rate hike

Apache is functioning normally

Weekly housing inventory data

We will start with the price cut data percentage because it deserves a detailed explanation. 2022 was a historic year for housing as we had the most significant home sales crash ever, and mortgage rates went from 3% to 7% in the same year. That type of move is very abnormal and home sales simply collapsed, especially in the second half of 2022. 

Naturally, some people thought home prices would crash in 2023 as many market players said prices always follow volume. But not only did that not happen, home prices quickly got back to all-time highs. Then something even crazier happened: mortgage rates shot to to 8% but the number of homes taking price cuts never went above 2022 levels during this time.

In fact the price cut percentage consistently stayed 4% below 2022 levels. I believe this is due to the fact that home sales aren’t crashing anymore like they were in 2022. What happened between June 2022 to June 2023 can be confusing, so if you need more clarity I suggest listening to this podcast.  

Here is the price cut percentage data for the same week in other years:

  • 2023 38%
  • 2022 42%
  • 2021 27%

As you can see, affordability is an issue, and the price cut percentage is higher now than in any period from 2015-2021, but still below 2022 levels.

Now lets take a look at the weekly inventory data. Last year, according to Altos Research, the seasonal peak for housing inventory was Oct. 28. the seasonal peak this year was on Nov. 17.

  • Weekly inventory change (Dec. 1-Dec 8): Inventory fell from  555,717 to 546,424
  • Same week last year (Dec. 2-Dec. 9): Inventory fell from  550,302 to 536,409
  • The inventory bottom for 2022 was 240,194
  • The inventory peak for 2023 so far is 569,898
  • For context, active listings for this week in 2015 were 1,050,971 

The new listing data has been trending at the lowest levels ever for 17 months now. What 2023 data has shown me is that even with mortgage rates heading toward 8%, new listings data didn’t take a new leg lower — it stayed remarkably consistent all year long. This is a positive, and something I discussed on CNBC months ago, that we should see some flat-to-year-over-year growth data in the second half. Since most sellers are also buyers, getting growth in this data line will be a positive for home sales in 2024.

New listings data last week

  • 2023 43,188
  • 2022: 39,149
  • 2021: 46,881

In 2024, what we want to see is new listings data grow back to 2021 and 2022 levels in the spring. This will bring more inventory to the marketplace and get more sellers, who will also be buyers.

Mortgage rates and the 10-year yield

Last week was another interesting week for bond yields and mortgage rates. We almost broke under 7% mortgage rates for the first time in a while, getting as low as 7.04%. We ended the week at 7.09%, and this was during jobs week where had two weaker-than-anticipated labor reports and two better-than-anticipated reports. Regarding jobs Friday, I wrote this article on why the Federal Reserve was wrong about inflation and jobs.

We have a big week ahead of us. For now I would focus on the 4.10% level on the 10-year yield since we bounced on that level twice last week. We have two inflation data points this week and if both come in lighter than anticipated and the Fed gives a dovish outlook, that is the best case for the 10-year yield to fall below 4% and get us mortgage rates below 7%.

Purchase application data

There was some confusion over the purchase application data this last week: The unadjusted data showed 35% week-to-week growth and the seasonal adjusted data showed a slight decline of 0.03%. We always take the seasonal adjusted numbers no matter what. Just be mindful of purchase apps around the holidays.

Since Mortgage rates have fallen from 8% and are now near 7%, purchase apps have had four positive and one flat weekly print. This makes the year to date count 22 positive prints, 23 negative prints and 2 flat prints. Clearly we have a positive trend here in purchase apps which is typically the normal with a 1% move in rates. But again, we are working from a low bar here in this data line and we will need at least 12-14 weeks of positive growth trends to have it been something material.

The week ahead: Fed and inflation week

Ok, here we are heading into Christmas and the question is: will the Fed be the good Grinch going into Christmas or the Grinch we see for 93% of the movie? There is no rate hike coming of course, but what the Fed says matters a lot, especially what Chairman Powell says in the Q&A portion of the press conference. Inflation data is key as always, because we wouldn’t be talking about rate cuts in 2024 if the growth rate of inflation was at 5%-8% year over year. We also have retail sales coming up this week so we will be keeping a close eye on all of these reports.

Source: housingwire.com

Apache is functioning normally

The rally in Treasuries ahead of the Federal Reserve’s first interest-rate cut may only just be getting started, according to Bank of America Corp. research.

The 10-year yield has already fallen toward 4% from a 16-year high above 5% reached in October. It could fall nearly two percentage points more, according to the bank’s analysis of prior bond moves between a final Fed rate hike and a first cut.

