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Apache is functioning normally

Apache is functioning normally

The big news this morning is the confirmation that President Trump canceled next month’s meeting with North Korea’s Kim Jong Un. Yesterday’s dovish Federal Open Market Committee Meeting minutes are also playing into a slide for bond yields and mortgage rates. Read on for more details.

Where are mortgage rates going?            

Rates hit highs in Freddie Mac PMMS

The Freddie Mac Primary Mortgage Market Survey got released a few moments ago and it’s showing that mortgage rates moved up to new seven-year highs. With long-term government bond yields moving higher, this was no surprise. Here are the numbers:

  • The average rate on a 30-year fixed rate mortgage moved up five basis points to 4.66% (0.4 points)
  • The average rate on a 15-year fixed rate mortgage went up seven basis points to 4.15% (0.4 points)
  • The average rate on a 5-year adjustable rate mortgage moved up five basis points to 3.87% (0.3 points)

Here is what the Economic and Housing Research group had to say about rates this week:

“Mortgage rates moved up over the past week to 4.66 percent, their highest level since May 5, 2011 (4.71 percent).

Mortgage rates so far in 2018 have had the most sustained increase to start the year in over 40 years. Through May, rates have risen in 15 out of the first 21 weeks (71 percent), which is the highest share since Freddie Mac began tracking this data for a full year in 1972.

At a time when housing inventory remains extremely low, it’s worth watching whether these higher borrowing costs lead some would-be sellers to stay put in their current home. Inventory shortages would likely worsen if more homeowners decide not to sell out of reluctance of having a new mortgage with a higher rate.”

It’s important to note that the data for the Freddie Mac PMMS is collected early on in the week and doesn’t necessarily reflect current market conditions.

For instance, we’ve seen the yield on the 10-year Treasury note, which is the best market indicator of where mortgage rates are going, move down several basis points over the past couple days.

Mortgage rates typically move in the same direction as the 10-year yield, so average rates across the nation are likely lower than what the report shows.

Rate/Float Recommendation    

Lock before rates move even higher  

Mortgage rates keep moving higher and higher. Despite the modest dip over that past couple of days, the long-term projection for rates is to gradually increase. To avoid the risk of locking in a higher rate, we’re recommending that borrowers try to take action on a purchase or refinance sooner rather than later.

Learn what you can do to get the best interest rate possible.  

Today’s economic data:     

Jobless Claims

Applications filed for U.S. unemployment benefits came in at 234,000 for the week of 5/19/18. That’s up 11,000 from the previous week.

FHFA House Price Index

Home prices rose by 0.1% in the month of March. That puts the yearly rise at 6.7%.

Existing Home Sales

Existing home sales came in at an annualized rate of 5.460 M. That’s a monthly decline of 2.5%, bringing the year over year change at -1.4%.

Kansas City Fed Manufacturing Index

Fedspeak

  • New York Fed President William Dudley at 4:15am
  • Atlanta Fed President Raphael Bostic at 10:35am
  • Philadelphia Fed President Patrick Harker at 2:00pm

Notable events this week:     

Monday:  

  • Chicago Fed National Activity Index
  • Fedspeak

Tuesday:   

  • Richmond Fed Manufacturing Index

Wednesday:        

  • PMI Composite Flash
  • New Home Sales
  • EIA Petroleum Status Report
  • FOMC Minutes
  • Fedspeak

Thursday:     

  • Jobless Claims
  • FHFA House Price Index
  • Existing Home Sales
  • Kansas City Fed Manufacturing Index
  • Fedspeak

Friday:          

  • Durable Goods Orders
  • Consumer Sentiment
  • Fedspeak

*Terms and conditions apply.

Carter Wessman

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.

Source: totalmortgage.com

Apache is functioning normally

Apache is functioning normally

Information Sharing, Home Equity, Fulfillment, Marketing Products; Conventional Conforming News

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Information Sharing, Home Equity, Fulfillment, Marketing Products; Conventional Conforming News

