Recession Archives - Page 13 of 142

Apache is functioning normally

November 3, 2023 by Brett Tams

A new study released today by the Mortgage Bankers Association argues that despite home buying sentiment being relatively normal, negativity among home sellers is holding back sales.

Of course, it’s not necessarily their fault. Many current homeowners bought at unsustainable prices, and are thus somewhat trapped in their homes.

The study, titled “The Great Recession and Attitudes Toward Homebuying,” noted that nearly 80 percent of American households believe now is a good time to buy, but with sellers not on board, it’s extremely difficult to make deals work.

Researchers pointed to a few issues. For one, home sellers haven’t adjusted their price expectations enough to meet those of buyers.

This could be because sellers believe prices should be based on past market values, such as what they paid or what homes sold for in the recent past.

But as we all know, sales prices a few years ago now look outrageous, and just can’t be reproduced in the current real estate market.

Home Sellers’ Lack of Equity Makes Pricing Difficult

Along with that, sellers are between a rock and a hard place when it comes to adjusting their sales price because of home equity issues.

Put simply, many sellers can’t lower the sales price because they don’t have the equity, or worse yet, are underwater on the mortgage.

As a result, they’d have to bring money to the table at closing, which clearly no homeowner wants to do.

There’s also straight up hope. Many homeowners who have held on for “this long” are probably banking on home price appreciation to get them out of the mess they’re currently in.

Regardless of how bad things are, I would guess that most homeowners expect to come out of the crisis with positive home equity. So selling now wouldn’t make a lot of sense if you think things are as bad as they’ll be and can only get better.

Of course, one could also argue that dumping your current underwater property and buying a more appropriately priced home would be a better move. But with mortgage financing being so tricky at the moment, that’s a difficult endeavor to be sure.

Negativity to Hurt Home Sales for Next Five Quarters

The study points to negative home selling sentiment over the next five quarters, meaning home sales should remain sluggish over that period, despite relatively low home prices and rock-bottom mortgage rates.

This explains why distressed sales, such as bank-owned properties and short sales, continue to dominate home sales.

When it comes down it, nobody really wants to sell right now unless they’re absolutely forced to.

These types of sales are also hurting the appraised values of non-distressed properties, according to the latest HousingPulse survey released today by Campbell/Inside Mortgage Finance.

In short, distressed comparable sales are forcing appraisers to value non-distressed properties below their contract selling prices, which means the sales fall through. Then they sell for less to opportunistic cash buyers, pushing home prices even lower.

So it’s a nasty downward spiral, which is further exacerbating the already fragile market and pushing back a possible recovery.

In summary, if you’re looking to buy a home, you should now have a better idea as to why everything looks overpriced and unattractive.

The good homes aren’t for sale.

Read more: Should you buy a house now or wait?

Source: thetruthaboutmortgage.com

Apache is functioning normally

November 2, 2023 by Brett Tams

Dave Stevens, CEO at Mountain Lake Consulting and former president and CEO of the Mortgage Bankers Association (MBA), said the current rate environment “is what’s crushing the mortgage industry and grinding it to a halt.”

“This is a really tough one because it’s an inflationary recession, where the Federal Reserve is having to actually contract the economy by driving interest rates high,” Stevens added. “…This is going to be the hardest, slowest winter, and you’re going to have a hard time finding anybody who’s old enough to remember a period that was this hard.”

Jeff Walton, CEO and co-founder of mortgage data analytics company InGenius, which provides loan-officer data to IMBs for recruiting purposes, said it’s going to be a “tough time through winter.” He added that the hope is we see some improvement in the spring or summer, “but it’s anyone’s guess.”

“I was speaking to someone the other day who said, ‘If you’re in this business [mortgage lending], I can’t see a downside to a recession.’”

Industry consolidation underway

Hale said he would not be surprised to see 40 to 50 merger and acquisition (M&A) deals play out over the next six months.

“I think there could be some big deals,” he said. “And to be blunt, I’ve been in conversations around deals that I think would be shocking, but nothing’s transacted yet.

“… I can tell you that I have two [potential M&A deals] that I’m leading currently. I have four more that I’m in negotiations on representing buyers, and in some cases, buyers who might be interested in multiple transactions, and I think I’ll know the results of those [talks] in the next couple of weeks.”

Ludden said what he sees ahead is the thinning of the mid-sized IMB ranks due to mergers and acquisitions as well as a thinning of the smaller IMB players, many of whom will “become brokers or just dissolve.”

“In our pipeline of deals underway, the vast majority involve [lenders with] $500 million to $5 billion in annual originations, and it’s as big of a pipeline as we’ve ever had,” Ludden said. “…There are roughly 1,000 lenders [IMBs], and our expectation is that probably 70% of them are sub-$500 million [in annual origination volume].

“I think you’re going to see a lot of them transition to brokers.”

He said of the remaining 300 or so IMBs with $500 million or more in annual origination volume, “it’s not unreasonable to assume that group will be whittled down to 150 or 200.”

Ludden said much of the consolidation is expected to take place via M&A deals involving IMBs in the $500 million to $2 billion range in annual originations.

“So, we’ll be much more top heavy [at the end of this cycle], with the remaining three-quarters of IMBs in that group [of 150 to 200] being in the $2 billion-plus category [due to mergers and acquisitions],” he said.

Ludden added that in many cases, the M&A deals ahead will be handled quietly without press announcements, and that “nobody ever sees” to guard against recruiting headhunters luring away the loan officers of companies being acquired prior to deals closing.

Stevens stressed that financing costs are prohibitively high right now and, in most cases, are not favorable for leveraged buyout deals.

“The guys who are doing buyouts now are going to be buying with their own cash,” he said. “I don’t think anybody’s going to borrow to buy, … so, that limits the pool of buyers.

“… There are some folks who were very successful in 2020 and 2021, generated huge portfolios and have retained earnings, probably, in large part, from servicing, and they didn’t buy corporate jets or things of that sort,” Stevens added. “These are the folks who are buying right now, and I you know because some of them are my clients.”

Loan officers going away

Data from InGenius shows that the average number of active IMB and bank loan officers with valid Nationwide Mortgage Licensing System (NMLS) licenses dropped 49% between the third quarter of 2021 and the second quarter of 2023 — from 181,656 in Q3 2021 to 89,094 in Q2 2023.

Mortgage-origination volume between 2021 and yearend 2023, however, is projected to drop 63% — from $4.44 trillion to $1.64 trillion, according to the MBA’s forecast. Hale said he thinks that 2023 origination forecast may even turn out to be on the high side.

“… We’re in the business of giving data for recruiting, and we’re still growing as a company because the haves [the healthy IMBs] are buying data … to go after the have-nots’ [loan officers],” Walton said. “There’s no question about it, the ‘haves’ definitely have a growth hat on and are buying data to recruit, and they are definitely extremely active.”

