from Almost Heaven Saunas, which are manufactured in West Virginia and start around $7,500. He also has a stock tank pool from Cowboy Pools, an Austin-based company that has pool packages starting around $2,000.
He was inspired to create a backyard oasis where he and his fiancée, Katie Snyder, can have friends over. “It’s wellness,” Garten says, “but it’s entertainment too.”
Servicing, Lead Source, AI, MERS Review Products; Cybersecurity News; STRATMOR on Artificial Intelligence
<meta name="smartbanner:author" content="We now have a native iPhone and Android app. Download the NEW APP”>
This website requires Javascrip to run properly.
Servicing, Lead Source, AI, MERS Review Products; Cybersecurity News; STRATMOR on Artificial Intelligence
By: Rob Chrisman
8 Hours, 47 Min ago
As the U.S. faces nationwide flight delays, one must ask if there are processes in place for the FAA to deal with them. “Trust the process” is a common thing to hear, but attorney Brian Levy reminds us of why process is important in the actions of government in light of the FHFA’s rescinded DTI pricing. The CFPB knows a thing or two about the process, and the Consumer Financial Protection Bureau issued an order against Nebraska’s ACI Worldwide and one of its subsidiaries, ACI Payments, for improperly initiating approximately $2.3 billion in unlawful mortgage payment transactions. ACI’s data handling practices negatively impacted nearly 500,000 homeowners with mortgages serviced by Mr. Cooper (formerly known as Nationstar). “By unlawfully processing erroneous and unauthorized transactions, ACI opened homeowners to overdraft and insufficient funds fees from their financial institutions. Today’s order requires ACI, among other things, to pay a $25 million civil money penalty.” (Today’s podcast can be found here and is sponsored by Visio Lending. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Through its top-rated Broker Program, Visio brokers can earn up to 5 percent. Hear an interview with Visio Lending’s Jeff Ball on all things rental lending and debt service coverage ratio – DSCR – lending.)
Lender and Broker Services, Products, and Software
“Need a third-party reviewer for your 2023 MERS® Annual Report? Look no further than Falcon Capital Advisors. Only our review team consists of former members of the MERS legal, operations, membership, and compliance departments, who have first-hand experience developing, reviewing, and enforcing the requirements of the Annual Report. The MERS® Annual Report is not due until 12/31, but the submission window has already opened. Don’t delay. Contact Tim Renner today to learn more about how Falcon can put our unmatched experience and expertise to work for you. Discounted pricing available to those who sign up by September 1.”
Hey there, mortgage industry movers and shakers! Let’s talk tech, baby! Technology has been revolutionizing the mortgage industry, from LOS systems and underwriting systems to cloud-based credit reports. But wait, there’s more! Artificial Intelligence (AI) is on the horizon, and we’re here to explore how it’s going to shake things up. Love it or hate it, understanding its potential is crucial to staying relevant in the industry. Our free eBook is your ticket to discovering how AI can take your customer experience to the next level, boost productivity, slash costs, keep you compliant, streamline workflows, and give you a crystal ball into your borrowers’ future. Don’t miss out! Download Artificial Intelligence: 7 Ways AI is Transforming the Mortgage Industry today. Follow Birchwood Credit Services to gain access to a plethora of industry-related news and informative content that will aid you in closing more loans at lightning speed!
Own Up is the nation’s only mortgage concierge marketplace enabling mortgage companies, banks, credit unions and brokers to access exclusive, high intent and highly qualified borrowers. A recipient of numerous accolades, including Fintech Breakthrough’s “Best Digital Mortgage Platform,” Own Up is currently onboarding select lenders to further its national expansion. Own Up seamlessly integrates into all major lender CRMs, lead management systems and pricing engines. Lenders interested in acquiring qualified leads with industry-leading conversion should reach out to [email protected] to learn more.
Servicing Products and Tools
It’s time for a quick riddle! Every company wants this, but few achieve it. And when you have it, it speaks for itself. The answer? CREDIBILITY. Mortgage servicers of all sizes trust their portfolios to MSP®, Black Knight’s loan servicing system – and for good reason. MSP has consistently set the industry standard for delivering best-in-class functionality and fully integrated solutions that support every servicer’s unique needs. No need to take our word for it, though, just check out what MSP clients are saying. Credibility speaks for itself. If you want to learn more about the proven system capabilities to transform your servicing operations, contact our team today.