By:
Rob Chrisman

8 Hours, 4 Min ago

How can it be that it’s been 14 years since Michael Jackson died of acute propofol intoxication? (A drug that is used for the induction and maintenance of general anesthesia.) The world certainly took notice of his death, and moving into mortgage banking, any time the same news story contains words like “FHFA,” “socialism,” “Congress,” and “credit scores” everyone takes notice. People are taking notice of bank and credit union performance in this environment. Unlike non-depository lenders, they’re faring okay in this environment. Personnel can be shifted to other channels within the company, such as auto loans, credit cards, or customer service. They generally have a different set of concerns than independent mortgage banks. For example, how does the referral process work, and who is compensated along the way? How are potential non-mortgage customers identified? How are marketing expenses handled… does the mortgage arm of the bank do its own marketing? How are management costs allocated? What is the reporting structure: who does “mortgage” report to and how? Are mortgage employees actively trained on other bank channels such as auto lending or credit card work? IMBs, of course, must compete with bank and CU comp structures which often involved a salary (let’s say, $5k per month) plus commissions (let’s say, 50 basis points). (Today’s podcast can be found here and is sponsored by Visio Lending. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Through its top-rated Broker Program, Visio brokers can earn up to 5 percent. Hear an interview with Black Knight’s Frank Poiesz on the current regulatory environment and what parts of the origination cycle AI will likely benefit first.)

Broker and Lender Services, Products, and Software

Whether you’re looking to funnel more leads, increase repeat business or forge valuable connections, the Surefire℠ CRM and Mortgage Marketing Engine by Black Knight has got you covered! In its latest ‘Mortgage Marketing Essentials’ quick guide, Surefire breaks down some simple, cost-effective strategies used by many of the mortgage industry’s top-producing loan originators to help you hone your marketing efforts! In today’s difficult housing market, there’s no better time to kickstart your journey to the top of the lending leaderboard. Get a bite-sized overview of proven tactics from loan officers who have perfected their marketing skills by downloading the ‘Top Producer Quick Guide’ today.

Are you a warehouse lender seeking to optimize operations, reduce costs and enhance customer satisfaction? Look no further than ProMerit, the industry’s leading warehouse lending platform brought to you by SitusAMC. As a SaaS-enabled and cloud-hosted system, it offers the flexibility and resilience required to thrive in the ever-evolving technological landscape. Effortlessly manage, track, fund and secure repayments while supporting your reporting, audit, and compliance requirements. Seamlessly integrate with LOSs, general ledgers, wire systems, DDA systems and more, enabling more smooth data flow and streamlining processes. Experience the power of automation, allowing you to schedule and execute tasks, import files, generate reports, and receive notifications of work complete. Elevate your warehouse lending business with ProMerit. Discover a world of enhanced efficiency, reduced costs, and unparalleled customer satisfaction. Contact Anthony Beshara or Rich Berg.

“Do you want to win more business and gain more agents? Then you need Loangendary Marketing, a marketing partner for mortgage companies and loan officers. With the market wreaking havoc on budgets and marketing departments, Loangendary Marketing was created to help you affordably grow and scale your origination business without growing your team. With our customizable contract terms, our lightning-fast turnaround times, and our talented team of mortgage marketing experts, we’re here to help your business grow in any market condition. Imagine having a team of the best mortgage marketers in the business focused solely on helping you win more loans and growing your brand. That’s what we do. And with over 20 years of experience working with some of the leading mortgage companies in the country, we know what it takes to help you win more business. Book a discovery call today to see what we can do for your business!”

Cover your staff’s time off with Maxwell’s on-demand underwriting. As a mortgage professional, you know the value of an uninterrupted workflow. Maxwell Fulfillment services empowers you to seamlessly maintain your operations while your team enjoys time off this summer (and beyond). With direct integrations to your LOS, our experienced onshore team of underwriters provides a seamless, fast, and cost-effective experience. To learn more about Maxwell’s on-demand underwriting or other fulfillment services, click here or schedule a call today.

Homeowners with mortgages, which account for roughly 63 percent of all properties, gained $1 trillion in equity between the fourth quarter of 2021 and the fourth quarter of 2022. Along with this increase in equity, there has been an increase in demand by borrowers to tap into that equity. Join executives from FirstClose, Space Coast Credit Union and HousingWire this Wednesday for a 1-hour for a virtual event that will discuss today’s levels of home equity, and how to successfully help homeowners utilize their equity with different home equity products. Register today!

The CWDL mortgage banking leaders had a great time in California last week, as we co-hosted Power Lunches with Michael McAuley and Joe Garrett of the renowned consulting firm Garrett, McAuley & Co. Mark Wilson and Dustin Pfluger helped to facilitate roundtable discussions with C-level executives of leading lenders in both the San Diego and Bay Area markets, hitting on topics such as getting to breakeven, dealing with margin compression, when/how to acquire other mortgage companies, and strategies for profitability in a hyper-competitive market. If you’re interested in CWDL bringing these Power Lunches to your market in the future, reach out to Kasey English (619-302-0010), and learn more about our industry-specific tax, audit, accounting and consulting services here.

