Apache is functioning normally

Washington, DC

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

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


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.

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Source: finance.yahoo.com