Hale added: “I’ll bet you a dinner that by February [2024], those [LO] numbers are down by 20,000 to 25,000 from where they are now because [NMLS license] renewals in all the states happen at the end of the year. A lot of originators or companies won’t pay the license-renewal fees at the end of the year for originators who haven’t closed a loan in the last six months.”

Hale continued: “… I worked for a guy at one time who said, ‘You know, you don’t know who’s not wearing swim trunks until the tide goes out,’ and the tide is now receding. We could be down to 60,000 to 70,000 originators by 2025.”

Walton said there is going to be more IMB consolidation this winter, adding that he doesn’t see any other outcome at this point. “Even if rates don’t go up [further], it’s going to get worse. And if they do go up, then it’s going to get really worse.”

Sevens said most acquisition deals taking place now involve lenders who might have gotten an up-front cash offer a year ago.

“Today, almost every originator has been losing money several quarters in a row,” he added. “And so virtually every deal being put on the table now is an asset-only, earn-out offer, with no money upfront, so they [the seller] get paid assuming the buyer makes a profit.

“So, the deals aren’t as attractive to sellers. …We’ll definitely see between now and April more [M&A] transactions occur in the [IMB] space. And some [IMBs] may just decide to get out of mortgage banking and become brokers, and some may shut their doors, so we’ll have to see how this all plays out.

Disruption opportunities

Walton stressed that as difficult as the winter ahead will be for the IMB industry, at the end of this dark period — which could last through next year, unfortunately — “there will be lenders who come out the other side of this in better shape than before the downturn.”

“Market disruptions create opportunities,” Walton said, adding “for IMBs that are structured right, this is actually an opportune time.”

Stevens added that a phrase coined at a recent MBA convention by Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School, has now become a bit of an industry slogan: “Survive until ‘25.”

“We are going to see who the best leaders are in our industry by who survives this downturn,” Stevens said. “…A lot of people thought they were really good at this business in 2020 and 2021, and they got really arrogant based on their success, some becoming multi-millionaires or billionaires during that period of time.

“But if you couldn’t be successful then, you shouldn’t have been in any business because rates went to 3%, and you could refinance the world and make a great margin. Now, we’re going to separate the winners from the losers in terms of who’s really built for long-term survival.”

Stevens added that those IMBs that do make it through this dark period “are going to have the strongest management quality.”

“And we’ll probably end up with a much stronger industry on the backend of this [downturn],” he said.

Source: housingwire.com

Apache is functioning normally

November 1, 2023 by Brett Tams

The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

Interest rates on certificates of deposit play an important role for some savers. CDs’ fixed rates can offer guaranteed returns for terms of several months or years. And locking in a high CD rate can mean earning strong yields even if the economy enters a low-rate environment. Here’s an overview of where CD rates might be headed.

Are CD rates going up?

Yes, but CD rates are rising more slowly this year than in 2022. Here’s a quick comparison: From January to October 2022, the best one-year CD rates rose from around 0.50% annual percentage yields to 3% APY. But from January to October 2023, the top one-year CD rates climbed from mid-4% APY to mid-5% APY, according to a NerdWallet analysis. Despite the slowdown, these rates are some of the highest in more than a decade.

Bread Savings™️ CD

Term

1 year

Barclays Online CD

Term

1 year

Discover Bank CD

Term

1 year

A big reason for the current rising-rate environment is the frequency with which the Federal Reserve has increased its federal funds rate. The Fed pushes up the target range of this Fed rate, which is the interest rate banks use to borrow money from each other, as one tool to curb inflation. Since March 2022, the Fed has raised its rate 11 times, with more increases in 2022 than in 2023. The last increase occurred after the Fed’s July 25-26 meeting

Banks generally adjust their rates on new CDs in the same direction as Fed rate changes. Credit unions — the not-for-profit equivalent to banks — similarly raise rates on their CDs, known as share certificates.

“Rates are going up, but for CDs, [they’re] going up faster for credit unions than at banks,” says Dawit Kebede, senior economist at Credit Union National Association.

CD rate trends

High-yield CDs tend to be at online banks and online credit unions, which have rates that are whole percentages higher than national average CD rates. For example, the national averages are 1.79% for one-year CDs and 1.38% for five-year CDs. Top one-year yields are above 5%, and the best five-year CD rates are closer to 4%.

Short-term CD rates remain higher than long-term rates, for national averages and among high-yield CDs, according to a NerdWallet analysis. This phenomenon, known as as an inverted yield curve, can reflect that banks expect that future interest rates are headed downward.

CD rate forecast: 2023-2024

The Fed meets two more times this year: Oct. 31-Nov. 1, and Dec. 12-13. The likelihood of the Fed raising its rate in November is very low, but nearly one in four projections suggest that the December meeting will likely end in a small increase of 25 basis points, or 0.25 percentage point, according to the CME FedWatch Tool on October 24. CD rates may see a slight bump if the Fed pursues that increase, though it’s up to each bank and credit union as they consider rate changes to attract more deposits.

But 2024 might be the year that rates start to fall. The Fed’s fight against inflation is more likely to end in what’s known as a soft landing instead of a recession in 2024, according to a September forecast from the American Bankers Association’s Economic Advisory Committee. The committee consists of chief economists from some of the largest U.S. banks

“If we have a soft landing scenario, where there is no significant damage to the economy, there is no reason for the Federal Reserve to keep rates up [at] a very restrictive range,” says CUNA economist Kebede, referring to the Fed rate’s target range. “By mid-next year, we may be closer to [the] inflation target, and then maybe the Fed will start cutting rates after that,” he says, noting that the direction of inflation or the labor market can affect this projection.

When the Fed rate drops, CD rates will likely drop too. But the drops might not be as drastic as they were after March 2020, when the Fed cut its rate to nearly zero. The Fed rate may drop more gradually over the next few years, according to the Fed’s September economic projections

Take advantage of today’s CD rates

Lock in CD rates sooner than later. CDs are typically best for specific goals, such as protecting some savings from inflation’s effects or earmarking a fixed sum for a large purchase within five years, such as a car or house.

Don’t forget about specialty CDs. If you’re unsure about getting a CD now, some types of CDs offer flexibility. Bump-up CDs allow you to increase the rate at least once during a CD term, as long as rates on new CDs go up. No-penalty CDs give you a fixed rate plus the opportunity to jump ship for free.

Consider a CD ladder to hedge your bets. A CD ladder strategy reduces the stress around timing your CDs. Split up an investment equally into several CDs of different term lengths, such as one year, two years and three years. When each CD matures, reinvest in a longer-term CD or, if you need the cash, withdraw. Ideally, though, you can have multiple long-term CDs that mature at staggered intervals. You mix short-term CD access with long-term rates.

Compare other short-term ways to save and invest. For more everyday savings with the same low risks as CDs, consider a high-yield savings account or money market account, which have top rates above 5% APY. Or, if you’re looking to invest, consider more ways to invest your savings.

