refinance applications

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Falling mortgage rates last week brought increased demand.

Total home loan applications increased 2.8% for the week ending Dec. 1 compared to the previous week, according to data from the Mortgage Bankers Association (MBA). The 30-year fixed-rate mortgage averaged 7.17% last week.

Slower inflation and the confidence financial markets have that we are nearing the end of the Fed’s hiking cycle has brought mortgage rates to the lowest level since August.

Purchase applications rose by 35% week-over-week on an unadjusted basis, though they were 17% lower than a year ago. According to Joel Kan, MBA’s vice president and deputy chief economist, they were mostly held back by “low inventory and still-challenging affordability conditions.”

Meanwhile, refinance applications posted their strongest week in two months. The refinance index rose by 14% on a weekly basis and was 10% higher than a year ago. Refinance applications exceeded their 2022 levels for the second week in a row, a first since late 2021.  

“The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast,” Kan said in a statement.

The adjustable-rate mortgage (ARM) share of activity decreased to 7.4% of total applications, down from 8.1% last week.

The share of Federal Housing Administration (FHA) loan activity increased to 15%, down from 13.5% the week prior. The share of Department of Veterans Affairs (VA) loan activity was 12.8%, up from 12.6% over the previous week, while the share of U.S. Department of Agriculture (USDA) loan activity remained unchanged at 0.5%.

Source: housingwire.com

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Mortgage borrowing ticked upward in the short Thanksgiving week, as subsiding rates helped bring home buyers to market, the Mortgage Bankers Association said.  

The MBA’s Market Composite Index, which measures weekly application activity based on surveys of the trade group’s members, inched up a seasonally adjusted 0.3% for the period ending Nov. 24. Activity climbed upward for the fourth straight week but still finished 15.4% lower year over year. Data was adjusted to account for the Thanksgiving holiday. 

The slight increase in applications was driven by greater purchase applications, but refinance applications fell over the week, according to Joel Kan, MBA vice president and deputy chief economist. 

“Rates have declined more than 50 basis points over the past six weeks, which has helped to spur a small increase in purchase applications,” he said in a press release.

The contract 30-year fixed-mortgage rate average for loans with conforming balances slid down to 7.37% from 7.41% in the previous survey. Points used to help bring down the rate increased to 0.64 from 0.62 for 80% loan-to-value ratio mortgages. The conforming rate hit 

But the 30-year jumbo average among MBA lenders increased 3 basis points to 7.54% compared to 7.51% a week earlier. Borrower points also rose to 0.81 from 0.79.

As most rates headed lower, the seasonally adjusted Purchase Index picked up for the fourth consecutive week, climbing up 4.7%, but volumes landed 21.6% below levels of a year ago. Still, the increase in purchase mortgage activity corresponds to trends real estate agents reported seeing this year, according to a recent survey from Assurance IQ. Low existing inventory, though, has served to cap the rate of growth.

Heading in the other direction, the Refinance Index declined for the first time in four weeks, dipping 8.9% from seven days earlier. Despite the drop, refinance volumes saw a slight annual increase, edging up by 0.7% from a year ago when they plummeted to their lowest mark since 2000.   

The weekly pullback in refinance applications led their share relative to total activity to shrink to 30.6%, down from 32.4% seven days earlier. 

Government-sponsored loan applications, meanwhile, fell by only a fraction, with purchases up, but refinances down. The share of federally-backed applications also came in mostly flat, but borrower interest across sponsors varied. Mortgages guaranteed by the Federal Housing Administration garnered 13.5% of activity, falling from 14.8% a week earlier. But countering the slowdown in FHA loans was growth in the portion of applications coming through the Department of Veterans Affairs, which represented 12.6% of volume, rising from 11.3%. The slice of applications backed by the U.S. Department of Agriculture remained at 0.4% week over week.

The contract interest rate for the 30-year FHA-backed home loan decreased by a single basis point compared to the prior survey, falling to 7.18% from 7.19%. Borrowers typically used 0.81 in points, climbing from 0.79 a week earlier.

The 15-year fixed rate average also saw a 1 basis point decline, falling to 6.88% from 6.89%. Points slid to 0.52 compared to 0.76 for 80% LTV loans.

The average of the 5/1 adjustable-rate mortgage, which starts fixed before becoming variable after 60 months, took a 17 basis point decline to 6.59% from 6.76%. Points used by borrowers retreated to 0.76 from 0.82 a week earlier. Following a surge in ARM interest earlier this fall, the share of adjustable-rate mortgages has tempered in November, accounting for 8.1% of applications last week versus 8.3% in the prior survey.