“The Treasury market has rallied substantially after the last hike in each of the five hiking cycles back to the 1988 cycle,” said strategists including Ralph Axel and Meghan Swiber in a client note. The strategists calculated the biggest drop was 163 basis points, with an average fall of 107 basis points.

With a potential pivot by global central banks from hikes to cuts next year at the top of the agenda for investors, the research is an effort to show the possibilities of where U.S. yields could end up. That would have a spillover effect across global markets.

While the US 10-year rate is down about 90 basis points from its October peak, the strategists noted it still remains above the level in July when the Fed last hiked rates to a range of 5.25% to 5.5%. Taking the yield from then of 3.87%, they estimated it could drop as low as 2.25% by May 2024. That’s when money markets are pricing the first quarter-point cut.

The second-biggest U.S. bank isn’t betting on its study, however. Its own forecast is for the benchmark yield to end next year at 4.25%, not too far off current levels.

“It is a simple application of historical moves,” the strategists said. They also cautioned that “lingering inflation pressures could limit the rally.”

Source: nationalmortgagenews.com

Apache is functioning normally

Anyone eyeing mortgage rates, which reached above 8% in October, can be excused for longing for the pandemic lows of sub-3% mortgages. But it’s unlikely those rock-bottom rates will return anytime soon, according to Mark Zandi, chief economist at Moody’s Analytics. Instead, the veteran market watcher expects rates to hover at roughly double that level in the near future. 

“Everybody should get used to 5.50% to 6%, because that’s where mortgage rates are going to settle in, [in the] long run,” Zandi told CNBC on Monday. Mortgage rates tend to trail the 10-year Treasury yield, which he suspects will hover around 4% to 4.50%; that generally puts mortgage rates at that 5.5% to 6% he’s expecting. 

Asked to predict the magic mortgage rate that will have inventory flooding back into the housing market, Zandi said that obviously a 5% rate is better than 6%, but the long-term number will likely be somewhere in between.

In recent weeks, mortgage rates have fallen from their October highs, with the average 30-year fixed rate currently at 7.30%. But in today’s somewhat frozen housing market, that’s barely a start. With a 6% mortgage rate, things start to thaw as would-be buyers and sellers enter the market, but Zandi doesn’t think home sales will get back anywhere near levels seen during the pandemic, before the Federal Reserve began its interest rate hike cycle to lower inflation. Getting closer to that 5% mortgage rate would trigger more activity, he added. 

“The other thing that’s got to happen here, obviously, is we do need to see some weakness in house prices,” Zandi added. “If house prices don’t come [down] to any degree, we’re going to have to see even lower mortgage rates to get sales up.”

Some forecasts, like that of Goldman Sachs, suggest home prices will continue to increase next year. So far, prices aren’t letting up; the national S&P Case-Shiller house price index increased 3.9% on an annual basis in September, according to figures released on Tuesday. 

Meanwhile, existing home sales are at their slowest pace since 2010, when the housing market was reeling in the aftermath of the Great Financial Crisis. That’s largely because of the so-called lock-in effect, which keeps homeowners with low mortgage rates from selling their homes—constraining both buyers and sellers. New home sales, on the other hand, have outperformed existing home sales because homebuilders can offer incentives, like mortgage rate buydowns. Still, higher mortgage rates are curbing demand even there, with new home sales falling more than expected in October.

“Most of the weakness in sales is on the existing side,” Zandi explained. “Homeowners are much more reluctant to cut prices … Builders are doing what it takes to move those homes.”

There is some relief pushing its way through the housing market, and that’s on the rental side. 

“Rents have gone flat to down, particularly at the high end of the market,” he said. “These big multifamily towers are going up in the big urban centers in the Northeast, Chicago, on the West Coast, and that’s putting downward pressure on rent—and, I think, is having some impact on new house prices, and at the high end of single-family housing markets.” 

Realtor.com’s October rental report released on Tuesday showed median rent for studios and one- and two-bedrooms across the top 50 metro areas in the U.S. continues to trail its 2022 levels, experiencing a year-over-year decline for the sixth month in a row. As Zandi mentioned, a lot of that has to do with supply. There was a substantial increase in new multifamily construction in 2022, and that resulted in an uptick in new multifamily completions in 2023, “which significantly augmented the rental supply and exerted downward pressure on rental prices” this year, the report found. 

Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up for free.