Source: nerdwallet.com

Apache is functioning normally

October 31, 2023 by Brett Tams

Verification, HELOC, POS, Servicing Transfer Products; Webinars Today and Tomorrow; Fannie’s Solid Earnings

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Verification, HELOC, POS, Servicing Transfer Products; Webinars Today and Tomorrow; Fannie’s Solid Earnings

By:
Rob Chrisman

52 Min, 10 Secs ago

“Change is inevitable, except from a vending machine.” Corporate changes are the name of the game. Atlanta’s Crescent Mortgage’s bank owner is aligning all mortgage facets of the enterprise and moving to “retail only” and eliminating third party. Rather than wind down, Colorado’s Universal Lending is inking an agreement with Lower LLC in a partnership setting up Universal Home Loans being in the same markets as a division of Lower LLC and improve its competitive position. Every discussion that I’ve had with real estate agents lately involves a) thousands of agents leaving the business due to the lack of… business, and b) how 8 percent mortgage rates have absolutely ground transactions, and even interest in looking at properties, to a halt. Meanwhile, I’m having similar conversations with loan originators as a) NMLS licenses are declining, and b) 8 percent mortgage rates have ground activity to a halt. From a broker-dealer’s perspective, BAML’s trade desk reported that, “Supply limped into the weekend, closing at 1.2bn amid a light rate move, dragging the 5 day average to 1.8bn.” (Today’s podcast can be found here, sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. Hear an interview with Richey May’s Seth Sprague on the servicing marketplace, strategic planning, and returns to profitability from an advisory perspective.)

Lender and Broker Software, Products, and Services

On this Halloween, don’t get tricked: Stop and think before you click. The human element is the easiest target for cyberattacks, from phishing emails to phone calls. However, with proper training, your team can become your greatest defense against these attacks. In an industry that values sales goals, it’s tempting to pursue every mortgage lead without hesitation. But recent data reveals the dangers of careless clicking. In 2022, social engineering was the top attack vector, even for the best teams. Discover how to strengthen your human cybershield here and reach out to Richey May’s cybersecurity experts to assess and define your cybersecurity training needs.

“BOO! No tricks here, only treats! Did you know that even the leanest of teams can leverage the same enterprise ecosystem technologies as the largest players in the mortgage industry? For purchasers of mortgage assets, Blue Water (“Blue Water Financial Technologies Services, LLC”) has turnkey solutions available that can dramatically widen your funnel. For example, SuperTransfer™, ensures that you receive docs and data from any number of sellers exactly in your stacking order and format with exception remediation* built into the process. Buy directly from sellers or buy from aggregators to access hundreds of sellers. Blue Water technology can help drive your valuation-based pricing* to target your footprint and return objectives- at the loan level. From pricing, valuations, transactions, transfer, QC, to boarding, Blue Water makes it easy to scale up your pipeline. *Patent pending. Connect with our expert Sales Team today.”

Maximize your return on every loan with better secondary pricing and industry-leading technology. To achieve profitable mortgage lending, you need solutions built for your bottom line. Maxwell’s tech-enabled platform enhances each step of the process, from point of sale to the secondary market. You’ll gain competitive secondary market pricing on a wide array of products, including non-QM and jumbo, and full-service fulfillment support on both wholesale and mini-correspondent offerings. Maxwell Capital customers leveraging Maxwell Point of Sale close 36 percent more loans than top competitors, increasing and accelerating closes, while built-in business intelligence tracks and benchmarks performance. Schedule a call with our team to learn more about Maxwell Capital and Maxwell Point of Sale to ensure profitability on every mortgage origination.

“Take your Encompass® experience to the next level with the Encompass Essentials – 10 Free Tools Package from KensieMae, where seamless enhancements await at no cost. We get it; this market can be tough, and we’re here to make it a little easier… for free! No gimmicks, no hidden fees, and no strings attached. Our free tools package includes 10 simple, but powerful, time-saving tools trusted by thousands of lenders, and they won’t cost you a dime. Installation is a breeze, and upgrades are on the house. Whether you’re a new KensieMae customer or already part of the family, these tools are our gift to you. Save time, reduce frustration, and streamline your workflow with tools like Doorbell, Navigation Buttons, and Macro Automation. Your lending business deserves these game-changers, so why wait? Claim yours today and supercharge your operations with the Encompass Essentials – 10 Free Tools Package!”

We all remember the houses that give the full-size candy bars just like we remember the houses that give toothbrushes and raisins. Why should your digital mortgage experience be any different? Borrowers remember a slick, easy-to-use loan app, and just like the neighborhood kids, will tell you where to go and what to avoid. Be the full-size candy bar house with LiteSpeed by LenderLogix.

Symmetry Lending has some very exciting news: As of tomorrow, November 1, Symmetry is enhancing the Borrower-Paid Broker Fee payouts on its Standalone HELOCs! Mortgage loan officers and brokers can now earn 1.5 percent on the Symmetry Standalone HELOC draw amount, with no maximum payout. Symmetry will also continue to allow for a $500 borrower-paid broker fee on its Piggyback HELOC solution. This increased payout on Symmetry’s Standalones offers a big opportunity to increase your income while the first mortgage market remains challenging and slow. In fact, HELOCs, especially Standalone HELOCs, continue to gain a lot of interest, with homeowners looking to this lower-interest financing solution to make renovations and repairs to their current home, versus buying a new home at a high interest rate, offset debt and increase cash flow in an inflationary economy, increase their home value in preparation for a future sale, and more! Don’t wait until it’s too late! Talk to your clients about the benefits of a HELOC before someone else steals this business opportunity from you. Contact Symmetry to learn more about their HELOC solutions, pricing, and industry-leading speed and service.

Verification Products

Truv is saving Lenders 60-80 percent over competitors. That’s the savings of multiple full-time employees. For example, Compass Mortgage saved roughly 60 percent in verification costs and maintained their same conversion rate. “Truv has given us the ability to lower costs, all while speeding up the verification process and providing better employment data” said Justin Venhousen, COO, Compass Mortgage. Stop wasting money. Contact TRUV today to discuss how we can help you with your income, employment, insurance, and asset verifications.

It may be spooky season, but don’t let the risk of buybacks frighten you. Reports of falsified data are on the rise, and buybacks have become an increasing problem for mortgage lenders. Requesting paper paystubs or W-2s from the applicant may be your default method of verification, but it can be burdensome for both you and the applicant, and fake pay stub generators are easily accessible via the web. Scary! Third party verification of income through The Work Number® is one of the best ways to mitigate risk, helping to reduce potentially costly buybacks. Available for use by credentialed verifiers with permissible purpose under the FCRA, The Work Number database provides instant access to 163 million current employment records directly from 2.9 million employers and payroll providers. With buybacks on the rise, why use paper-based processes when instant GSE-approved options exist?