Source: nationalmortgagenews.com

Apache is functioning normally

Apache is functioning normally

Mortgage applications rose to their highest level in six weeks after the 30-year fixed mortgage rate fell to 7.44% last week.

Total home loan applications increased 3% for the week ending Nov. 17 compared to the previous week, according to data from the Mortgage Bankers Association (MBA).

Mortgage rates for the 30-year fixed loan averaged 7.44%, falling 6 basis points in one week, according to Freddie Mac‘s Primary Mortgage Market Survey. 

On a seasonally adjusted basis, purchase applications rose by nearly 4% over the week, with increases in both conventional and government purchase loan demand.

The average loan size on a purchase application was $403,600, the lowest since January 2023. Joel Kan, MBA’s vice president and deputy chief economist, said this corroborates with other sources of home-sales data pointing to a rising share of first-time homebuyers entering the market.

Meanwhile, refinance applications rose slightly by 1.6% last week but remained subdued. The adjustable-rate mortgage (ARM) share of activity fell to 8.3% of total applications, down from 8.8% the previous week.

The share of Federal Housing Administration (FHA) loan activity increased to 14.8% of all applications, down from 14.4% the week prior. The share of Department of Veterans Affairs (VA) loan activity was 11.3%, up from 11.2% over the previous week, while the share of U.S. Department of Agriculture (USDA) loan activity fell to 0.4% from 0.5% week over week.

Source: housingwire.com

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Mortgage rates this week saw the biggest one-week decline in a year and potential homebuyers waiting for rates to drop responded, said Josh Mettle, division president and co-creator of NEO Home Loans.

“I think we were up right around 15% increase in the number of initial mortgage applications. That doesn’t take into consideration the number of buyers that had already applied and were sitting on the sidelines. They’ve also re-entered the home-buying process,” Mettle told HousingWire.

Many homebuyers are aware of the lack of inventory of existing homes for sale, he explained. Because of that, they want to avoid any potential bidding wars by getting back into the market earlier rather than waiting for mortgage rates to drop further.

Following the Federal Reserve’s decision to hold interest rates steady, the 10-year Treasury yield – the primary driver in the rise of longer-term interest rates – have been on the downswing. The 30-year, conventional fixed mortgage rate hit 7.48% on Friday, down from 7.55% a month ago, HousingWire’s Mortgage Rates Center showed. 

The biggest question in the minds of loan originators is whether mortgage rates will fall through the end of 2023, providing some reprieve from the high-rate environment that has stifled origination volume for much of the year.

What’s going on with mortgage rates? 

Economists pointed out that the market interpreted Federal Reserve Chair Jerome Powell’s comments at the latest Federal Open Market Committee (FOMC) press conference as dovish compared to his previous remarks.

“The way I interpret what has happened, post-press conference for Powell, is that the market is going back to their behavior from earlier this year, where they kept signaling to the Fed that we want rate cuts,” Fannie Mae Chief Economist Doug Duncan told HousingWire. “So the fact that the Fed didn’t raise rates, the market rushed to say, ‘well, rates are going to get cut.’ The decline in the 10-year Treasury yield is simply that response,”

Duncan added that Powell’s comments were balanced, indicating that there has been progress in bringing inflation down but upside risk to inflation remained. Most importantly, Powell emphasized that the committee is not thinking about rate cuts. 

“It will not surprise me at all if there’s some intervening speeches that push rates back up on the 10-year Treasury yield,” Duncan said. 

Speaking on Nov. 9 – a little more than a week after the Fed held benchmark rates steady – Powell said that the central bank is not confident it has done enough to bring inflation down.

“My colleagues and I are gratified by this progress but expect that the process of getting inflation sustainably down to 2% has a long way to go,” Powell said on Thursday, addressing the International Monetary Fund audience in Washington, D.C.

The 10-year Treasury yield rose after the speech, largely driven by a bad bond auction, but the bond market fell from the peak of Thursday, noted Logan Mohtashami, HousingWire’s lead analyst.

“The bad bond auction on Thursday took yields and rates higher, and Powell’s hawkish tone kept rates up there, but yields on Friday morning fell just a little,” Mohtashami said. “It’ll be interesting to see what the (market) reaction will be to the next (CPI) report.”

Where are mortgage rates headed? 

The direction of the 10-year Treasury yield and mortgage rates will depend on the incoming data – including the Consumer Price Index (CPI) and retail sales numbers, economists emphasized.