Source: fortune.com

Apache is functioning normally

Today’s mortgage rates are high but they could be worth locking in compared to the potential higher ones to come.

Getty Images


While a cut to interest rates is still off in the distance, borrowers this week received the second-best news they could wish for: Rates aren’t going to be increased again. At least not for November. While the benchmark interest rate range remains at a 22-year high of 5.25% to 5.50%, it will stay there at least until the final Federal Reserve meeting of 2023.

And though that rate remains high, even a pause can help borrowers now (and it can motivate savers to take advantage while rates are elevated). A pause, in particular, can be helpful for homebuyers who have been looking to purchase a new home. Even though mortgage rates today hover around 8%, it can still be a good time to lock in a rate, particularly if the prospect of a rate cut looks far off. In fact, there are multiple reasons why buyers may want to lock in a mortgage rate now while interest rates are paused.

Start by exploring your mortgage rate options here to see what you can qualify for.

Why homebuyers should lock in a mortgage rate with interest rates paused

Here are three compelling reasons why those looking to buy a new home should lock in a rate this month.

There’s (slightly) more time to shop around

When interest rates increase, there’s very little time between the Fed’s actions and the corresponding bump in mortgage rates offered by banks and lending institutions. But after the Fed kept rates paused this week — and the next Fed meeting scheduled for December 12 and December 13 — borrowers have a little more breathing room to shop around to find the best rates and terms without the added pressure. 

They won’t have an infinite amount of time, though, particularly if rates are increased in that final 2023 meeting. But they can lock one in now and still have the time to shop around for something better, which normally wouldn’t be the case following yet another rate hike. 

Start exploring your mortgage rate options here today and see what you can find.

Rates will likely be lower

While not certain, the mortgage rates qualified borrowers can obtain now will likely be lower than what they can get if they wait for the Fed to make another rate hike. So, sure, 8% isn’t considered a bargain now, particularly when compared to the sub-3% mortgage rates one could have secured in 2020 or 2021. But 8% is still likely to be lower than what you may encounter if you take a wait-and-see approach. 

Plus, by waiting, you could risk losing your dream home. After all, there’s a reason why many experts recommend you “date the rate and marry the home.” You can always refinance to a lower rate in the future, but the home of your dreams, in the location you want to live in, may not always be available.

You can explore your alternatives

Even with mortgage rates higher than they’ve been in decades, there are still ways borrowers can secure a below-average rate. A pause in rate hikes gives you more time to explore these methods. This includes shopping around (as mentioned above) but it also means getting rates for adjustable-rate mortgages (which can increase over time but may be lower than the median rate available now). 

There’s also the potential to buy mortgage points, in which you pay a fee to the lender to get a lower rate now (think 8% without points and 7.50% to 7.75% with them). Or you could even see if the home you’re interested in buying comes with an assumable mortgage. While rare in today’s market, this option could save you significant sums of money if the current, assumable mortgage is pegged to a lower mortgage rate than you would have otherwise been eligible for.

Learn more about your mortgage rate options here.

The bottom line

Mortgage rates are high, no question. But timing here is crucial and there may be no better time, at least for the foreseeable future, than now to lock in a rate. This brief respite will give buyers some additional time to shop around but it will also, potentially, allow them to secure the lowest rate they can get until the economy fully recovers from inflation. Borrowers will also now have time to explore some other, lesser-known ways to obtain a below-average rate such as with an adjustable-rate mortgage, by buying mortgage points or by taking over an assumable mortgage. 

While the options (and the rates) may not be as favorable as they were just a few short years ago, any edge in the wider rate environment can help now. So don’t dismiss the benefit of locking in a rate today. Get started here today!

More

More

Source: cbsnews.com

Apache is functioning normally

Apache is functioning normally
The new inflation report could mean yet another hike to the benchmark interest rate.

Getty Images/iStockphoto


After some signs that inflation was cooling earlier this year, it rose in July and August and remained unchanged in September. While not as high as earlier in 2023, persistent inflation is still a problem to be dealt with, particularly as the 3.7% rate it currently sits at is substantially higher than the Federal Reserve’s 2% target goal. And with elevated inflation comes elevated interest rates. 

The benchmark interest rate currently sits at a range between 5.25% and 5.50% — a 22-year high — and could go even higher in the weeks to come. While this has resulted in substantial returns on some savings accounts, it’s also made borrowing more expensive. This is particularly felt by homebuyers who are now contending with the highest mortgage interest rates since 2000. That said, rates could go even higher in the weeks to come, possibly making now the last time to get a decent rate.