Conventional Conforming Products in the News

Freddie and Fannie’s policies, procedures, underwriting guidelines, and activities in the capital markets impact roughly 3/4 of current production. Let’s see what’s happening in that channel.

FHFA Released 1st Quarter 2023 Foreclosure Prevention and Refinance Report.

Effective August 1, 2023, Freddie Mac is retiring the Loan SellingAdvisor® CTE01 environment. If you’re a current CTE01 user, you’ll need to migrate to the UAT Production Baseline CTE​. All functionality you have had access to in CTE01 will be available in UAT Production Baseline CTE.

Fannie Mae Positive Rent Payment Success Stories.

Fannie Mae June Appraiser Quality Monitoring (AQM) list.

Based on recent GSE feedback and QC findings, Pennymac clarified requirements related to documentation received with the loan file. Regardless of AUS documentation requirements, all documentation submitted with the loan file is subject to review and analysis and may be used for qualification purposes. PennyMac is analyzing the documentation to assess the impact.

All Fannie Mae, Freddie Mac, and AUS Jumbo Product Profiles were recently updated.

In Announcement 23-45, Pennymac provided a reminder regarding Fannie Mae and Freddie Mac’s condominium project insurance requirements and the importance of ensuring the insurance coverage is adequate to meet GSE requirements as well as protect the project from damage and loss.

Citi Correspondent Lending Bulletin 2023-05 contains credit policy updates regarding Quarterly Depreciating Markets List Update & New Format, Full Review Fannie Mae’s Condo Project Manager (CPM) –and Alternatives for Tax Filing Documents for DU Loans. The bulletin also provides notifications on Batch Funding for loan purchase wires and mandated screening for non-Obligated parties.

Impact of Fannie Mae SEL-2023-05 and DU/DO August Release Notes to AmeriHome Correspondent Products were posted in Announcement 20230606-CL.

PRMG Product Update 23-30: Conventional and Government Products updates include clarification on unique or non-traditional homes (such as barndominiums, tiny homes, geodesic dome, earth homes) are not eligible. Expanded Access clarification that Tax Professional Attestation Form allowed in lieu of written letter from Tax Professional (form ensures borrower’s Tax Professional meets all attestation requirements). Product codes added for High Balance options with repayable DPA on Chenoa Fund FHA. Clarification on requirements for Florida Assist and Florida HLP 2nd mortgage DPA documents.

Capital Markets

We had a little bond market rally in price to close last week as the market responded to releases of flash June Manufacturing and Services PMI readings from major economies which showed a clear trend of weakening activity. (When there isn’t much news, something 2nd or 3rd tier news can move prices in a thin market.)

This weakening activity comes at a time when central banks like the Fed, ECB, and the Bank of England are threatening more rate hikes. Domestically, the S&P PMI surveys for manufacturing and services were both lower, showing that the sector is contracting while growth in services also slowed. Other economic releases of note showed initial jobless claims were unchanged at 264k while the four-week moving average trended higher. While initial claims have been higher as of late, they are currently around the average seen from 2015 to 2017. Meanwhile continuing claims have been near their 2018 – 2019 range, consistent with 3.5 percent to 4.0 percent unemployment. Housing starts were higher than expected and may prove to be a boost to economic activity in the later part of the year. A 27 percent increase in multifamily starts led to the surprise reading. Builders continue to benefit from the lack of resale home supply as would-be sellers remain in place not wanting to give up their historically low fixed mortgages rates. The National Association of Homebuilders’ Housing Market Index increased from a revised 50 to 55 in June.

Despite being a slower week for economic releases last week, the sparse data points, as well as Fed comments, provided insight as to the strength of the U.S. economy. Fed Chair Powell reiterated the modest economic expansion that is being driven by consumer spending indicates that more work is needed to bring inflation down to the FOMC’s 2 percent target. Housing, which accounts for roughly one third of CPI, is being buoyed by limited supply as well as demographics which are keeping demand steady even with higher interest rates. Single-family permits increased for the fourth straight month and multifamily units under construction tied a record high. There was a slight uptick in resale home inventory last month as available homes increased to a still low 3.0 months’ worth. Single-family home prices rose for the fourth consecutive month in May to a median price of $401,100 due to low inventory and stabilizing demand.