Top mortgage subservicer PHH is asking “what if?” What if you could reduce your servicing complaints by 75%? What if you could save more than $1 million per year just by switching subservicers? What if your subservicer could help reduce defaults and increase recapture? What if your customers loved your servicing technology, including mobile apps, videos, and online chat capability? No other servicer has been more highly decorated for servicing excellence over the past two years than PHH with top awards from Fannie Mae STARTM and Freddie Mac SHARPSM. Clients like Curtis Dair, CFO of Sierra Pacific Mortgage Company, said “PHH has shown an unwavering commitment to providing the highest levels of customer service.” In 90-120 days, PHH can help you make the jump to the next generation of subservicing: cost savings, customer-centric tech, and award-winning service. Find out how to join the PHH Mortgage family, starting with a call or email to Chris Sabbe at 415-828-1222.
Prepare to act on your servicing portfolio when delinquencies increase! Do you have the right team in place to help manage your servicing portfolio when borrowers become delinquent? When it comes to mortgage delinquencies, getting in front of distressed borrowers is important. Velocity Servicing™, a LoanCare® division focused on specialty servicing and investor ROI, can provide you with critical and specialized support for your distressed loan portfolio. Within 12 months, Velocity achieved a 36% lift in loan resolution compared with traditional servicing models for their specialty servicing clients. We accomplish return on investment earlier through an intelligent network of triggers, exceptions, and loan-level conditions to keep your most distressed customers’ loans on their pathway to performance. Velocity’s team prioritizes maximizing opportunities to return your distressed loans to performing portfolios faster by using an award-winning data analytics platform to drive payment success. Click to learn more or call today: 646-361-6808.
STRATMOR on Artificial Intelligence
Let’s face it: AI is part of our industry’s future, and we’d all like to have insight into its potential impact. In the June issue of STRATMOR Group’s Insights Report, STRATMOR experts including Senior Partner Garth Graham, Senior Advisor Brett McCracken and Principals Jennifer Fortier, Jennifer Smith and Kris van Beever answer questions about artificial intelligence and its future in our industry. For the AI perspective, STRATMOR went to ChatGPT, the current poster child for AI, and asked it the same questions posed to STRATMOR’s team. On some questions STRATMOR and ChatGPT agree; on others, the experts with decades of mortgage experience show why AI isn’t the be all, end all answer. Read, “The Rise of AI: STRATMOR Experts and ChatGPT on Artificial Intelligence in the Mortgage Industry,” for a glimpse into what may be a best-case scenario for how we share the future with these powerful new technologies in the June Insights Report.
Cybersecurity and Protection
Kris Van Beever with STRATMOR observes, “Everyone needs to be ultra-diligent in watching out for fraudulent texts and emails. With the availability of highly functional AI, perpetrators of fraud are now able to leverage this new tech to eliminate many of the things that used to give them away. All employees should be trained in looking for misspellings, poor grammar, and otherwise inappropriate tone. ChatGPT and similar tools now eliminate all the obvious telltale signs of fraudulent messages. They can even mimic the style and tone of humans with references that are near impossible for us to decipher. We may be heading into an electronic world where we have to use complicated multi-factor authentication for all interactions. I am not claiming the sky is falling… It has fallen.”
Along these lines, FundingShield announced a partnership with Mastercard. “As payment related fraud spikes, we are addressing the cybersecurity-based challenges with solutions that deepen our ability to serve the mortgage and real estate sector but provide industry agnostic payment verification tools. FundingShield entered a partnership with Mastercard to leverage its open banking platform delivered by Finicity, a Mastercard company. FundingShield provides live, source data-based technology products and SaaS solutions that have been used to secure the funds of over $2.5 trillion in mortgage closings.”
FundingShield CEO Ike Suri shared, “FundingShield has over 95% coverage of licensed service providers in the real estate, mortgage, closing and settlement space in our live repository. This partnership with Mastercard allows us to leverage its open banking connectivity of over 95% of U.S. based deposit accounts for consumer-permissioned access to real-time, bank-sourced data to expand our B2B and B2B2C payment verification solutions for clients.”