See what mortgage interest rates you could qualify for here now.

Will mortgage interest rates go up in November?

The Federal Reserve has already implied that another rate hike is coming this year. And with just two and a half months left until 2024, it could be announced following their October 31-November 1 meeting. 

“We are attentive to signs that the economy may not be cooling as expected,” Fed chair Jerome Powell said in August. “We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

Considering that those comments were made before the September inflation report was released, it’s almost a certainty that the benchmark interest rate — and the corresponding rates on mortgages, personal loans, credit cards and more — will follow with it. So the 7.89% average mortgage rate for a 30-year loan available today is likely to creep up even further in the weeks to come, possibly as soon as November. 

“It’s always a nearly impossible task to predict mortgage rate movements, but there’s no clear reason to expect a sizable drop in the near future,” Nicole Bachaud, senior economist at Zillow, recently told CBS News. 

If you’re looking to purchase a home in today’s elevated-rate environment, then it may help to shop around to find the lowest mortgage interest rate possible. Get started here now.

How to get a below-average mortgage interest rate now

Even with mortgage rates higher than most buyers would like, there are some ways to get a below-average rate. Here are two of the more popular options:

Buy mortgage points

Homebuyers searching for a more affordable loan should speak to their lender about potentially buying mortgage points. Mortgage points essentially act as a fee that buyers can pay to the lender to lock in a slightly lower rate than they otherwise would have secured on their own. While this won’t dramatically lower the available rate, every dollar counts, particularly now. 

Just make sure to remain in the home long enough to recuperate the costs of paying for the points. Otherwise, it may not be valuable for you. 

Consider an adjustable-rate mortgage

An adjustable-rate mortgage is not an option many experts would recommend in a regular rate environment. But the rate environment of October 2023 isn’t what many would consider to be normal, either. An adjustable-rate mortgage involves securing a slightly lower rate now with the understanding that it can and will adjust at some point in the future (possibly to an even higher amount than what’s currently available with a conventional mortgage). This option isn’t for everyone, but it could save you some money now. Plus, you could always refinance to a fixed rate when the market stabilizes in the years to come.

Learn more about your mortgage rate options here today.

The bottom line

Inflation, even if unchanged in September, is still a major concern for borrowers around the country. And with it still above the Fed’s goal, it could be a portend for yet another rate hike in the weeks to come. With this understanding, homebuyers may want to lock in a mortgage rate now before they tick up even further. These buyers should also explore other ways to get a below-average rate by potentially buying mortgage points and/or securing an adjustable-rate mortgage. 

More

More

Source: cbsnews.com

Apache is functioning normally


Washington, DC
CNN
 — 

Mortgage rates tumbled this week in the biggest one-week drop since last November. It’s the second straight week that rates have fallen, after rising for seven consecutive weeks.

The 30-year fixed-rate mortgage fell to an average of 7.50% in the week ending November 9, down from 7.76% the week before, according to data from Freddie Mac released Thursday.

A year ago, the average 30-year fixed-rate reached 7.08%, its highest level in 2022. The following week, rates dropped by 47 basis points. This week saw a drop of 26 basis points from last week.

“As Treasury yields decline, the 30-year fixed-rate mortgage dropped a quarter of a percent, the largest one-week decrease since last November,” said Sam Khater, Freddie Mac’s chief economist.

“Incoming data show that household debt continues to rise, primarily due to mortgage, credit card and student loan balances,” he said. “Many consumers are feeling strained by the high cost of living, so unless mortgage rates decrease significantly, the housing market will remain stagnant.”

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit. A current buyer’s rate may be different.

Lower rates could bring buyers off the sidelines

Homebuyers have been shellshocked by surging rates, which have sent home loan applications and home sales down sharply. Sales hit a 13-year low in September as buyers paused their home search, waiting for more inventory and lower mortgage rates.

But as mortgage rates dipped last week, there was a 2.5% increase in all applications for loans from a week ago, according to the Mortgage Bankers Association. Applications for a mortgage to purchase a home went up by 3%.

“Applications for both purchase and refinance loans were up over the week but remained at low levels,” said Joel Kan, MBA’s vice president and deputy chief economist. “The purchase index is still more than 20% behind last year’s pace, as many homebuyers remain on the sidelines until more for-sale inventory becomes available.”

The Federal Reserve’s decision at last week’s monetary policy meeting to keep interest rates where they were was good news for homebuyers struggling with sky-high mortgage rates, but the option for an additional Fed rate hike is still on the table.