This week concludes with month and quarter-end trades on Friday. Data includes regional Fed surveys, housing data, durable goods, consumer confidence, and final Q1 GDP before concluding with May PCE on Friday. Fed Chair Powell is scheduled to appear on Wednesday before the ECB Forum on Central Banking. Today’s calendar kicks off with the non-market moving Dallas Fed Texas manufacturing for June and a Treasury auction of $42 billion 2-year notes. We begin the week with Agency MBS prices better .125-.250, the 10-year yielding 3.68 after closing last week at 3.74 percent, and the 2-year is at 4.70 for no real reason, although there is some talk of the Russian political scene’s unrest.

Employment and a Retirement

Ready to take your career to the next level? Making certain borrowers have a smooth experience is vital in today’s competitive market, which is why Mortgage One provides all the tools you need to succeed. Through its partnership with Lender Toolkit, the Michigan-based lender helps its loan officers streamline the underwriting process with AI Underwriter™️ , which automates and applies underwriting conditions in 60 seconds. With just one click, you can review credit reports, income, assets, appraisals, loan data, fraud reports and more. “Research shows that consumers don’t like being asked for documents more than once, and AI Underwriter makes sure that doesn’t happen,” says Mortgage One CEO Mark Workens. “By moving underwriting upstream, we’re able to deliver a better customer experience, giving our loan officers more repeat and referral business from satisfied borrowers.” If you’re looking for a company that invests in your success, check out Mortgage One’s careers page today.

A Mortgage Boutique, the wholesale division of First Community Mortgage, has several zero or low down payment options: Conventional up to 97 percent, USDA 100 percent, VA 100 percent, FHA 100 percent CLTV, and HomeZero just announced NO income limitations! A Mortgage Boutique is looking for skilled Account Executives nationwide to join its team. Committed to delivering exceptional service to clients and partners, A Mortgage Boutique considers top talent as a crucial element in achieving this goal. If you are passionate about excellence and seeking to join a thriving team, consider a career with A Mortgage Boutique. Contact DJ Ziggas to learn more.

FHA job opportunity to make up to $166k per year: Director in its Real Estate Owned Division. Duties include reviewing technical reports of property damage, coordinating the completion and processing of necessary documents, and overseeing the preparation of deeds and mortgages and close sales.

“Liz Scott, Regional Managing Director with National MI has decided to retire from National MI after serving 11 years with the company. Her career has spanned more than 30 years in the mortgage industry, and we are deeply and sincerely grateful for Liz’s contributions. She was one of the first salespeople hired at National MI during its founding stage, and she helped craft our customer development strategy. She steadfastly believes that achieving homeownership offers the ability to improve families’ quality of life and has held the privilege of fostering broad and deep relationships with customers and members of the industry she considers partners and friends. She has built and led a best-in-class team of exceptional National MI sales advisors in the western territory who will continue to serve our clients with the highest standard of service. Liz looks forward to spending more time with her family, enjoying international travel, and soon welcoming her first grandchild to her family. We are grateful for the opportunity to have worked with Liz and wish her the best in her retirement as she begins a new life chapter.”

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

Source: mortgagenewsdaily.com

Apache is functioning normally

Apache is functioning normally

Additionally, initiated forbearance plans decreased in Q1 to 34,479, from 47,068 in Q4 2022. The total number of loans in forbearance at the end of Q1 stood at 65,757, coming out to 0.21% of the total loans serviced and 15% of delinquent loans.

Sixteen percent of home modifications in Q1 were modifications with principal forbearance, the report said. 35% of loan modifications completed in Q1 “reduced borrowers’ monthly payments by more than 20%,” the report’s findings said. “The number of refinances decreased amid rising mortgage rates from 111,251 in the fourth quarter of 2022 to 78,445 in the first quarter of 2023.”

The serious delinquency rate also decreased to 0.6% at the end of Q1, “compared with 4.01% for Federal Housing Administration (FHA) loans, 2.26% for Veterans Affairs (VA) loans, and 1.73% for all loans (industry average),” the report said.

Still, refinance transactions saw a slight uptick in Q1 despite being down overall for the quarter.

“[T]otal refinance volume increased in March 2023 as mortgage rates continued to decrease through February from the October peak of 6.90%,” the report said. “Mortgage rates rose in March: the average interest rate on a 30-year fixed-rate mortgage increased to 6.54% from a February level of 6.26%.”

The percentage of borrowers refinancing into shorter-term 15-year mortgages also increased to 14% in March, while the “average interest rate savings of a 15-year mortgage over a 30-year mortgage has been higher in 2022 and 2023 compared to previous years.”

