Mortgage Bankers Association

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2016 Mortgage Rate Predictions

Well, another year is behind us and it’s time to look into the crystal ball to see what 2016 has in store when it comes to mortgage rates.

I already posted my 2016 predictions for everything mortgage and real estate related, but I wanted to dig a little deeper into mortgage rates, which always seem to be a crowd favorite for existing and prospective homeowners.

While we can never say with certainty which way mortgage rates will move on a given day, week month, or year, we can definitely make some educated guesses.

Additionally, we can use the experts’ forecasts as a guide, though as I’ve mentioned before, they aren’t going to be accurate 100% of time, or even close to that. In fact, they could be completely wrong.

Still, it’s good to get a variety of estimates from the pundits so we at least narrow things down.

Below I’ll be listing all the estimates for the 30-year fixed-rate mortgage, which is by far the most popular mortgage type in existence today.

Note that these estimates can change from time to time, but are the latest available.

Fannie Mae’s 2016 Mortgage Rate Forecast

Let’s start with Fannie Mae, a leading securitizer of residential mortgages on the secondary market. Clearly they know a thing or two about mortgage rates.

They expect relatively flat mortgage rates in 2016, which is undoubtedly a good thing.

First quarter 2016: 4.0%
Second quarter 2016: 4.0%
Third quarter 2016: 4.1%
Fourth quarter 2016: 4.1%

Per Freddie Mac, the 30-year fixed currently stands at 3.97%, so Fannie’s forecast calls for very little or no rate movement in 2016. Nice!

Freddie Mac’s 2016 Mortgage Rate Forecast

Now let’s take a look at brother Freddie’s forecast, which differs quite a bit from Fannie’s. They actually expect a decent amount of rate movement in 2016, though rates should remain below 5% all year long.

First quarter 2016: 4.1%
Second quarter 2016: 4.3%
Third quarter 2016: 4.5%
Fourth quarter 2016: 4.7%

Freddie Mac sees the 30-year climbing about 75 basis points (0.75%) from current levels, which is significant but no reason to panic.

MBA’s 2016 Mortgage Rate Forecast

Now let’s turn to the Mortgage Bankers Association to get their point of view. They’re clearly a major player in the mortgage industry so you’d expect them to come up with some pretty accurate estimates.

Unfortunately, their estimates are a bit higher, so hopefully they’re wrong…

First quarter 2016: 4.2%
Second quarter 2016: 4.4%
Third quarter 2016: 4.6%
Fourth quarter 2016: 4.8%

As you can see, not quite 5%, but pretty darn close. They expect applicants to receive 30-year mortgage rates closer to 4.875% by year-end as opposed to 4% today. That’s enough to turn the rent vs. buy decision on its head.

National Association of Realtors 2016 Mortgage Rate Forecast

Finally, let’s take a look at what the Realtors think. I like to take their estimates with a larger grain of salt because the NAR always seem to think rates will surge higher. Call it motivation to BUY NOW!

Their estimates are pretty similar to the MBA’s, and you could argue that the MBA also wants you to get a mortgage ASAP.

First quarter 2016: 4.1%
Second quarter 2016: 4.3%
Third quarter 2016: 4.6%
Fourth quarter 2016: 4.9%

So the NAR stopped short of calling 5% mortgage rates in 2016, but they’re not leaving much room to breach that psychological level. And as mentioned, these estimates can and will change throughout the year.

In other words, don’t be surprised if they are revised up as the year goes on. That being said, they can be revised down as well.

I’d say mortgage rates have already surprised (in a good way) to start 2016, though investors have taken big losses in the stock market in the process.

In summary, the 30-year fixed isn’t expected to do too much if you believe Fannie Mae, but all the other forecasters expect rates closer to 5% by the end of 2016. Stay tuned to see who’s right.

Update: Mortgage rates have fallen for five straight weeks in 2016 and are now close to testing new-all time lows. Looks like Fannie is the best predictor so far.

(photo: Charles Wagner)

Source: thetruthaboutmortgage.com

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Today marks the last day to submit a nomination for HousingWire’s prestigious and first-of-its kind Women of Influence award. Each year, HousingWire’s Women of Influence award spotlights women who are cultivating a new path forward for the housing economy and paving the way for the women who follow after them. These women are recognized based on achievements within their organizations, their communities and the in the industry at-large.

HousingWire reached out to previous award winners and asked them to share any advice they would have for someone starting out in the industry. Keep reading to see the responses from some of the previous Women of Influence honorees.