The 8 percent mortgage rate housing market is here, and it’s time for lenders to get lean and cut out complicated fluff. Truework is saving lenders $100 on every VOI/Eby connecting every major verification method into a single platform. With one-stop verification, you can verify income for 95 percent of applicants and replace expensive and clunky legacy systems. Now is the time to sharpen your processes and with Truework Income, lenders are accelerating applications and cutting verification costs.

Fannie Mae Earnings

This morning Fannie announced that it had $4.7 billion of net income for the third quarter of 2023, with net worth reaching $73.7 billion as of September 30. It is certainly being “recapitalized!” Net income decreased $295 million in the third quarter of 2023 compared with the second quarter of 2023, primarily driven by a decrease in benefit for credit losses, partially offset by an increase in fair value gains. Fannie acquired approximately 224,000 single-family purchase loans, of which more than 45 percent were for first-time homebuyers, and approximately 45,000 single-family refinance loans during the third quarter of 2023.

Tune in Today and Tomorrow

Today, Halloween, is the next Mortgages with Millennials with Kristin Messerli and Robbie Chrisman. Tune in every Tuesday at 10AM PT to the weekly video show designed to empower mortgage professionals to tap into the millennial market. This show demystifies the psychology of first-time homebuyers and offers strategies to win more market share with a key segment of the market. Sign up for a weekly reminder with the link to join and a sneak peek into the next episode. Top Millennial producer Sean Herrero is today’s guest.

A shout out to Lender Toolkit and its 2024 Supercar event in Las Vegas to kick off ICE Experience 2024 on March 18! The company is offering early bird discounts on sponsorships, but only until October 31. Imagine your logo on an exotic car with your clients and prospects behind the wheel. And yours truly will be doing a live podcast! To get the deal on sponsorships reach out to Brent Emler or grab the sponsorship form.

Join the AEI Housing Center for the 12th Annual AEI Housing Conference, today, Oct. 31st and Wednesday, Nov. 1st, both in-person and online.

Looking for more in-depth commentary on weekly mortgage news? Register here for “Mortgage Matters: The Weekly Roundup” presented by Lenders One. Every Wednesday at 2:00 PM EST/11:00 AM PT is a dive into a range of mortgage-related topics, including market trends, interest rate fluctuations, innovative mortgage products, and industry advancements. This week’s episode features Charlotte Brown, Qualia’s VP of Product Design, discussing pain points in the closing process and working with title and escrow.

Capital Markets

Both a big federal budget deficit and a clearer path for the economy to return to low inflation without a recession are putting upward pressures on interest rates that will likely persist into next year. The December fed funds futures are nearly certain there will be no change at this week’s meeting that begins today and concludes tomorrow, and the probability for a hike in December at the subsequent Federal Open Market Committee meeting has fallen from around one-in-three a month ago to one-in-four currently. We still have the jobs report on Friday.

We also have the quarterly refunding data this week with investors preparing for increased issuance on longer dated tenors, as Treasury officials attempt to offset a widening budget deficit. There was some intraday speculation yesterday that the quarterly refunding statement for the U.S. Treasury could show increased borrowing needs for Q3, but the release showed that the Treasury plans to borrow $776 billion in Q4, which is $76 billion below the estimate from three months ago. Keep in mind that the last few Treasury auctions didn’t go well, so the bond market will be sensitive to these.

Today’s busy month-end economic calendar is under way with the Q3 Employment Cost Index (+1.1 percent, slightly higher than Q2), where a 1.0 percent quarter-over-quarter increase was expected, the same as the prior quarter. Later this morning brings Redbook same store sales, August house prices from S&P/Case-Shiller and FHFA, Chicago PMI for October, Dallas Fed Texas services, and several Treasury auctions. We begin Halloween with Agency MBS prices better than Monday afternoon by .125-.250 and the 10-year yielding 4.82 after closing yesterday at 4.88 percent; the 2-year is at 5.03 percent.

Jobs and Transitions

“First Community Mortgage (FCM) continues to experience remarkable growth, having doubled our branch locations, spanning from coast to coast. Despite challenging market conditions, FCM continues to thrive, committed to expansion. As a state-chartered lender, FCM loan officers can originate in 48 states, unlocking a world of opportunities. Our dedicated transition team is ready to support you during your first 120 days, ensuring the journey to FCM is seamless and successful. Our unique business model is tailor-made to empower our leaders with the support and flexibility they need to cultivate their businesses and deliver exceptional customer experiences, yielding outstanding results and a significantly higher income potential. Our unwavering commitment to enhancing your experience shines through in our substantial investments in technology, aimed at simplifying your workload and unlocking your full potential for business growth. Come along with us and discover the possibilities. Contact Bret Head or visit us online.”

Brokers and correspondents should know that Arc Home, a leading Non-QM and Non-Agency lender, is delighted to announce the appointment of Brian Devlin as President. Brian brings more than two decades of diverse industry experience, making him the ideal leader to guide Arc Home through its next phase of growth. In addition to his role as President, Mr. Devlin is set to assume the position of CEO following a transition period with current CEO, Richard Bradfield, who will embark on new opportunities. Brian shared his excitement, saying, “Joining Arc Home is an incredible opportunity to collaborate with the best professionals in the industry. We’re committed to providing top-notch Non-QM and Non-Agency products, processes, and service to our valued clients.” To learn more, click here, or reach out to your Arc Home Account Executive. Find out why this leadership addition, along with our top-tier products and pricing, makes Arc Home your go-to partner for Non-QM and Non-Agency lending in 2024.

As part of its ongoing growth and expansion, top tier Third Party Origination Go (TPO Go) announced the hiring of Katie Plezia, Kim Kriel, and Brice Waterman as Account Executives who will be instrumental in driving sales production and operational excellence. Each brings more than twenty years of mortgage industry experience across all lending channels, including roles in sales production and management as well as operations management, and are regarded as top performers, having received multiple awards and recognition for sales production, including rankings among the top 10 AEs in the country for several consecutive years. Adam Millstein, VP and National Sales Manager shared, “Katie, Kim, and Brice’s passion for this business is evident and their respective patterns of success are enviable. They exemplify the type of people that we want and need to represent the TPO Go brand as we continue on our journey, and I can’t wait for the great things we’ll do together.” TPO Go is a national mortgage wholesaler, offering Fannie, Freddie, Ginnie, niche renovation lending products such as VA, 203k, Fannie Mae Homestyle and Freddie Mac’s Choice Renovation, USDA, VA, TPO GO 100/Chenoa, and a proprietary TPO GO first-time homebuyer program to brokers.

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

Source: mortgagenewsdaily.com

Apache is functioning normally

October 31, 2023 by Brett Tams

How High Could CD Rates Go in 2024?