Real-estate owned (REO) inventory also increased by 2% over the course of Q1 to 11,190 units.

“REO acquisitions outpaced property dispositions,” the report said of the change. “The total number of property acquisitions decreased slightly to 1,692, while dispositions rose 56% to 1,529 during the quarter.”

The number of foreclosure starts increased 6% during Q1 to 19,809, while third-party and foreclosure sales rose 12% to 3,700.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

As the Federal Reserve raised short-term rates for the first time in years, mortgage rates climbed 31 basis points to 4.16%, according to data from Freddie Mac‘s PMMS survey.

“The 30-year fixed-rate mortgage exceeded four percent for the first time since May of 2019,” said Sam Khater, Freddie Mac’s chief economist. “The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year. While home purchase demand has moderated, it remains competitive due to low existing inventory, suggesting high house price pressures will continue during the spring homebuying season.”

During a highly anticipated meeting on Wednesday, the Federal Reserve raised the benchmark rate a quarter of a percentage point. The Fed said there would likely be six more rate hikes in 2022 and three more in 2023, the primary tool the central bank is using to reduce inflation, which climbed to a 40-year high in February, at an annual rate of 7.9%.

The 30-year-fixed rate rose 31 points from 3.85% for the week ending March 17, according to Freddie Mac. A year ago, the 30-year averaged 3.09%. Freddie Mac assumes borrowers bought 0.8 mortgage points on their loan.

The 15-year fixed-rate mortgage averaged 3.39%, up from 3.09% last week. A year ago, the 15-year fixed-rate mortgage averaged 2.40%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.19% with an average of 0.2 points purchase by borrowers, 22 basis points higher last week. A year ago, the 5-year ARM averaged 2.79%.

The increase in rates in recent months has dramatically chilled refinancing activity in the mortgage market. According to the Mortgage Bankers Association, refi applications this week are down 49% from a year ago, and rate lock data from Black Knight found that refis in February were down to just about one-third of mortgages.

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The seasonally adjusted purchase index increased 1% from one week earlier; the unadjusted purchase index increased 2% from the prior week but was 8% lower than the same week a year ago, largely due to a decline in inventory.

Still, it remains to be seen whether the spoke in mortgage rates back to 2019 levels will chill the purchase market, which in many markets is still defined by low inventory, multiple offers and bidding wars. Zillow reported late last week that inventory dropped to 729,000 home listings in February, a 25% drop year-over-year and a 48% fall since February 2020. It was the fifth consecutive drop in inventory.

While mortgage rates will chill the refi market, the Federal Reserve laying out a clear path ahead should stem some of the volatility with mortgage rates, which have been on a rollercoaster ride for over a month.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

Fortunately we have 2018 as a guide to understand the impact of rising interest rates on the housing market in 2022. From September 2017 through November 2018, the 30-year mortgage rate rose from 3.8% to 4.9%, which was the highest point in the whole decade.

Based on the patterns from 2018, here’s what to expect, and the most important signals to watch:

1. Inventory will inch up… but not much.

In the 2010s, as interest rates remained low, more and more Americans became real estate investors, and available inventory of homes for sale dropped every year. That trend reversed for a short time in 2018 when mortgage rates rose, and in 2019 we began the year with 7% more inventory than in the previous year.

If interest rates climb above 4.5%, we’re likely to see this pattern repeat, which would add some more listings to inventory. But because nearly all American homeowners have a 30-year fixed mortgage below 4%, most will choose to hold onto that mortgage instead of selling.

2. Home price growth will slow, but don’t expect prices to drop.

With so much demand and rapidly shrinking inventory, home prices have continued to rise in Q1, even with higher interest rates. The median home price for single family homes this week is $394,500, which is about 12% higher than last year at this time. Other leading indicators of home prices in the data are all bullish for future transaction prices. 

Let’s look at what happened in 2018: even as interest rates rose and payments got more expensive, this didn’t result in any price drop. In fact, the median home price rose from $299,000 in early 2018 to $319,000 one year later. Why? Because in real terms, those mortgage payments were still a good deal.

Also, you can’t fight demographics. In 2018, demand was accelerating as Millennials moved into prime home-buying years. This is just as true today and will remain true further into the 2020s. As a mortgage lender recently told me about his first-time home buyer business, “life events don’t care about mortgage rates.”