“More economic indicators are needed to determine whether the current policy is ‘restrictive enough’ to bring inflation back to the [Fed’s] 2% target,” said Jiayi Xu, an economist at Realtor.com.

Rates cool as job growth slows

While the Fed does not set the interest rates that borrowers pay on mortgages directly, its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually ends up doing and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.

Meanwhile, Xu said, the October jobs report, which revealed moderate job growth and reduced wage pressures, might boost confidence among policymakers that the economy will continue to ease without the need for more Fed rate hikes in the coming months. The Fed’s last rate-setting meeting of the year is scheduled for December 12-13.

“As the possibility of a rate hike remains on the table, investors are likely to exercise caution in their positioning, and the expectations for [mortgage] rates to stay steady to slightly higher remains,” said Xu.

The monthly cost to buy a home hits a record high

Homebuyers are getting a little break in rates just as unaffordability reaches new heights.

While the median price of a home in October was about the same as last year, according to Realtor.com, mortgage rates that have been over 7% since mid-August have resulted in a significant increase in the cost of financing a typical home purchase.

The monthly cost to buy a home has risen by over $166. That’s a 7.4% increase compared to the previous year and a new record in the year-over-year increase in the cost of buying a home, Realtor.com has found.

But while mortgage rates remain relatively high, the difference between rates now and what they were a year ago has narrowed, said Lisa Sturtevant, chief economist at Bright Multiple Listing Service.

“In many ways, market conditions are similar to what they were last November,” she said. “The difference is that consumers have adjusted their expectations about mortgage rates.”

“Many buyers are pressing on and will act quickly when they see rates dip,” she said. “Other prospective homebuyers will bide their time until after the first of the year, hoping for lower rates and more inventory.”

While rates are expected to come down in 2024, she said, they are not forecast to return to pandemic levels.

“We are in a new era for mortgage rates, where prospective homebuyers can expect rates to settle above 6%,” said Sturtevant.

Source: cnn.com

Apache is functioning normally

Apache is functioning normally

There’s a reason we haven’t been mentioning this week’s release of the Fed Minutes as we lament the absence of significant scheduled market movers.  Simply put, we’re largely past the phase of the rate hike cycle where the minutes can tell us any more about the Fed’s outlook than the Fed can tell us itself via speeches, press conferences, etc.  Of course, there can always be a brief, volatile reaction to any Fed communication, but it would be quite surprising to see this particular event doing anything to reshape the rate narrative in any meaningful way. 

We know the Fed is “done hiking unless the economic data and inflation metrics pick back up in a way that suggests more tightening is needed.”  And even then, the Fed would then have to weigh the extent to which sufficient tightening may already be in the pipeline.  Long story short, we’re not expecting any fireworks, and even if we see a few, we’re not expecting them to start any fires.

To be perfectly fair and balanced with respect to our “narrow range” outlook for the week, it’s worth noting that the narrowest version of the range has given way to a slightly wider version as yields press back toward last Friday’s lows.  This doesn’t really change the gist of “sideways and less volatile” ahead of the next big round of data, but it does mean we get to wait things out at levels that are even better than hoped.

Source: mortgagenewsdaily.com

Apache is functioning normally

Underwriting, Outsourcing, CRM, POS Products; IMB earnings for Q3

<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.

Underwriting, Outsourcing, CRM, POS Products; IMB earnings for Q3

By:
Rob Chrisman

Thu, Nov 16 2023, 11:02 AM

“Every disaster movie starts with the government ignoring a scientist.” Vendors and lenders can’t ignore red ink. Here in Kansas City, one of the discussion topics is how relationships are important during these days when the balance sheets of many lenders and vendors don’t look so great after, for many companies, several quarters of losses. How much pain do some owners want? Balance sheets were plump after 2020 and 2021, and warehouse banks and investor counterparties continue to do business with companies that are losing money based on those balance sheets along with the servicing income. Now? The MBA’s oft-quoted Marina Walsh, VP of Industry Analysis, reported, “Independent mortgage banks and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $1,015 on each loan they originated in the third quarter of 2023, an increase from the reported loss of $534 per loan in the second quarter of 2023. (Today’s podcast can be found here, sponsored by LoanCare, the mortgage subservicer known for delivering superior customer experience through personalization and convenience. Its award-winning portfolio management tool, LoanCare Analytics, supports MSR investors with a focus on customer engagement, liquidity, and credit risk.)