Wouldn’t it be great if we all had a crystal ball that told us what the interest rate environment would do? We could figure out the best time to get a mortgage or the best time to buy a car. And of course, we would know exactly when to put all of our money into certificates of deposit (CDs) to maximize our yield.Unfortunately, that isn’t the case. Nobody knows what interest rates are going to do in the future — not even the people in charge of setting benchmark interest rates. However, we can use the latest economic projections to consider the most likely scenario and what else could happen instead. So here’s what we know (and don’t know) about what CD yields will do in 2024.Where do CD yields come from?The short explanation is that CD rates are a combination of three main factors:The current interest rate environmentThe bank or financial institution that offers themThe maturity termIn other words, when benchmark interest rates rise, CD rates generally tend to rise along with them. However, the rates paid by CDs can vary dramatically between banks.For example, as I write this, our top 12-month CDs have APYs ranging from 4.25% to 5.65%. The same is true for CDs of other maturity lengths as well. But because the Federal Reserve has raised benchmark interest rates so aggressively in the past couple of years, this range is significantly higher than it was.When it comes to different maturity lengths, it’s a little tricky to explain, but the general idea is that shorter-term CDs tend to track benchmark interest rates rather closely. The current federal funds rate (the most important interest rate the Fed controls) is set to a range of 5.25% to 5.5%, and this is certainly aligned with most of the top 1-year CDs we track.With longer maturities, there are a lot of economic factors at work, but the simple explanation is that CD yields are a combination of the current interest rate environment and expectations for future interest rate movements. In most environments, longer-maturity CDs tend to have higher yields, since banks typically pay a premium if customers agree to leave their money on deposit for a longer time. But as of Oct. 2023, the range of 5-year CD yields on our top CD list is 3% to 4.85%, with the average yield significantly lower than the average 1-year CD.This makes sense. According to the latest projections from the policymakers at the Federal Reserve, the benchmark federal funds rate is expected to fall to 4.6% by the end of 2024 and to 3.4% by the end of 2025.What will CD rates do in 2024?There’s no way to predict with accuracy what CD rates will do next year. Even the Federal Reserve’s own projections can be very wrong. In fact, the Fed’s projections in Sept. 2021 called for a federal funds rate of just 1% at the end of 2023.Having said that, the latest projections call for one further quarter-point rate hike by the end of 2023, which would likely push CD yields slightly higher to start 2024. And if the Fed’s projection of a 4.6% federal funds rate proves to be accurate, we could expect 1-year CD rates to gravitate towards that level, with other maturity terms drifting generally lower as well.However, it’s tough to overemphasize that we don’t know what is going to happen. If inflation proves far more difficult to control than the Fed expects, it’s entirely possible that several more interest rate hikes will be needed and CD yields will be much higher at the end of 2024. On the other hand, there’s the possibility of a recession coming and the need for the Fed to aggressively cut rates if the economy takes a worse downward turn than expected.The bottom line is that CD rates are higher right now than they’ve been in a long time, and the best course of action is to put your money in CDs that make sense for you now — not to leave your cash on the sidelines in anticipation of rates rising even further.However, one smart strategy could be to create a CD ladder, which gives you the best of both worlds. If rates end up rising in 2024, you’ll end up with some money to take advantage. And if rates fall, most of your money will be locked in at today’s rates.

Costco Is Selling a Full Thanksgiving Meal Kit So You Don’t Have to Do a Thing

By: Maurie Backman |
Updated
Oct. 23, 2023 – First published on Oct. 23, 2023

Some people absolutely love hosting Thanksgiving and getting creative in the kitchen. But if you’re someone who dreads Thanksgiving and the hours upon hours of preparation that tend to come with it, then you may be in luck. Costco is selling a Thanksgiving meal kit for $199.99 that’s designed to feed a party of eight. You’ll need to pre-order yours by Nov. 5, but it could be worth it for the time-related savings involved. And you may even find that Costco’s Thanksgiving dinner kit saves you money, too.When you’re looking to outsource your Thanksgiving mealEven if you’re someone who likes to cook, being in charge of Thanksgiving isn’t easy. There’s a lot of pressure to throw together a massive feast, and you may not have the time or desire to spend an entire day preparing food. If you’re not at all looking forward to a day of cooking, let Costco come to your rescue. For $199.99, you’ll get the following:Five pounds of skin-on turkey breastA two-pound tray of stuffingA 1.5-pound trap for mashed potatoes with a side of gravyA 1.6-pound tray of macaroni and cheese A two-pound pack of sweet cornA two-pound pack of green beansCranberry relish12 dinner rollsOne pumpkin pieOne apple pieAll of this food will ship frozen, and you can expect delivery to your home between Nov. 8 and 17. Will Costco’s Thanksgiving meal kit save you money?You probably won’t save money by purchasing Costco’s meal kit compared to buying ingredients for the above dishes at Costco, or even elsewhere. At your local grocery store, turkey might cost about $3.50 per pound. So a five-pound turkey might cost you just $17.50. A Costco pumpkin pie, meanwhile, is generally only $5.99 (though prices can vary). So right there, you’re looking at $23.50 for 20% of your meal. The cost of the other items included in Costco’s Thanksgiving dinner kit can vary based on how you prepare your sides. But macaroni and cheese, for example, can be an extremely inexpensive dish to prepare. A single box of Kraft might cost under $1.50, so even if you need five boxes, you’re looking at $7.50 or less in total. (Of course, if you insist on making yours from scratch with high-end cheese, that’s a different story.)All told, you can probably throw together a Thanksgiving meal for eight for under $200 — but not so much under. So the question you’ll want to ask yourself is how much time you want to save.Also, if you’re so not looking forward to cooking to the point where you think you’ll pay to cater your Thanksgiving dinner, then you’re likely to put more than $200 on your credit card by going that route through a local restaurant or caterer. In that regard, Costco’s offering could save you some money.All told, Costco’s Thanksgiving dinner kit may be worth considering if you’re not excited to cook for the holiday this year. But chances are, this meal kit is going to be a popular item, which means it may sell out soon. If you are interested in ordering it, do so quickly so you don’t miss out.

3 Costco Perks You Aren’t Taking Advantage of — but You Should

By: Brittney Myers |
Updated
Oct. 23, 2023 – First published on Oct. 23, 2023

Just $250 a month at Costco would earn enough back to pay for the upgrade. In other words, if you spend more than $250 a month at Costco, upgrading makes financial sense.If that sounds like a ton of money to you, then definitely stay with your regular membership. But if your family goes through Kirkland Signature toilet paper like they flush it down the toilet, and you’re one of the people who actually finishes that 3-liter bottle of olive oil, then a membership upgrade could be a smart idea.Double up with rewards cardsWhether an Executive membership is right for you or not, there’s another way to earn rewards that everyone should be taking advantage of: rewards credit cards.Unfortunately, you can only use Visa credit cards in a Costco warehouse. If you’re shopping at Costco.com, you can use Visa or Mastercard credit cards. While these restrictions certainly stymie some of my favorite rewards cards, you’re not completely out of luck. There are still some great options from either issuer. Costco even offers its own cobranded Visa card, which can be especially rewarding when it comes to gas purchases. I prefer to use my Chase Freedom Unlimited®, however, for 1.5x points per $1.