“FundingShield’s solutions manage risk for B2B and B2B2C firms facing a surge of cybersecurity threats like hacking and fraud. FundingShield’s payment verification solutions support bank account ownership that is confirmed with consumer-permissioned data from the banking institution where the account is held, using Mastercard’s open banking platform. This source data is then used to help approve payments ahead of a FundingShield client initiating a wire, ACH, or other payment method from the customer’s banking institution.”
Capital Markets
Economies have so far proved more resilient to rate hikes than most had expected, with the Fed’s benchmark rate now north of 5%. There are several explanations for the phenomenon, ranging from pandemic-era forces and tight labor markets to wage gains and consumer spending. It also takes time for higher rates to filter through the economy, with many economists still anticipating a recession over the next six to 18 months if central banks extend their hiking cycles. The yield curve between the 2-Year Treasury (US2Y) and 10-Year (US10Y) has even widened by more than 100 basis points, marking the greatest disparity between the two instruments since late 1981. But…
Looking forward, expectations stubbornly call for a recession starting in a few months, but various economic data are telling a far different story. Stronger than expected durable goods orders data and an above-consensus and highest year-to-date Consumer Confidence report for June released yesterday morning helped harden sentiment that the Fed will remain hawkish, with rates subsequently rising as a result. It was a busy day for data, most of which depicted continued strength and resilience in several corners of the U.S. economy, including the May New Home Sales report that came in at 763k, easily beating 665k estimates. That was the fastest annual rate of new home purchases in more than a year, and up 15.5 percent compared to May of last year. Markets also responded to the day’s $43 billion 5-year note auction, which met weaker demand than Monday’s stellar 2-year note sale.
The May New Home Sales figures are consistent with the recent firming in home price growth and homebuilder optimism over the past few months. Steady buyer demand and low existing home supply continue to bolster the new home market across all regions. May saw the second largest increase on record for sales of new homes that have not yet been started, which surged to an annual rate of 195k, the highest level since January 2022. Also aiding homebuyers is stalling home price growth: the Case-Shiller Home Price Index reported an annual overall decrease of 0.2 percent in April. The median new home price fell 7.6 percent on a year-over-year basis to just over $416k. The average sales price fell 6.6 percent to $487k. Separately, FHFA reported that home prices rose 0.7 percent month-over-month in April and 3.1 percent on a year-over-year basis, though there were declines in the West and the Mountain states.
On the central bank front, ECB President Christine Lagarde indicated yesterday that the European Central Bank will likely hike rates in July and that additional rate hikes may be required to thwart inflation. That largely echoes the Fed’s message that rates are likely to remain elevated throughout 2024. However, there have been some Fed members that think the Fed should stand pat, such as Atlanta Fed President Raphael Bostic. “My baseline is that we should stay at this level for the rest of the year (to assess the impacts of the Federal Reserve’s rate-hiking cycle on the real economy),” he said. Market participants are slowly capitulating to the Fed’s “higher rates for longer” theme, as pricing in fed funds futures have largely priced in another 25-basis points rate hike at the upcoming July FOMC meeting. That said, markets continue to price in a nearly one-in-three chance that the Fed pulls an about-face and cuts rates by a quarter percentage point by December.
Mortgage applications from MBA kicked off today’s economic calendar, increasing 3.0 percent from one week earlier. The week’s results included an adjustment for the Juneteenth holiday. We’ve also received Advanced indicators for May with the goods trade deficit (down to $91.1 billion which could add to GDP), wholesale inventories (+.8 percent), and retail inventories (+.8 percent, strong). Later today brings remarks from Fed Chair Powell in Portugal and Treasury auctions of $22 billion reopened 2-year FRNs and $35 billion 7-year notes. We begin the day with Agency MBS prices a few ticks (32nds) better, the 10-year yielding 3.73 after closing yesterday at 3.77 percent, and the 2-year’s at 4.74.