And let’s not forget the effect of inflation. “Real” interest rates are the difference between inflation rates and mortgage rates, and in the inflationary economy of 2022, real interest rates are negative. Inflation is currently running at 7% annually. If your mortgage is at 3%, 4%, or even 6%(!) you’re still in a better financial position than you were last year. 

3. Homes will take a little longer to sell.

In a “normal” market, we generally expect it to take an average of 80-100 days to sell a home; over the past two years, that’s dropped to just 35 days. In fact, according to Altos Research data, one-third of homes are now sold in hours or just a few days. 

If prices and mortgage rates continue to rise, we’re likely to see the breakneck pace of the market slow down a little bit. There will be a little less competition. Buyers may be able to take their time and do full diligence on a house and not have to make an offer that afternoon. We will also likely see price reductions start to tick up, because more people who overprice their home won’t be getting those immediate offers.

Of course, these numbers may look different depending on the location, and investor-heavy markets such as Phoenix will likely be more sensitive to interest rate changes. Deals get less appealing when money gets more expensive. Look for slightly more inventory, slightly longer market time in these markets.

So to sum it all up: as we enter into spring, while all the leading indicators continue to show robust demand, rising interest rates could have a small cooling effect on the market. Buyers should move quickly during this window of opportunity. If history is any indication, it won’t last for long.

Mike Simonsen is the Founder and CEO of Altos Research.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

While the flow of new listings remained suppressed for much of 2022 due to a mortgage rate lock-in effect, the slower pace of sales led to a build-up of active inventories for sale and a modest decline in national house prices in late 2022, the ESR group explained.

Single-family housing starts surged 18.5% in May to a seasonally adjusted annualized rate of 997,000 units. 

Single-family housing permits, which tend to be more indicative of the underlying trend, also rose, but by a smaller 4.8% and to a seasonally adjusted annualized rate of 897,000 units, well below the pace of starts. 

Still, the permits data points to a clear upward trend in recent months, and this coincides with improvement in homebuilder sentiment. Homebuilder confidence moved into a positive territory for the first time in nearly a year amid recent data from the U.S. Census Bureau showed that about 1.69 million single-family and multifamily housing units are under construction across the country in May, nearing the highest levels recorded in the last 50 years.

Without a broader economic slowdown, current home prices and lack of existing inventory will lead to more home construction, Fannie Mae’s ESR group projected.

Doug Duncan, senior vice president and chief economist, pointed out that housing prices continue to show stronger growth than what was previously expected given the “suddenness and significant magnitude” of mortgage rate increases.

Homebuilders continue to add to the supply of historically low inventory levels, but years of meager homebuilding over the past business cycle means the imbalance will likely continue for some time, according to Duncan. 

The ESR group projects single-family mortgage originations for 2023 to be $1.59 trillion, down from its previous forecast of $1.65 trillion. In 2024, about $1.90 trillion origination volume for total single-family houses is projected, also down from the previous forecast of $2.03 trillion.

Fannie Mae reiterated that the economic downturn remains a question of “when” rather than “if.”

The ESR group expects a modest recession in the fourth quarter of 2023, a shift from last month’s forecast from the beginning of the second half of the year. 

“We do expect housing will be supportive of the overall economy as it exits the modest recession,” Duncan said. 

The good news is that ongoing resilience in employment, strong housing demand, and current financial conditions do not point to an immediate downturn. 

Fannie Mae upgraded its 2023 GDP forecast to 0.1% from -0.3% on a Q4/Q4 basis while it downgraded its 2024 GDP forecast to 0.8% from 1.2%.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

California housing officials are urging households to take advantage of Homeowner Assistance Fund resources following recent changes to eligibility, including updated area median-income levels. 

The new income thresholds will qualify more mortgage borrowers for up to $80,000 in financial assistance. Funding was originally made available in late 2021 under provisions of the American Rescue Plan Act in order to help households encountering economic distress due to economic impacts of COVID-19. 

“Even now, too many homeowners are still struggling to recover from the financial toll of the pandemic. This adjustment could mean that more families will not only save their house, but their home,” said Rebecca Franklin, president of the CalHFA Homeowner Relief Corporation, in a press release.

The Golden State’s Homeowner Assistance Fund already expanded in February this year to make relief available to more borrowers, including reverse mortgage holders. It also opened up to support households who may have already received some form of pandemic-related loss mitigation, such as a partial-claim second mortgage or loan deferral if granted in or after January 2020.