I Bought a $278.99 Walmart Mattress. Here’s How It Compares to My Expensive Tempur-Pedic

By: Christy Bieber |
Updated
Oct. 27, 2023 – First published on Oct. 27, 2023

Recently, we bought a mattress that we plan to use temporarily for a few months as most of our furniture is in storage while we complete a remodeling project. We didn’t want to spend a lot of money since this mattress will be relegated to a guest room, if it is used at all, once we get our furniture back in place.We opted to buy a memory foam mattress from Walmart and paid $278.99 for a king size. This was a fraction of the cost of our regular mattress, which is a Tempur-Pedic that cost several thousand dollars.After sleeping on the cheap mattress for a while, here’s how they compare.Both are equally comfortableFirst and most importantly, my husband and I have found that both of the mattresses are equally comfortable to sleep on. Both provide a similar level of firmness and support. And, we don’t feel the other person moving around in either bed. In fact, if forced to pick which of the two we like better, we would not be able to based on the comfort factor alone.Both have the same warrantyOur Tempur-Pedic mattress came with a 10-year warranty. We didn’t expect our new bed to offer this same guarantee since it cost so much less. But, we were wrong. The new, inexpensive mattress also has a 10-year warranty and a 30-day refund policy to make sure we’re comfortable with it.Both have multiple layersOur Tempur-Pedic came with multiple different layers of material including a comfort layer on the top, a support layer in the middle, and a base layer. Each of these layers is supposed to serve a purpose, like distributing body weight evenly along the mattress or dispersing heat.Our inexpensive mattress actually comes with more layers, referred to as the “five floors of comfort.” There’s a top breathable fabric, a second layer to avoid heat, two separate support layers, and a non-slip layer at the bottom.I’m not exactly sure if all of these layers are serving their exact purpose, but I have noticed that neither bed sleeps warm and both feel like they provide adequate support. The non-slip layer on the cheaper mattress also seems to help it stay in place on my box springs.The Tempur-Pedic feels heavier and more substantialThe Tempur-Pedic stands out by feeling more substantial. The cheaper mattress came vacuum packed in a tiny little package and it took a while to fluff up. And it just doesn’t have the same heft as the Tempur-Pedic mattress.However, while this is a point in the Tempur-Pedic’s favor because the substance has me feeling like it may last longer, it also means the Tempur-Pedic is more of a pain to move around.Ultimately, I feel like the cheaper mattress was a better buy. It left more money in my bank account than the Tempur-Pedic, and it provides a similar level of comfort as well as the same warranty.The experience has shown that buying a more expensive bed isn’t always the best option, so before breaking out your credit cards, be sure to explore and fully compare different mattresses to find one that feels the best at a fair price. Visit some stores and try them out. Don’t immediately dismiss one just due to a lower price point, as you might miss out on a comfortable mattress at a great discount. And don’t forget to consider the return policy and warranty so you end up happy with your purchase in the long run.

Mark Cuban Thinks You Should Buy a 2-Year Supply of Toothpaste. Here’s Why

By: Christy Bieber |
Updated
Oct. 27, 2023 – First published on Oct. 27, 2023

Mark Cuban is the owner of the Dallas Mavericks and is well-known for his business skills and investing prowess. Over the years, he has provided some tips to others who want to get rich, and one of them was a pretty surprising one.His advice: Buy a two-year supply of toothpaste. Here’s why the billionaire suggested making this unconventional move.Cuban has a simple reason for buying so much toothpasteMark Cuban doesn’t just want your teeth to be really clean. He had a good reason for suggesting purchasing such a large stockpile. Specifically, he advised doing this if you use the same brand of toothpaste regularly and can find it at a deep discount.”If we, hopefully we’re all using toothpaste every day, right, couple times a day, and we’re gonna go through toothpaste every month, whatever it may be, you’re better off buying two years’ worth of toothpaste when it’s on 50% discount,” he said. “That’s an immediate return on your money.”Cuban’s point was that the prices of items go up over time, so you’re better off purchasing them at the lowest possible price as this puts guaranteed money in your pocket. You also immediately benefit from the savings since you get to spend less now and in the coming years, keeping more cash in your bank account.Toothpaste isn’t the only item Cuban believes you should stock up on. “Any of your reusables, consumables that you have to have, when they’re on a huge sale on Amazon, buy them, because chances are, their prices are gonna go up, but that’s a real savings that you get to put in your pocket.”Cuban said that while it can feel difficult to make a profit by investing in a brokerage account, this is a simple step that anyone can take that will have an immediate positive impact on their personal finances.Should you follow Cuban’s advice?Listening to Cuban just makes good sense — especially as the recent few years of rising prices and surging inflation have demonstrated that routine products and services that we use every day can and do see big price increases.If you’re able to get many of your consumer products at discounted prices, this can make a noticeable difference in your personal finances. It’s not difficult to do either. Most stores put items on sale on a predictable schedule, such as marking down a product once every six or eight weeks. If you can stock up when there’s a good price — and especially if there’s a deep discount, then you’ll be able to slash what you spend on groceries and personal care.Use this extra money wisely to do things like repay debt or invest for your future, and you will end up being able to build wealth without changing your lifestyle at all. But, no matter what you do with the money, you probably have better stuff to spend it on than paying full price for toothpaste.

Source: fool.com

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October 29, 2023 by Brett Tams

The world’s central banks have unleashed the steepest series of
interest-rate increases in decades during their two-year drive to tame
inflation—and they may not be done yet. Policymakers have raised rates by
about 400 basis points on average in advanced economies since late 2021,
and around 650 basis points in emerging market economies.

Most economies are absorbing this aggressive policy tightening, showing resilience over the past year, but core inflation remains elevated in several
of them, especially the United States and parts of Europe. Major central
banks therefore may need to keep interest rates higher for longer.

In this environment, risks to the world economy remain skewed to the
downside, as we detail in in our Global Financial Stability Report. Though this latest assessment of vulnerabilities is similar to what we
noted in April, the acute stress we saw in some banking systems has since
subsided. However, we now see indications of trouble elsewhere.

One such warning sign is the diminished ability of individual and business
borrowers to service their debt, also known as credit risk. Making debt more
expensive is an intended consequence of tightening monetary policy to
contain inflation. The risk, however, is that borrowers might already be in
precarious positions financially, and the higher interest rates could
amplify these fragilities, leading to a surge of defaults.

Eroding buffers

In the corporate world, many businesses suffered closures during the
pandemic, and others emerged with healthy cash buffers thanks in part to
fiscal support in many countries. Firms were also able to protect their
profit margins even though inflation had picked up. In a higher-for-longer
world, however, many firms are drawing down cash buffers as earnings
moderate and as debt servicing costs rise.