Lender and Broker Software, Products, and Services

Plug-n-play your way to better relationship marketing with Velma, an effortlessly simple CRM tailor-made for smaller lenders, banks, and credit unions. Say goodbye to expensive, complex systems. Velma delivers budget-friendly marketing automation solutions featuring zero implementation fees and seamless, hassle-free setup. With hyper-personalized engagement, effortless efficiency, and a proven track record with over 40,000 mortgage professionals since 2007, Velma simplifies your journey, supercharges your marketing, and keeps your loan officers doing what they do best. Join the Velma revolution today and transform your lending business!

It’s the most wonderful time of the year… budget planning! A great POS shouldn’t cost an arm and a leg, and a budget-friendly POS shouldn’t suck. Check out LiteSpeed by LenderLogix – great, budget-friendly, and integrates seamlessly with Encompass® by ICE Mortgage Technology™.

As we head into the holiday season, also known as the time to review your 2024 plans, AmeriHome Correspondent, backed by the strength of Western Alliance Bank, wants to speak to you about how a relationship with them will help you navigate the coming year. Combined with AmeriHome’s industry leading loan purchase platform, this is a “must-have” relationship for mortgage bankers of all shapes and sizes. Financial institutions, IMBs and Emerging Bankers alike benefit from AmeriHome’s Delegated and Non-Delegated options, full suite of conventional and government products, and Bulk, Bulk/AOT and Best-Efforts delivery options. Learn how Leveraging Western Alliance Bank’s Warehouse Lending, MSR Financing, and Treasury Management services can enhance your bottom line and improve execution with AmeriHome. Check out Upcoming Events for details on where they’ll be through year-end, find your sales rep here, or send them an email to learn more about partnering with AmeriHome!

Remember when you could just pick up your phone and text a client with news about their loan? Nowadays, a few bad actors are using texts to bombard people with texts that they don’t want. And go figure, the FCC and the TCPA implemented new A2P 10DLC requirements, to try and stop the junk texting. And the fines for noncompliance are serious. Recently, a mortgage company was fined north of $7 million by the TCPA. That’s scary. Are your salespeople texting their databases? Have your compliance teams even heard about 10DLC federal regulations? Since ALL texting through mortgage CRMs falls under this federal law, it is imperative that you utilize texting legally and compliantly. What have your CRM providers done to help you navigate this challenging compliance landscape? Click here to learn more about the regulations and what you need to do. Share this Infographic with your team.

Ever heard the one about the investor who didn’t need more value? Neither have we! Join Planet Loan Servicing at the IMN SFR Forum West Dec. 4-6 to explore how our expert blend of technology, service, and cost-efficiency enhances Single-family Rental investments. Managing $100B+ in total assets, Planet provides top-tier expertise and savings-focused strategies to support robust portfolio performance. Enjoy complimentary access to our proprietary tools and discover how we create lasting value. Let’s connect in Scottsdale and unlock the full potential of your investments. To schedule your meeting now Email [email protected] or call (585) 512-1030.

Despite the recent rally, this year’s deterioration in the MBS market, marked by both its scale, duration, and concurrent surge in rates, is consistently surprising observers with its resilience. Seeking insights from historical patterns, MCT’s industry webinar titled “The Great Inflation vs. 2024: Analysis & New Tools for the Current Market” aims to provide answers and current market analysis. Phil Rasori and Andrew Rhodes will delve into the current market scenario, draw comparisons with pertinent historical precedents, and introduce new MCT software functionality. Register for today’s webinar at 11am PT for information and valuable insights to navigate the challenges of this historic market.

“Turn fixed costs into variable costs on a dime. When the market zigs, lenders need the flexibility to zag. Richey MayAdvisory brings the mortgage industry expertise and agility you need to convert fixed costs into variable costs. Our difference maker is your ability to outsource services to highly trained experts in a model that fits your needs. Whether that means loan-level accounting, advisory, business intelligence, compliance support, cyber services, internal audits, or underwriting automation, we have the tools, knowledge, and experience to deliver value and improve your financial performance unlike any competitor, anywhere. You’ll feel it almost immediately in your day-to-day operations. Even better, you’ll notice the difference in your bottom line. Reach out or visit our website to learn more about how we can help your operation.”