Danielle Hale, chief economist at Realtor.com, noted that the economy is in the monetary cycle where mortgage rate changes are based on “expectations which can shift in outsized fashion relative to changes in the actual data.”

The CPI report for October 2023 – set to release on Nov. 14 – could push mortgage rates up if CPI numbers come in higher than expected, Hale projected.

Headline inflation is broadly expected to be subdued month over month, partly due to oil prices easing from their late-September highs.

The streak of declining mortgage rates may continue into December if the next few inflation readings come in as expected, Hale projected. 

Although Q3 economic growth came in “quite strong” at an annualized 9.4% rate and several job market indicators continue to show strength, as long inflation cools, the central bank is likely to pause at this level for some time, said Michael Fratantoni, MBA’s chief economist.

Fannie Mae and the MBA both expect the Fed to hold rates steady in its last 2023 FOMC meeting scheduled Dec. 12-13. 

Is this enough to prop up mortgage origination?

With mortgage rates falling, homebuyers are starting to realize that this may be a great time for them to get into the market while there’s lower demand, said John Crivea II, certified mortgage advisor and loan originator at Mpire Financial Group. 

Crivea II saw more than a triple increase in the number of leads in the past week and sees more activity on the horizon. 

“If the rates drop more and more people get more excited and come back into the market, now you’re going to be back to where we were two years ago with multiple offers in the five to 10 range,” Crivea II said. 

The welcome relief in mortgage rates, however, won’t help lenders a whole lot, economists expected.

“The change of 25 basis points (bps) or a quarter of a percent, puts a very few households in the game versus out of the game. So it’s not a game-changer. If rates fell below 6%, then you’d see a pick-up in production volume,” Duncan said.

Refinance applications tend to pick up when mortgage rates drop, Hale noted. But for the industry to see a mini refi boom, mortgage rates would need to fall below 7%.

“Mortgage rates have only exceeded 7% since August, and, given the sluggishness in home sales in recent months, there aren’t many homeowners who would need to refinance by a smaller dip,” Hale said.

The spread between mortgage rates and Treasury yields remains roughly 120 basis points wider than typical, due to a combination of factors, Fratantoni noted.

MBA’s baseline forecast is for mortgage rates to end 2023 at 7.2%, reach 6.1% at the end of 2024 and drop to 5.5% by 2025. Fannie Mae expects the average 30-year, fixed-rate mortgage to land at 6.8% in 2023 and move up to 6.9% in 2024.

Loan originators emphasized any decline in rates improves affordability while the lack of housing inventory and higher home prices will continue to be a challenge.

LOs are hopeful that the end of 2023 will be different from the same period last year when their origination business was paralyzed, largely due to mortgage rates sharply surpassing the 7% mark.

“We saw extreme pain last year at this time because a 7% mortgage was just absolutely shocking at that point after 3% rates. Nobody had gotten acclimated to that higher interest rate environment because it happened so fast,” Neo’s Mettle said.

“The fourth quarter and the first quarter are always the most challenging for the mortgage industry. People believe that rates peaked just above 8%. I think it’s going to be a much more favorable year for those reasons.”

Source: housingwire.com

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Mortgage applications picked up for the first time in four weeks as mortgage rates dropped by 25 basis points, to 7.61%. The Fed’s rate hike pause, combined with a softer October jobs report and the U.S Treasury’s issuance update, paved the way for rates to come down. 

For the week ending Nov. 3, total home loan applications increased 2.5% compared to the week prior, according to weekly mortgage application data from the Mortgage Bankers Association (MBA).

“Applications for both purchase and refinance loans were up over the week but remained at low levels,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “”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.”

Purchase applications increased 1% from the week prior and were 20% lower compared to the same week a year ago. Refinance applications inched up by 2% from the previous week and fell 7% from the same time period in 2022. Meanwhile, the adjustable-rate mortgage (ARM) share of activity decreased to 9.8% of total applications.

The share of Federal Housing Administration (FHA) loan activity remained unchanged at 14.7%. The share of Department of Veterans Affairs (VA) loan activity was 10.5%, up from 10.1% while the share of Department of Agriculture (USDA) loan activity remained unchanged at 0.5% week over week.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

Apache is functioning normally

The nation’s largest home builder, D.R. Horton, also has its own affiliated mortgage lender known as “DHI Mortgage.”

Recently, new home sales have surged in popularity due to the mortgage rate lock-in effect.

Essentially, existing homeowners aren’t selling their properties because they’ve got ultra-low fixed interest rates on their home loans.

At the same time, mortgage rates have surged higher, resulting in big financing incentives from home builders to move their newly-built home inventory.