“Be teachable and take every opportunity to learn as much as you can about the industry. Recognize that some lessons are taught and some are caught. Find people who will pour into you (taught) and will model for you (caught).” — Lisa J. Haynes, senior vice president, chief financial officer and diversity and inclusion officer, Mortgage Bankers Association

“Make sure you are passionate about what you do and who you are serving. You’ll accomplish all of your goals if you truly care about what you are working on.”
— Hilary Saunders, Esq., co-Founder and chief broker officer at Side

“The best learning is done situationally. Put yourself in new experiences. And take the lead to get there. Ask your supervisor what you can take off their plate so you can learn by doing new things. Seek conversations with people in related but different roles or fields, to expand your ability to think creatively with new inputs.” — Liz Gehringer, president and CEO, franchise brands, Anywhere Real Estate Inc.

“Be curious with what you can achieve. Self-doubt and imposter syndrome gets the best of us, push yourself beyond that line and you will surprise yourself on what you can do.” — Dr. Jessica Lautz, deputy chief economist and vice president of research, National Association of Realtors

Join the ranks of these inspirational women and nominate a female colleague — or yourself — for the Women of Influence award, today!

Source: housingwire.com

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Rates Are Low Again

Thanks to ongoing economic turmoil, mortgage rates are now on sale again, so much so that mortgage refinancing is picking up steam and lifting overall mortgage applications.

Mortgage rates have now fallen for six consecutive weeks, per data from Freddie Mac. The popular 30-year fixed-rate mortgage now sits at 3.65%. It was averaging a much higher 4.01% as of December 31st, 2015.

Some lenders are now offering rates as low as 3.375% on the loan product, a steal for anyone looking to purchase a home or refinance.

Interestingly, purchase volume has still been pretty flat, per the Mortgage Bankers Association, so it’s unclear if the low rates are pushing folks to look for homes. But it’s clearly motivating individuals to look into a refinance.

I looked at some of the larger lenders to see just how low interest rates are at the moment.

What Rates Are Lenders Offering Today?

This is what I saw offered on February  12th, 2016.

One lender, CashCall Mortgage, famous for their no cost refi, is offering a 30-year fixed with no closing costs for 3.625%. They’ve also got a 15-year fixed set at a promotional rate of 2.99% with no fees.

If you actually pay your closing costs out of pocket you should be able to get a rate at least as low as 3.5% on the 30-year, which is pretty much as low as it has been.

Greenlight Loans is offering a rate as low as 2.75% on the 15-year fixed, though the APR is a higher 3.003%.

Wells Fargo is displaying rates of 3.75% on the 30-year fixed and a rather high 3.25% on the 15-year fixed.

Chase is offering 3.5% on the 30-year fixed with APR at a very low 3.56% as well. They’re charging .75% in discount points for that rate. Their 15-year fixed is also a low 2.875%.

PNC Mortgage is advertising a range of rates on the 30-year fixed from 3.5% to 3.875%, and rates as low as 2.75% on the 15-year fixed.

Flagstar Bank Is Advertising a Rate of 3.375%

The lowest rate I’ve seen advertised by the top 10 mortgage lenders is the 3.375% on offer at Flagstar Bank. The APR is a low 3.535% as well, so closing costs don’t appear to be exorbitant.

If you recall, the 30-year fixed hit its lowest point on record (per Freddie Mac) during the week of November 21, 2012, averaging 3.31%. So it’s pretty much there again.

Over at Bank of America, they’re offering a 30-year fixed for 3.625% with about a half a discount point charged.

At U.S. Bank you can get a jumbo 30-year fixed as low as 3.625% with similar APR. Their FHA 30-year fixed is currently 3.5%, but APR is over 5% because of pricey mortgage insurance premiums.

There are also some major duds out there. Somehow CitiMortgage is advertising rates of 4% on the 30-year fixed, though they aren’t charging mortgage points.

Still, that’s way higher than the competition. Their 15-year fixed is also set at a pricey 3.375%.

PHH Mortgage is also advertising a relatively high 3.71% rate for their 30-year product and 3.125% for their 15-year fixed.

PennyMac Mortgage, which rose from the ashes of Countrywide Mortgage, is offering a pricey 3.875% 30-year fixed and 3.25% on its 15-year fixed.

Interestingly, their 5/1 ARM is more expensive, advertised at 4.125% today.

Remember, while rates are low, it can all change in a hurry. Of course, with how bad the global economy looks at the moment, we could see rates trickle down even further in 2016.