Processing and Fulfillment Tools

ACES Quality Management Announces Preliminary Speaker Lineup and New Location for ACES ENGAGE 2024! ACES ENGAGE conference will take place at the Ritz Carlton Dove Mountain hotel in Tucson, Ariz. on May 19 – 21, 2024. Attendees learn from industry experts and thought leaders, network, and leave with the knowledge necessary to increase efficiencies, improve productivity and further quality at their organizations. This year’s keynote speaker is Robyn Benincasa, a two-time world champion adventure racer, 20+ year veteran San Diego firefighter and 2014 CNN Hero. In addition, ACES has gathered industry experts for this year’s speaker lineup, including Joel Kan, vice president and chief economist at the Mortgage Bankers Association; vice president at Fannie Mae, Bill Cleary; and Richard J. Andreano, Jr., partner, and practice leader of Ballard Spahr’s Mortgage Banking Group. Discount pricing available. Register today!

“We are painfully aware of the emotional and financial stress lenders are experiencing in the current environment. Many of you have been forced to choose between saving great people or saving the company: a horrible set of choices. However, with the help of our patented machine + human mortgage loan fulfillment solution, you will never find yourself in that situation again. By harnessing the CandorPLUS™ full loan lifecycle solution and its decision-ready file output, will ensure that you can quickly and confidently scale up or down to match your volume while simultaneously improving your performance metrics: cost, speed and quality. Click here to schedule a call to explore how CandorPLUS™ can help you change the way your business navigates market volatility going forward.”

MBA on Origination Volume

According to the Mortgage Bankers Association’s (MBA) newly released Quarterly Mortgage Bankers Performance Report, “A decline in originations volume worsened net production losses in the third quarter of 2023. While production revenues stayed relatively flat, per-loan production costs reverted to the third-highest level in the history of MBA’s survey, which reversed a portion of the cost improvements made in the second quarter.”

Ms. Walsh elaborated. “Net production income has been in the red for six consecutive quarters. MBA forecasts lower industry volume over the next two quarters compared to last quarter, which means a turnaround is unlikely until the second quarter of 2024. One silver lining is that mortgage servicing continues to be a bright spot for many companies. Combining both the production and servicing business lines, roughly half of mortgage companies stayed profitable in the third quarter of 2023. Were it not for mortgage servicing, only about one in three companies would have been profitable.”

Including all business lines (both production and servicing), 51 percent of the firms in the study posted pre-tax net financial profits in the third quarter, down from 58 percent in the second quarter. The average pre-tax production loss was 34 basis points (bps) in the third quarter of 2023, compared to an average net production loss of 18 bps in the second quarter of 2023, and a loss of 20 basis points one year ago. The average quarterly pre-tax production profit, from the third quarter of 2008 to the most recent quarter, is 45 basis points.

The average production volume was down 5 percent from the second quarter. Total production revenue (fee income, net secondary marketing income and warehouse spread) increased to 329 bps in the third quarter, up slightly from 328 bps in the second quarter. On a per-loan basis, production revenues decreased to $10,426 per loan in the third quarter, down from $10,510 per loan in the second quarter.

The purchase share of total originations, by dollar volume, was constant at 89 percent. For the mortgage industry as a whole, MBA estimates the purchase share was at 82 percent in the third quarter of 2023.

Total loan production expenses (commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations) increased to $11,441 per loan in the third quarter, up from $11,044 per loan in the second quarter of 2023 versus an average of $7,305 per loan over the last fifteen years.

Servicing net financial income for the third quarter (without annualizing) was $90 per loan, down from $94 per loan in the second quarter. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, was $104 per loan in the third quarter, down from $105 per loan in the second quarter. (Any questions should be addressed to Marina Walsh.)

Capital Markets

Cooling prices and slipping retail sales are pointing to a fabled soft landing. We learned yesterday that U.S. producer prices declined 0.5 percent last month, the most since April 2020. The decline was mostly due to a drop in gasoline prices, adding fuel (sorry) to the assumption that global central banks are finished with interest rate hikes. If you strip out food and energy, the producer price index was flat on a month-over-month basis and registered lower than expectations.

Meanwhile, we also learned that U.S. retail sales fell 0.1 percent month-over-month in October after a summer spending flurry: should we be cautious about the consumer? The report isn’t adjusted for inflation, so consumer demand for goods in October fell off noticeably from September but was better than expected as expectations were for a larger decline. Sales were up 2.5 percent on a year-over-year basis. Overall, PPI was supportive of bond prices, while the retail sales number was negative for bond prices.

Yesterday’s reports followed consumer price data from Tuesday showing that inflation is broadly slowing. Additionally, recent figures have indicated tempered job growth, suggesting the economy is slowing after aggressive rate hikes by the Federal Reserve. Pricing in fed funds futures markets currently implies a zero chance of another rate hike this year, and that the first interest rate cuts will come in May of next year. Of course, the Fed has indicated that it will remain data dependent. My personal opinion is that the bond market is at risk of leaning too heavily toward rate cuts next year.