Indeed, the GFSR shows increasing shares of small and mid-sized firms in
both advanced and emerging market economies with barely enough cash to pay
their interest expenses. And defaults are on the rise in the leveraged loan
market, where financially weaker firms borrow. These troubles are likely
going to worsen in the coming year as more than $5.5 trillion of corporate
debt comes due.

Households too have been drawing down their buffers. Excess savings in
advanced economies have steadily declined from peak levels early last year
that were equal to 4 percent to 8 percent of gross domestic product. There
are also signs of rising delinquencies in credit cards and auto loans.

Headwinds also confront real estate. Home mortgages, typically the largest
category of household borrowing, now carry much higher interest rates than
just a year ago, eroding savings and weighing on housing markets. Countries
with predominantly floating rate mortgages have generally experienced
larger home price declines as higher interest rates translate more quickly
into mortgage payment difficulties. Commercial real estate faces similar
strains as higher interest rates have resulted in funding sources drying
up, transactions slowing, and defaults rising.

Higher interest rates also are challenging governments. Frontier and
low-income countries are having a harder time borrowing in hard currencies
like the euro, yen, US dollar and UK pound as foreign investors demand
greater returns. This year, hard currency bond issuances have occurred at much
higher coupon—or interest—rates. But sovereign debt concerns do not only apply to low-income countries, as the recent surge in longer-term interest rates in advanced economies has demonstrated.

By contrast, major emerging economies largely do not face this predicament
given better economic fundamentals and financial health, although the flow
of foreign portfolio investment into these countries has also slowed.
Material amounts of foreign investment have left China in recent months as
mounting troubles in its property sector have dented investor confidence.

Spillover effects

Most investors appear to have shrugged off mounting evidence that borrowers
are having repayment troubles. Along with generally healthy stock and bond
markets, financial conditions have eased as investors appear to expect a
global soft landing, in which higher central bank interest rates contain
inflation without causing a recession.

This optimism creates two problems: relatively easy financial conditions
could continue to

fuel inflation, and rates can tighten sharply if adverse shocks occur—such as an
escalation of the war in Ukraine or an intensification of stress in the
Chinese property market.

A sharp tightening of financial conditions would strain weaker banks
already facing higher credit risks. Surveys from several countries already
point to a slowdown in bank lending, with rising borrower risk cited as a
key reason. Many banks will lose significant amounts of equity capital in a
scenario where high inflation and high interest rates prevail and the
global economy tips into recession, as we explore in a
forthcoming GFSR chapter. Investors and depositors will scrutinize the
prospects of banks if their stock-market capitalization falls below the
value of balance sheet, causing funding problems for the weak bank. Outside
of banking system, fragilities are also present for nonbank financial
intermediaries, such as hedge funds and pension funds, that lend in private
markets.

Reassuringly, policymakers can prevent bad outcomes. Central banks must
remain determined in bringing inflation back to target—sustained economic
growth and financial stability is not possible without price stability. If
financial stability is threatened, policymakers should promptly use
liquidity support facilities and other tools to mitigate acute stress and
restore market confidence. Finally, given the importance of healthy banks
to the global economy, there is a need to further enhance financial sector
regulation and supervision.

Source: imf.org

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October 29, 2023 by Brett Tams

Interest rates on 30-year fixed-rate mortgages have hit yet another high, with lenders offering loans above 8% for the first time since 2000. Mortgage rates have gone up rapidly this year, rising two full percentage points from lows near 6% back in February.

That’s been brutal for home buyers, who have watched their buying power erode. At a 6% interest rate, a buyer looking to spend $2,000 a month on principal and interest could afford a loan of roughly $333,500. With interest rates at 8%, that same buyer can afford only $272,500. Their target home price has dropped $61,000 as more of that monthly payment has to go toward servicing interest.

Here’s why mortgage interest rates are so high, and why they could remain elevated. Still, there are ways that home buyers can contend with such a challenging housing market.

Mortgage loans from our partners

Why mortgage rates climbed so high

A year ago, many housing economists, including in forecasts from Fannie Mae and the Mortgage Bankers Association, were anticipating that today’s mortgage rates would be in the 5%-6% range. Though that seems wildly off base now, at the time it looked pretty reasonable.

“Last year around this time, the Fed was in the midst of hiking interest rates very rapidly,” explains Chen Zhao, head of economic research at Redfin. “And most economic forecasters were really looking at this and saying, OK, this is most likely going to lead to a recession.”

A recession could have forced the Federal Reserve to cut interest rates, with mortgage rates likely falling, too. But that recession hasn’t arrived.

“Despite what the Fed has done, hiking rates at the fastest rate ever, the economy, especially the job market, has really just remained very resilient. As a result, investors are now expecting that the economy is going to avoid a recession and remain very strong for longer,” Zhao says. “And that means that the economy can sustain higher mortgage rates for a longer amount of time.”

Where are mortgage rates headed in 2024?

Looking at last year’s predictions for 2023, it’s clear that a lot can change in just a few months. With political upheaval in the U.S. and multiple wars overseas, there’s potential for tectonic shifts in markets and in economic policy.

“I would say that right now uncertainty is unusually high,” Zhao comments. “Maybe the most plausible forecast would be to say that rates are probably going to stay in this range for the near term or at least in the foreseeable future.” But Zhao also outlines scenarios for mortgage rates going lower — an economic downturn forcing the Federal Reserve to encourage economic activity by easing interest rates — or higher, if mortgage spreads remain elevated.

The mortgage spread is the difference between the 30-year fixed mortgage rate and 10-year Treasury rate. “Historically, the spread between the 10-year Treasury and the 30-year mortgage rates is about 1 3/4%,” explains Melissa Cohn, New York-based regional vice president and mortgage banker at William Raveis Mortgage. Because of economic and geopolitical volatility, “Those spreads have grown over the course of the past couple of years, and our mortgage rates are now trading at 3% or higher above the 10-year Treasury.”

That said, it’s also worth noting that while we haven’t seen mortgage interest rates this high in 23 years, prevailing interest rates are in line with longer-term historical averages. Interest rates collected by government-sponsored enterprise Freddie Mac, which go back to 1971, are widely used as the yardstick for mortgage interest rates. Over that half century, the average 30-year fixed interest rate has been 7.74%.

“Looking holistically at the entire history, we’re about where the average is,” comments Jessica Lautz, deputy chief economist and vice president of research for the National Association of Realtors. Lautz points out that recent history is fairly exceptional: “We don’t want to say that the interest rate of 18 is normal, but the interest rate of 2.5 is also not normal,” she says, referring to historic highs of the early 1980s and the low point of 2020. “Both of those were very unusual time periods for interest rates.”

How high rates might affect buyers’ plans

Higher interest rates have got home buyers scrambling to keep their budgets in line with costs. But buyers should also consider the wider effects that rates have on the housing market and how these could play out.