Homeowners can qualify for federal relief if combined income comes in at or below 150% of their area’s median levels, as determined by the U.S. Department of Housing and Urban Development. Qualifying thresholds rose across most California counties from 2022 to 2023, and range from $99,000 to $223,000 for a household with two residents age 18 or older. But eligible income decreased in a few of California’s wealthier markets, including San Francisco and adjacent counties, where the amount shrank from to $223,000 from $223,700. 

Los Angeles County saw the eligible-income total increase to $151,350 from $142,950. Meanwhile, the limit in Santa Clara County, which includes San Jose, also grew to $214,100 from $202,200. 

Qualifying limits were also published for households of other sizes, with the range for single homeowners running from $96,200 to $195,100. For households with three adult residents, the upper threshold is now between $111,400 and $250,850. 

Eligible homeowners may apply for funding online to catch up on late or missed mortgage and property tax payments, or to help pay partial-claim or deferred amounts. Struggling homeowners with reverse mortgages may also apply it to their insurance costs.

Focus on state HAF programs is currently growing as regulators underscore to the lending industry its responsibility to provide means available to help homeowners avoid foreclosure. Some states with remaining funds, which the Department of the Treasury meted out beginning in 2021, have amended their original terms to increase uptake of the programs and protect more borrowers. 

Among those changes are extensions of original application deadlines and the addition of reverse liens to the pool of eligible loans. Earlier this month, Hawaii doubled the maximum amount available through its program and stated it could provide assistance for utility payments and selected other charges even to households without an existing home loan.

The Biden Administration made almost $10 billion in Homeowner Assistance Fund aid available nationwide through the American Rescue Plan Act, with $750 million granted to California. Each state took responsibility for their program’s administration, regulations and fund disbursement. CalHFA estimates it will allocate all of its funds by September 2025.

The range of different policies and campaigns are resulting in varied outcomes across the country. While a handful of states have already closed their programs, the majority remain open to new applicants. But some states, such as Pennsylvania, encountered problems with vendors used, leading the Keystone State to put some of its efforts on hold. 

Source: nationalmortgagenews.com

Apache is functioning normally

Apache is functioning normally

Mortgage rates keep climbing amid rising inflation, war in Ukraine, and disruptions to the supply chain, and there’s no sign that they’ll fall anytime soon.

The latest weekly Freddie Mac PMMS mortgage survey, released Thursday, showed that the average purchase mortgage rate touched 4.67%, up 25 basis points from the week prior. That was the highest reading since December 2018, according to Freddie Mac.

The GSE’s index accounts for just purchase mortgages reported by lenders over the past three days. Black Knight‘s Optimal Blue OBMMI pricing engine, which considers refis and data from the Mortgage Bankers Association, reported that rates on Wednesday averaged 4.81%, up about 10 bps from a week prior.

And several loan officers who spoke to HousingWire this week said they had clients lock rates in the 5.1% range this week, though many homebuyers with ample cash reserves are buying down mortgage points.

The central bank has signaled that it will raise interest rates another six times this year and several more in 2023 to control inflation, which reached the highest level in 40 years in February, at 7.9%.

Normally, a period of rising mortgage rates cools housing prices. But this is no normal market. The March national median listing price for active listings was $405,000, up 13.5% compared to last year and 26.5% compared to March 2020, according to Realtor.com economist Danielle Hale. In large metros, median listing prices grew by 9.1% compared to last year, on average.

Why lenders should think about non-QM now, not later

Agency rates are on the rise and refinance volume is down. Originators who had their best year in 2021 will have to utilize something else to make up for this loss in 2022 and non-QM can be the answer. 

Presented by: Angel Oak

The problem, of course, is inventory. National inventory of active listings declined by 18.9% over the last year in March, while the total inventory of unsold homes — including pending listings — declined by 12.5%, according to Realtor.com. The inventory of active listings was down 62.3% compared to 2020 at the onset of the pandemic, even though demand remains high.

The latest Mortgage Bankers Association survey this week found that while interest in refi mortgages fell 15% from the prior week, interest in purchase mortgages rose a modest 0.68%.

According to the PMMS report, the average 15-year fixed-rate mortgage averaged 3.83%, up 20 bps from the prior week. (On average homebuyers paid 0.8 mortgage points.) The 5-year Treasury-indexed ARM averaged 3.50%, up from 3.36% a week prior.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

While the first four and a half months of 2023 had significantly more housing demand than we expected coming out of the ice-cold fourth quarter, the real story of the year is the restricted supply of homes to meet that demand. Low inventory continues to be a major issue for the market, and we’re seeing signs that there’s no end in sight. 