Today’s economic calendar is already under way with import prices (+.6 percent, much higher than expected, but down ex-petroleum; -2.0 percent for the year), weekly jobless claims (231k, up from 218k; 1.863 million continuing claims), and Philadelphia Fed manufacturing (5.9). Later today brings industrial production and capacity utilization for October, the NAHB Housing Market Index for November, Kansas City Fed manufacturing for November, Treasury announcing next week’s auctions of 20-year bonds, reopened 10-year TIPS, and 2-year FRNs, Freddie Mac’s latest Primary Mortgage Market Survey, and a full slate of Fed speakers (Vice Chair for Supervision Barr, Cleveland President Mester, New York President Williams, Fed Governor Waller, and Fed Governor Cook. We begin the day, one week before Thanksgiving, with Agency MBS prices better by about .250 and the 10-year yielding 4.46 after closing yesterday at 4.54 percent; the 2-year is down to 4.84.

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

Source: mortgagenewsdaily.com

Apache is functioning normally

Mortgage rates dropped for the third week in a row, providing some wiggle room for budget-conscious homebuyers.

More softening may be on the way, with some experts predicting that rates may have already peaked this year.

The average rate on the 30-year fixed mortgage fell to 7.44% from 7.50% the previous week, according to Freddie Mac on Thursday. Still, rates have held steadily above 7% for three months, a stretch not seen in 22 years.

Read more: Mortgage rates at 20-year high: Is 2023 a good time to buy a house?

The move in rates came after a government report this week showing inflation came in lower than expected in October. While Federal Reserve Chair Jerome Powell didn’t rule out the possibility of another rate hike in December, the Fed’s commitment to remain data dependent gave traders and housing experts some hope.

“Recent incoming data, such as that from this week, is making a rate hike far less likely,” Jiayi Xu, Realtor.com economist, said in a statement. “Mortgage rates are likely to continue dropping, as they have in recent weeks.”

Elevated rates have been a blow for homebuyers’ affordability in recent weeks, keeping homeowners from listing and home prices out of reach for some. Still, the worst of rates may be behind us, said one expert.

Read more: How to buy a house in 2023

“I certainly hope so,” Daryl Fairweather, chief economist at Redfin, told Yahoo Finance Live (video above) when asked if rates were done rising. “Anything could happen with new data prints. Hopefully we continue to get more good news about inflation cooling, and that continues to be good news for mortgages.”

‘A slow recovery’

Mortgage demand for purchases hit its highest level in five weeks as mortgage rates edged lower last week, according to the Mortgage Bankers Association (MBA), but a full recovery is still far.

The volume of purchase applications increased 3% on a seasonally adjusted basis for the week ending Nov. 10, MBA data showed, but remained 12% lower compared to the same week a year earlier.

Prospective homebuyers leave a property for sale during an open house in a neighborhood in Clarksburg, Md., on Sept. 3. (Photo by ROBERTO SCHMIDT/AFP via Getty Images) (ROBERTO SCHMIDT via Getty Images)

Rates moved lower last week after a weaker than expected monthly jobs report solidified the Fed’s decision to hold its benchmark interest rate between 5.25% and 5.5% — where it’s remained since July. That marked the second consecutive meeting where Fed officials chose to hold rates steady, following 15 rate hikes.

But rates are just part of the equation, as many buyers on the hunt for a home also have to deal with scarce inventory levels that are keeping home prices high.

“It’s not going to be a major turn of events. We may just see a few more people decide that now is the time to make a move and lock in a rate, but mortgage rates are still substantially higher than they were last year,” Fairweather said. “Sales are still down, so it’s going to be a slow recovery.”

According to Realtor.com, elevated rates have pushed homebuyers nationwide to offer larger down payments to reduce the size of their mortgage loans.

Read more: Types of mortgage loans: Buying a house in 2023

The average down payment was 14.7% of the sales price in the third quarter — a high — according to Realtor.com. The median down payment amount equaled $30,000.

“Despite mortgage rates trending below the 8% ceiling, they remain nearly multi-decade highs,” said Xu. “…An unexpected consequence of this heightened rate environment is the surge in down payments, climbing to a new peak in the third quarter of 2023.”

Gabriella is a personal finance and housing reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.

Click here for real estate and housing market news, reports, and analysis to inform your investing decisions.

Source: finance.yahoo.com