Let’s take a hard look at what DHI Mortgage has to offer and whether an in-house lender is the way to go.

DHI Mortgage Fast Facts

  • Full service mortgage lender offering home purchase loans and refis
  • Founded in 1997, headquartered in Austin, Texas
  • Parent company D.R. Horton is the nation’s largest home builder
  • Publicly traded company (NYSE: DHI)
  • Also operate DHI Title and D.R. Horton Home Insurance Agency
  • Aim to be a one-stop shop for newly-built home buyers
  • Funded roughly $20 billion in home loans during 2022
  • Most active in the states of Texas, Florida, and California
  • Licensed to do business in 34 states

DHI Mortgage is a full-service mortgage lender owned by parent company D.R. Horton.

They were founded in 1997 and are headquartered in Austin, Texas.

D.R. Horton is the largest home builder in the United States, slightly bigger than competitor Lennar, which also has a captive mortgage company called Lennar Mortgage.

The home builder got its start back in 1978 when Don R. Horton built his first home in Fort Worth, Texas.

Since then, the company has grown into a near-$35 billion dollar company that is publicly-traded on the New York Stock Exchange (NYSE: DHI).

The company’s shares are owned by legendary investor Warren Buffett, who sees strength in home building given the lack of existing home supply.

Aside from operating their in-house mortgage lender DHI Mortgage, they also run an affiliated title company and insurance agency.

This means home shoppers can use DHI Title for their title insurance needs and D.R. Horton Home Insurance Agency for their homeowners insurance, assuming it’s competitively priced.

The goal is to create a one-stop shopping experience for home buyers and streamline what is often a daunting process.

Last year, they funded about $20 billion in homes, with nearly 30% of overall volume coming their home state of Texas, per HMDA data.

They are also quite active in Florida, California, Arizona, Georgia, Nevada, and The Carolinas.

How to Apply with DHI Mortgage

While you can get pre-qualified for a mortgage online via the DHI Mortgage website, they say to get in touch with your mortgage loan originator to submit a full loan application.

It’s unclear if this means you can still apply electronically after speaking with a loan officer, or if you have to apply in-person.

They do have branch locations and sales offices at their home builder developments, which could facilitate this process.

Unfortunately, their website is a bit limited when it comes to information, so you’ll probably need to speak with a human before proceeding to an application.

Their online system, powered by fintech company Blend, does seem to allow for online refinance applications along with the pre-qualifications.

If you visit their website, it’s also possible to search for a local loan originator by state, branch, or by name.

They say they have digital options for buyers, but don’t make clear what those are. My assumption is they do offer some sort of online loan submission process.

And likely the ability to complete tasks electronically, whether it’s satisfying loan conditions or checking loan status.

However, I would like to see more information in this department.

Loan Programs Offered by DHI Mortgage

  • Home purchase loans
  • Refinance loans
  • Conventional loans including Fannie/Freddie 3% down
  • FHA loans
  • VA loans
  • USDA loans
  • Fixed-rate and adjustable-rate options
  • Temporary buydowns
  • Affordable housing loans

DHI Mortgage offers the most popular loan options out there, whether it’s 3% down conforming loan backed by Fannie Mae or Freddie Mac or an FHA loan.

You can get both a home purchase loan or a mortgage refinance, though I doubt many existing homeowners would use them for a refinance unless mortgage rates were ultra-competitive.

The full menu of government-backed mortgages is offered, including FHA loans, VA loans, and USDA loans.

And both fixed-rate and adjustable-rate options are available, including the 30-year fixed, 15-year fixed, 7/1 ARM, and 5/1 ARM.

They also appear to offer jumbo loans that exceed the conforming loan limit in pricier regions of the country.

However, they don’t appear to offer any second mortgages, such as HELOCs or home equity loans.

But temporary buydowns, such as 2-1 buydown, are offered, as well as other affordable housing loans if buying in specific locations or with low-to-moderate income.

DHI Mortgage Rates

Speaking of mortgage rates, DHI Mortgage doesn’t have a page on their website dedicated to rates or lender fees for that matter.

So you’ll be a little bit in the dark there. Be sure to ask your loan originator what fees they charge, such as loan origination fees, application fees, processing and underwriting, etc.

The good news is I did see special interest rate offers on the D.R. Horton website, which is typical of home builders.

They often offer special incentives to their home buyers who also use their affiliated lender.

In this case, I saw a 5.50% fixed rate FHA loan offer, which was also available on VA and USDA loans.

And a 5.75% fixed rate conventional loan offer that only required a five percent down payment.