I’ve heard the Chinese housing bubble might make ours look like a walk in the park.

I suppose it’s possible the 30-year fixed could dip below 3%, but we’ll be in really bad shape if that’s the case.

Source: thetruthaboutmortgage.com

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The latest weekly survey data from Freddie Mac shows the 30-year fixed-rate mortgage rose to an average of 6.02% this week ahead of the Federal Reserve’s much-anticipated interest rate hike next week. Daily mortgage rate calculators are showing 30-year fixed rates at 6.30% and above.

A year ago at this time, rates averaged 2.86%.  

“Mortgage rates continued to rise alongside hotter-than-expected inflation numbers this week, exceeding six percent for the first time since late 2008,” said Sam Khater, Freddie Mac’s chief economist. The index compiles only purchase mortgage rates reported by lenders during the past three days.   

Inflation rose more than expected in August as rising shelter and food costs offset a drop in gas prices, adding weight to markets speculating the Fed will enact a 75 bps increase at its Federal Open Market Committee (FOMC) meeting on September 20 and September 21. 

The consumer price index, which tracks a range of goods and services to keep track of inflation, rose 0.1% in August and 8.3% year-over-year, according to the Bureau of Labor Statistics.

Inflation data shows the energy index fell 5.0% from the month prior while increases in the shelter (+0.7%), food (+0.8%), electricity (+1.5%), natural gas (+3.5%) and medical care (+0.7%) indexes were the largest contributors to the higher-than-expected inflation levels. 

More than ever lender profitability requires maintaining pace with innovation

Lenders continue to face tightening profit margins as mortgage rates stay substantially higher than they were last year. In light of this, HousingWire recently caught up with Teraverde’s Rob Peterson to learn more about what lenders need to succeed in today’s lending environment.

Presented by: Teraverde

Treasury yields leaped higher, as the 2-year note, most closely tied to the Fed’s interest rate moves, surged 33 bps to 3.78% on Wednesday from the prior week. 

On HousingWire’s Mortgage Rates Center, Black Knight’s Optimal Blue OBMMI pricing engine measured the 30-year conforming mortgage rate at 6.124% on Wednesday, up from 5.950% the previous week. Meanwhile, the 30-year fixed-rate jumbo was at 5.821% Wednesday, up from 5.587% the week prior. 

Pressure on rates has reduced demand for mortgage loans, according to the Mortgage Bankers Association (MBA). The market composite index, a measure of mortgage loan application volume, declined 1.2% for the week ending Sep. 9. The refinance index had a 4.2% decline from the previous week, and the purchase index was marginally down 0.15%.

According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 5.21% with an average of 0.9 points, up from last week’s 5.16%. The 15-year fixed-rate mortgage averaged 2.12% a year ago. 

The 5-year ARM averaged 4.93% this week, up from 4.64% the previous week. The product averaged 2.51% a year ago.

For prospective buyers, lack of inventory is still an issue although increase in rates will continue to dampen demand and put downward pressure on home prices, according to Khater.

“This indicates that while home price declines will likely continue, they should not be large.” Khater said. 

Source: housingwire.com

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Demand for mortgage loans increased for the first time in six weeks, ahead of the Federal Reserve’s meeting on Wednesday, when observers expect at least another 75 basis points hike to the federal funds rate. 

According to the Mortgage Bankers Association (MBA), the market composite index, a measure of mortgage loan application volume, increased 3.8% for the week ending Sep. 16, compared to the previous week. It was also down 64.3% compared to the same week in 2021.  

The refinance index gained 10.3% from the previous week but fell 82.6% from the same week in 2021. Meanwhile, according to the MBA, the purchase index was up 1% from the previous week and decreased 29.5% from the same week in 2021. 

 “As with the swings in rates and other uncertainties around the housing market and broader economy, mortgage applications increased for the first time in six weeks but remained well below last year’s levels,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a statement. “The weekly gain in applications, despite higher rates, underscores the overall volatility right now as well as Labor Day-adjusted results the prior week.”

Due to the Federal Reserve’s rate hike of 75 basis points on July 27 to combat persistent inflation, and the expectation of another sizable increase this week, mortgage rates are in the mid 6% range.

The latest weekly survey data from Freddie Mac shows the 30-year fixed-rate mortgage rose to an average of 6.02% this week past week. A year ago, rates averaged 2.86%.  

How will non-QM perform for the rest of 2022?