Employment and Transitions
“Homestead Funding’s commitment to community service is evident through the involvement of our Loan Originators in various volunteer activities. By living in the same areas they serve, our LOs are deeply connected to their communities and actively contribute to their betterment. Debb, for instance, selflessly volunteers her time as a driver for Disabled American Veterans, supporting veterans in need. Joel’s annual golf game raises funds for the local Boys & Girls Club, showcasing his commitment to empowering youth. Phil’s involvement in National EMT Day demonstrates his recognition of the vital role emergency medical technicians play in saving lives. Mark’s hockey team raises funds for Make-a-Wish, supporting critically ill children. We not only recognize the efforts of our LOs, but we provide corporate, marketing, and financial support, which helps amplify their impact and enables them to contribute more effectively. Interested in pursuing a career with Homestead Funding? Call Michele Teague (518)-368-1494.”
Agile, the industry’s first MBS fintech, has appointed a new company president, Greg Vacura, former SVP of Correspondent Pricing at Wells Fargo Funding. “He’s now been tasked with applying that deep industry expertise towards achieving Agile’s mission of creating a better MBS market… to fulfill Agile’s mission to create a better mortgage-backed securities (MBS) market through increasing liquidity and automation in TBAs, MBS pools, and AOTs.
And there was this news recently out of St. Louis: Employee-owned USA Mortgage, announced new leadership roles for three senior executives. Announcing the transition was Doug Schukar, who formed DAS Acquisition Company, LLC, (marketed as USA Mortgage nationwide) in 2001. Schukar handed off his duties as DAS Acquisition’s Chief Executive Officer to current President and Chief Operating Officer Linda Pring. (Schukar retains his role as Chairman of the Board.) Ron Mueller assumed the role of President of DAS Acquisition. And Dani Ploch, Chief Administrative Officer, succeeds Pring as the company’s Chief Operating Officer. The company has offices in 34 states and licensed in 49 plus the District of Columbia. Currently, it employs nearly 800 people at 142 locations nationwide.
Download our mobile app to get alerts for Rob Chrisman’s Commentary.
Share via Social Media:
All social media shares will include the image and link to this page.
Purchase mortgage applications increased for the third consecutive week, reaching the highest level of activity since early May, in spite of the 30-year fixed rate increasing slightly to 6.75%.
For the week that ended June 23, mortgage applications climbed 3% from the prior week, according to data from the Mortgage Bankers Association.
“Purchase applications increased for the third consecutive week to the highest level of activity since early May but remained more than 20% lower than year ago levels,” said Joel Kan, MBA’s vice president and deputy chief economist.
New home sales have been driving purchase activity in recent months as buyers look for options beyond the existing-home sales market, which has historically low levels of inventory. Many potential sellers keep on holding on to their lower-rate mortgages, according to economists.
Last week, mortgage rate changes varied across loan types, with the 30-year fixed rate increasing slightly to 6.75% from 6.73%. On the other hand, the jumbo rate was higher than the conforming rate for the third week in a row. The spread between the rates of the two types of loans widened to 16 basis points. As a point of comparison, from May 2022 to May 2023, the jumbo rate averaged around 30 basis points lower than the conforming rate. The MBA data showed that for jumbo loan balances (greater than $726,200), the rate jumped to 6.91% from 6.80% last week.
At Mortgage News Daily, mortgage rates were higher on Wednesday morning, at 6.92%.
Refinancing applications increased 3% last week compared to the previous week and were 32% lower than the same week one year ago. However, the refinance share of mortgage activity increased to 27.2% of total applications from 26.9% the prior week. Meanwhile, the purchase index increased by 3% from one week earlier and was 21% lower than last year’s level on an unadjusted seasonal basis.
Regarding loan types, the adjustable-rate mortgage (ARM) share of mortgage apps decreased to 6.1% of total applications, the MBA data shows.
The Federal Housing Administration loans’ share decreased to 12.9% from 13.3% the week prior. The U.S. Department of Veteran Affairs loans’ share increased to 12.2% from 11.9% the week prior. And the U.S. Department of Agriculture loans’ share remained unchanged at 0.4% of the total applications.
Direct mortgage lender Geneva Financial has launched an in-house portfolio lending division, expanding its loan options.
According to its release, the investor-focused private lending division taps into Geneva’s capital with $55 million in managed funds. The new unit will offer fix-and-flip loans, ground-up construction loans, bridge loans for investors, and a signature bridge loan called the “Transition” that allows borrowers to purchase a new home before their existing one is sold.
Geneva has appointed industry veteran Morgan Smith (pictured) to head the new unit.