So chances are they can offer some pretty competitive rates if you buy a D.R. Horton property and use DHI Mortgage.

DHI Mortgage Home Buyers Club

Those with imperfect credit can take advantage of the “DHI Mortgage Home Buyers Club.”

It pairs in-house credit consultants with prospective home buyers to prepare them for homeownership.

While it doesn’t guarantee loan approval or improved credit scores, they will work with you to boost your overall credit profile.

They’ll also ask you to complete a HUD-approved homebuyer education course while your credit consultant comes up with a credit profile improvement strategy.

This might entail removing inaccurate items on your credit report, paying down high balances, and getting current on any past due accounts.

The goal is to clean up your credit history and improve chances of mortgage approval, and potentially snag a lower mortgage rate depending on credit score improvement.

DHI Mortgage Reviews

As always, I try to track down customer reviews online to see what past customers think of the lender in question.

And they don’t appear to be great, based on what I could find. Their headquarters in Austin has a 2.6/5 rating from about 40 Google reviews.

Over at WalletHub, it’s a similar 2.6/5 rating from just over 30 reviews, with some customers citing poor communication and delays.

You can also find reviews for individual loan officers if you go on Zillow and search by name or location.

DHI Mortgage currently has a ‘B+’ rating with the Better Business Bureau (BBB), which isn’t fantastic and likely due to customer complaints.

They also have a 1.14/5 rating on the BBB website based on customer reviews.

To sum things up, their website could do with improving and their mixed reviews raise some questions about customer service.

On the bright side, they offer a good amount of loan programs and might have financing specials that beat out the competition.

Ultimately, it would probably come down to price if deciding between them and a different lender.

Though I assume most DHI Mortgage customers are also likely D.R. Horton home buyers, so there will likely be a big push to stay in-house.

Just be sure to speak with other mortgage companies, independent mortgage brokers, and so on to weigh your options.

Convenience is great, but not at the price of higher closing costs and/or interest rates. So definitely shop around.

Lastly, note that DHI Mortgage sells most of the loans it originates, meaning it’s likely your loan will be sold and transferred to a new loan servicer shortly after closing.

DHI Mortgage Pros and Cons

The Good

  • Special financing incentives to D.R. Horton home buyers
  • Might be a quicker/easier home buying process using affiliated companies
  • Branch locations allow borrowers to work with in-person if preferred
  • DHI Mortgage Home Buyers Club helps credit challenged buyers
  • Free mortgage calculator and homebuyer education resources online
  • Lots of loan programs to choose from including fixed-rate loans and ARMs

The Perhaps Not

  • Only licensed in 34 states
  • No mention of mortgage rates or lender fees online
  • Clunky website with limited information
  • Don’t seem to able to apply for a home loan electronically
  • Do not offer second mortgages or home equity products
  • Do not service the majority of their loans
  • B+ BBB rating and poor customer reviews

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

As the 30-year fixed mortgage rate increased for the sixth consecutive week to 7.70%, mortgage applications slumped, hitting their lowest level since 1995.

Last Monday, in an attempt to calm the markets, a coalition of housing trade groups — including the Mortgage Bankers Association (MBA), National Association of Realtors (NAR) and National Association of Home Builders (NAHB) demanded that the Federal Reserve to provide clarity on the Fed’s rate path and its plans for the mortgage-backed securities (MBS) portfolio.

Mortgage applications decreased 6.9% for the week ending Oct. 13, compared to the week prior, according to weekly mortgage application data from the MBA.

“Both purchase and refinance applications declined driven by larger drops for conventional applications,” Joel Kan, MBA’s vice president and deputy chief economist, detailed. “Purchase applications were 21% lower than the same week last year, as homebuying activity continues to pull back given reduced purchasing power from higher rates and the ongoing lack of available inventory.”

Meanwhile, the ARM share was 9.3%, 0.1 basis point higher than last week and the highest share in 11 months. Some borrowers are turning to ARMs in the hope of lowering their monthly payments. Additionally, refinance activity was at its lowest level since early 2023, with its share decreasing to 30.5% of total applications, down from 31.6% the previous week.

“There is very limited refinance incentive with mortgage rates at multi-decade highs,” Kan said.

The share of Federal Housing Administration (FHA) loan activity inched up to 14.8% from 14.4% for the week ending Oct. 13. The share of Department of Veterans Affairs (VA) loan activity was 10.7%, up from 10.2% the week prior while the share of Department of Agriculture (USDA) loan activity held steady at 0.5%.

Source: housingwire.com