With inflation and rising rates, non-QM lending has spent the last few months in choppy waters, with some lenders closing their doors. However, the outlook for non-QM for the rest of 2022 is relatively optimistic, according to Acra Lending CEO Keith Lind.

Presented by: Acra Lending

MBA’s estimate, however, indicated the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) rose to 6.25%, from the previous week’s 6.01%. Jumbo mortgage loans (greater than $647,200) increased to 5.79% from 5.56% in the same period. 

“Treasury yields continued to climb higher last week in anticipation of the Federal Reserve’s September meeting, where it is expected that they will announce – in their efforts to slow inflation – another sizable short-term rate hike,” Kan said. “Mortgage rates followed suit last week, increasing across the board, with the 30-year fixed rate jumping 24 basis points to 6.25% – the highest since October 2008.”

The MBA data shows the refinance share of all mortgage activity rose to 32.5% of total applications this week from the previous week’s 30.2%. 

The Federal Housing Administration’s (FHA) share of total applications fell marginally to 13.3% from the previous week’s 13.4%. The Veterans Affairs’s (VA) share of applications  decreased to 10.9%, from 11.3%, and the United States Department of Agriculture’s (USDA) share went from 0.7% to 0.6%. 

The share of adjustable-rate mortgages (ARM) applications remained unchanged at 9.1% this week. According to the MBA, the average interest rate for a 5/1 ARM increased to 5.14% from 4.83% a week prior.

The survey, conducted weekly since 1990, covers 75% of all U.S. retail, residential mortgage applications.

Source: housingwire.com

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Despite a marked improvement from the fourth quarter of 2022, independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks still lost a mountain of money in the first quarter.

On average, IMBs reported a net loss of $1,972 on each loan originated from January to March, a 35% improvement from the reported loss of $2,812 per loan in the fourth quarter of 2022, according to the Mortgage Bankers Association (MBA).

A net production loss of 68 basis points in the first quarter is a sober reminder that conditions remain extraordinarily challenging for the industry, even if losses narrowed from the record 99 bps loss recorded in Q4.

Chart courtesy of the Mortgage Bankers Association

The industry has experienced four consecutive quarters of production losses and nine consecutive quarters of volume declines, according to Marina Walsh, the MBA’s vice president of industry analysis. 

The average production volume was $398 million per company in the first quarter, down from $436 million per company in the fourth quarter of 2022. The volume by count per company averaged 1,264 loans, a drop from 1,395 loans during the same period. 

All in all, including both the production and servicing business lines, 32% of companies were profitable in Q1, up from 25% in the last quarter of 2022.

Another silver lining for IMBs was improved production revenue of 40 bps in the first quarter from the previous quarter.

However, costs continued to escalate with the further drop in volume and reached a study high of $13,171 per loan despite substantial personnel reductions, Walsh noted. 

Loan production expenses averaged $7,172 per loan from the third quarter of 2008 to the last quarter of 2022. The average number of production employees per company also declined to 374 between January and March from 413 from the previous quarter. 

Servicing operating income — which excludes MSR amortization, gains or loss in the valuation of servicing rights net of hedging gains or losses, and gains or losses on the bulk sale of MSRs — slightly declined to $102 per loan in the first quarter from the previous quarter’s $104. 

The sale of MSRs does not directly impact earnings as a revenue stream, but the conversion of MSRs into cash via sales deals bolsters a lender’s cash flow and overall liquidity.

It’s not all bad news, however. The MBA expects mortgage origination volume for one- to four-family homes to post $461 billion in Q2, a rise from $333 billion in Q1 2023, according to its latest forecast.

The MBA also projected the 30-year fixed mortgage rate to trend down to an average of 6.2% in the second quarter, ultimately declining to 5.5% by the fourth quarter of 2023.

Source: housingwire.com

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Mortgage rates increased this week as the debt limit impasse between the Republican-controlled House of Representatives and President Joe Biden’s White House continues to cause uncertainties within the market. 

Rising rates and home prices come with affordability challenges, mainly for first-time homebuyers. However, some borrowers are getting used to the landscape and are pursuing homeownership, housing market experts said.   

“The 30-year fixed-rate mortgage averaged 6.39% this week, as economic crosscurrents have kept rates within a ten-basis point range over the last several weeks,” Sam Khater, Freddie Mac’s chief economist, said in a statement. 