Cohn contends that those who can afford to buy now, despite high interest rates, are likely better off going ahead with a purchase, as home prices continue to rise. “Are you better off buying in the higher-rate environment today and paying hundreds of dollars more a month in a mortgage payment so that you can refinance in a year when rates are down instead of having to pay 5% more on the purchase price of that home in a year?” she asks. This argument assumes interest rates will drop, but it’s also worth noting that while today’s buyer waits for rates to fall, they’re building equity.

Lautz also leans toward acting now if you can, but for different reasons. With housing inventory limited, a drop in interest rates could bring currently priced-out buyers off the sidelines, driving up home prices. “I do think there is pent-up demand,” Lautz explains, “and so they may be facing a multiple-offer situation.” In other words, lower rates could lead to the return of bidding wars.

Mortgage loans from our partners

What home buyers can do now

If you’re in the position to buy a home despite today’s mortgage rates, there are a few steps you can take to buffer the effects of high rates.

Get all the help you can: If you’re a first-time home buyer, look into state and local programs that provide down payment and closing cost assistance. These can be no- or low-interest loans or even outright grants. You may not even have to be a true first-timer: Many programs consider you a first-time home buyer if you haven’t had an ownership interest in a home in at least three years.

Consider a variety of home types: Rather than a detached, single-family home, a condo or townhouse might better suit your budget. New construction is worth a look, as newly built homes are nearly one-third of the current market. Home builders with robust inventories are often able to provide incentives that make new homes more affordable.

Be interest-rate-aware: When you’re researching sample interest rates at various lenders, read the fine print. With rates so high, many lenders are including discount points — prepaid mortgage interest — to make their sample rates appear lower. Buying points can be a good strategy, but there’s an upfront cost, so you want to know if they’re included when trying to decide which lender has the best rates for you.

Source: nerdwallet.com

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October 27, 2023 by Brett Tams

Warning that the housing market is contracting again as today’s mortgage rates hover near 8%, Wells Fargo economists wrote in a new analysis that rising borrowing costs “stand to tip the housing sector back into a recession.”

The “ominous” special commentary posted Thursday, according to a Wells Fargo news release, states prospects for a housing rebound are dimming as mortgage rates tighten their grip on the already sharp U.S. housing affordability issues.

Even though the economy has shown “a remarkable degree of resilience” this year — and a strong labor market along with moderating inflation has “raised hopes that the U.S. economy can avoid a recession — the same can’t be said for the real estate market. Unfortunately, not every sector of the economy has been as sturdy in the face of rising debt costs,” the Wells Fargo economic group wrote.

“After generally improving in the first half of 2023, the residential sector now appears to be contracting alongside the recent move higher in mortgage rates,” they continued. “Although mortgage rates may gradually descend once the Federal Reserve begins to ease monetary policy, financing costs are likely to remain elevated relative to recent norms.”

The commentary comes days after Goldman Sachs analysts also issued a downgraded housing forecast, predicting “higher for longer” mortgage rates will continue to squeeze home inventory and yet home prices will stay in the green, though growth will be slight as sales slow even more.

It also comes a day after the Federal Reserve Bank of Atlanta posted an update to its Home Ownership Affordability Monitor, showing housing affordability sank to a “new record low” in August due to still stubbornly high prices and rising interest rates.

In yet another month of declines, the monitor index score sank to 67.3 in August with a national median home price of $377,500, a median income of $76,621, a total median monthly payment of $2,848 and an interest rate of 7.1%. The Atlanta Fed estimated the annual total payment share of median income to be 44.6%, well over the recommended 30% of income for housing costs.

Compare that score to a score of 112.3 in November 2012, when the median home price was $197,333, median income was $52,161, and the interest rate was 3.4%.

This latest affordability reading was back in August, before interest rates inched closer to 8%, hitting that threshold last week before tipping down only slightly, according to Mortgage News Daily.

This “higher for longer” interest rate climate is likely to “not only weigh on demand, but could also constrain supply by reducing new construction and discouraging prospective sellers carrying low mortgage rates from listing their homes for sale,” Wells Fargo economists wrote.

The bank’s analysts also downgraded their home price forecast, though now they expect a “slightly softer pace of home price appreciation in the years ahead.” Because high interest rates are expected to continue to both dampen demand and constrain supply, they predict those dynamics will continue to buoy home prices slightly.

“Higher financing costs are likely to both weigh on demand and constrain supply, which will allow home prices to maintain a positive trajectory,” Wells Fargo economists wrote, predicting the S&P Case-Shiller National Home Price Index to increase 1.8% in 2023 and 2.5% in 2024.

The economic group also predicts a “downshift” in new residential construction starts, with multifamily permits already declining sharply in recent months.

“The recent drop in home builder confidence is evidence that single-family construction may begin to moderate as higher mortgage rates test builders’ ability to offer rate buy-downs to attract new buyers,” they wrote. “That noted, a structural shortfall of single-family supply will likely continue to boost new development.”

Source: deseret.com

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October 27, 2023 by Brett Tams

FHFA revises current single-family mortgages backed by Fannie Mae, Freddie Mac (iStock)

Report Attribute	Details
No. of Pages	232
Forecast Period	2022 – 2030
Estimated Market Value (USD) in 2022	$116.5 Billion
Forecasted Market Value (USD) by 2030	$612.5 Billion
Compound Annual Growth Rate	23.1%
Regions Covered	Global

Hanover Mortgages

The Refined Mortgage Lending Company & Home Loan Lenders

Recession

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Negativity to Hurt Home Sales for Next Five Quarters

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Industry consolidation underway

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CD rate trends

CD rate forecast: 2023-2024

Take advantage of today’s CD rates

Verification, HELOC, POS, Servicing Transfer Products; Webinars Today and Tomorrow; Fannie’s Solid Earnings

Apache is functioning normally

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Why mortgage rates climbed so high

Where are mortgage rates headed in 2024?

How high rates might affect buyers’ plans

What home buyers can do now

Apache is functioning normally

Apache is functioning normally

Mortgage rates affecting affordability, buyers advised to build up down payments

Housing market showing lackluster activity

Apache is functioning normally

Home Sellers’ Lack of Equity Makes Pricing Difficult

Negativity to Hurt Home Sales for Next Five Quarters

Industry consolidation underway

Loan officers going away

Disruption opportunities

Are CD rates going up?

CD rate trends

CD rate forecast: 2023-2024

Take advantage of today’s CD rates

Verification, HELOC, POS, Servicing Transfer Products; Webinars Today and Tomorrow; Fannie’s Solid Earnings

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Why mortgage rates climbed so high

Where are mortgage rates headed in 2024?

How high rates might affect buyers’ plans

What home buyers can do now

Mortgage rates affecting affordability, buyers advised to build up down payments

Housing market showing lackluster activity