“After the substantial slowdown in growth last fall, home prices stabilized during the winter and began to modestly rise over the last few months. This indicates that while affordability remains a hurdle, homebuyers are getting used to current rates and continue to pursue homeownership,” Khater added.  

Per Freddie Mac‘s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage averaged 6.39% as of May 18, up four basis points from last week’s 6.35%. The same rate averaged 5.25% a year ago at this time.

Other indexes, however, showed rates even higher. The 30-year fixed rate for conventional loans was 6.70% at Mortgage News Daily as of Thursday morning. HousingWire’s Mortgage Rates Center had the Optimal Blue‘s 30-year fixed rate for conventional loans at 6.50% on Wednesday, up from 6.40% the previous Wednesday. 

Rates are increasing amid an impasse on the U.S. debt limit. The U.S. Department of the Treasury communicated this week to the Congressional leadership that it will potentially no longer be able to satisfy its obligations as early as June 1, if Congress has not acted to raise or suspend the debt limit.  

“Though a default remains unlikely, the closer we get to a possible event date without an increase in the debt limit, the more likely households will be affected by higher interest rates,” Hannah Jones, economic data analyst at Realtor.com, said in a statement. “The sooner the debt impasse is resolved, the less likely it is to negatively affect households already plagued by high prices.” 

Fewer applications 

Higher rates and home prices educed the appetite of homebuyers for new loans last week. 

“Mortgage rates increased to the highest level in two months, which put a damper on borrower demand last week,” Bob Broeksmit, Mortgage Bankers Association (MBA) president and CEO, said in a statement. 

Broeksmit added: “Higher rates and low inventory levels continue to keep many prospective first-time buyers on the sidelines. Purchase applications for Federal Housing Administration loans – popular with many first-timers – were down 5% from last week and 17% from a year ago.”

According to Jones, mortgage rates have remained in the roughly 6% to 7% range for the last eight months and will likely stay in this range until incoming economic data makes the economy’s path forward more clear. 

“Buyer demand has been sensitive to the ebb and flow of mortgage rates, but near-peak home prices and elevated inflation mean many would-be buyers are still waiting on the sidelines,” Jones said. 

Source: housingwire.com

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Washington, DC
CNN
 — 

Mortgage rates inched down last week, after a slight increase the week before.

The 30-year fixed-rate mortgage averaged 6.33% in the week ending January 12, down from 6.48% the week before, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.45%.

“While mortgage rates have resumed their decline, the market remains hypersensitive to rate movements, with purchase demand experiencing large swings relative to small changes in rates,” said Sam Khater, Freddie Mac’s chief economist.

“Over the last few weeks latent demand has been on display with buyers jumping in and out of the market as rates move,” he added.

Mortgage rates rose throughout most of 2022, spurred by the Federal Reserve’s unprecedented campaign of harsh interest rate hikes to tame soaring inflation. But mortgage rates dropped in November and December, following data that showed inflation may have finally reached its peak.

The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit. Many buyers who put down less money upfront or have less-than-perfect credit will pay more than the average rate.

Inflation continues to improve

New inflation data out on Thursday showed that price increases continued to moderate in December. That’s good news for people looking for lower and more stable mortgage rates.

The Mortgage Bankers Association expects mortgage rates to move lower over the course of the year, said Bob Broeksmit, MBA president and CEO, which should bring more homebuyers back into the market.

But in the near term, this see-sawing between 6% and 7% is likely to continue, said George Ratiu, manager of economic research at Realtor.com.

“The Freddie Mac fixed rate for a 30-year loan has been moving up and down in the 6% to 7% range since September 2022 when it crossed the 6% threshold for the first time in 14 years,” Ratiu said. “Mortgage rates have mirrored the volatility in the 10-year Treasury, as investors wrangle mixed expectations amid an inflow of new economic numbers.”

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

All eyes are on the Federal Reserve and its meeting at the end of January and its plans for monetary tightening, with investors and businesses looking for signs that the bank may ease the pace of rate hikes, said Ratiu.

Volatility expected to remain for rates

Home sales fell as rates rose last year. Still-high home prices and interest rates that doubled last year have pushed many people out of the market.

Would-be homebuyers can expect mortgage rates to remain volatile, similar to what we have seen over the past five months, said Ratiu.

That means it will be all the more important for buyers to shop around.

“For buyers who find a home to purchase, shopping for a mortgage with multiple lenders to secure the lowest rate and fees could result not only in a lower monthly payment, but also in tens of thousands of dollars saved over the life of the loan,” said Ratiu.

Source: cnn.com