What’s normal for this time of year?

Normally in the spring — the pandemic years notwithstanding — we see inventory rising as sellers put their homes on the market readying for the summer home-buying peak. In typical years, the low point for homes on the market is mid-February. This year that low point was 10 weeks later, in late April as the quantity demanded exceeded the quantity supplied for homes during the entire first quarter.

In this chart we’re showing the inventory curve of unsold single family homes weekly for each year. Each line here is a year. The pandemic years’ inventory are the lines at the bottom. From May 2020 through March 2021, the market was characterized by few sellers and ravenous buyer demand. You can see how last year inventory started rapidly increasing in the second quarter as mortgage rates rose. That’s the light red line. Later in 2022 inventory had a second burst of inventory growth in September, which was very unusual, and was a reflection of how dramatically homebuyer demand slowed as mortgage rates spiked over 7%.

As of mid-May 2023, there were only 424,000 single family homes on the market across the country. The lowest point was officially in mid-April. Available inventory of homes for sale is starting to inch up 1% per week now. Contrast that with the same period in 2022, when inventory was climbing as much as 6% weekly. 

Why is inventory so restricted this year?

The first half of this year has seen significantly more demand than we expected, and fewer sellers, so inventory has fallen. It’ll take sellers to emerge, or buyers to drop out, for active inventory to finally rise again. We saw last year how abruptly and completely buyers could freeze when the tides turn against them. 

This article is part of our ongoing 2023 Housing Market Forecast series. After this series wraps, join us on May 30 for the next Housing Market Update Event. Bringing together some of the top economists and researchers in housing, the event will provide an in-depth look at the top predictions for this year, along with a roundtable discussion on how these insights apply to your business.  To register, go here.

With the debt ceiling crisis in Congress, we now have a new wrinkle that could slow the housing market. Mortgage rates have climbed to 7% for the first time since October as the uncertainty of the potential default looms over us. Home buyers are sure to feel this cost pain. If it lasts for very long, inventory will rise.

Inventory of homes could come from three possible seller sources: existing homeowners who trade up or down; investors who are selling to perhaps de-leverage or unload newly unprofitable properties; or distressed / forced sellers — usually people out of work because of a slowing economy. None of those groups has emerged as home sellers yet this year.

With high interest rates making it harder for current homeowners to trade up (or even down), especially when they likely have a low mortgage on their current home, most of them just aren’t interested in moving. But even those who are moving, due to life events for example, are often holding their existing home as an investment property, even when they buy the next home, because they’re locked in at a low rate. Result: no new inventory.

Why aren’t investors selling even as mortgage rates have climbed and made some properties less profitable? In addition to cheap financing, investors who own rental properties have enjoyed another powerful windfall in recent years: low levels of unemployment leading to rising rents. Most investors, especially the mom-and-pop owners of 1-4 homes which make up 90%+ of all real estate investors, have fixed-rate financing.

So when rates rise, the next investment becomes more expensive and less desirable. Owners of big apartment buildings are more likely to have variable financing, and we’re starting to see some of those owners be caught in unsustainable debt. That impact of commercial real estate owners has not been seen in the smaller investors market at all. 

Americans are still near record levels of employment, so there has been no notable downward pressure on rents. Even if it’s harder to unload a rental property than it was 18 months ago, the vast majority of those deals are still very profitable. Result: no new inventory.

This record level of employment also means that we have record-few mortgages in any stage of delinquency right now. Based on this measure, American homeowners are in really strong financial shape. They’re well-employed, with cheap mortgages, and a lot of equity. Unless that equation dramatically, we won’t see inventory from distressed sellers. 

What’s next?

The question for the rest of the year is how quickly the dark red line on the chart above climbs. Does demand weaken again like last year? That’s going to be a question of mortgage rates and the economy.  Does the debt ceiling crisis break worse or get resolved? Do we have big job losses coming? Do we have banking crises or other shocks coming? Even the uncertainty itself is a risk to derail housing demand from here. 

If these major shocks are held at bay, this year’s curve will look more like most of the years on this chart, and we’ll end the year with under 500,000 homes on the market again — staying in this pattern of incredibly restricted supply.

If the economy tanks hard, then the curve could pick up quickly like last year. This is a real possibility, but there’s no indication anywhere in the data yet that any surge of inventory is imminent.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author responsible for this story:
Mike Simonsen at [email protected]

To contact the editor responsible for this story:
Brena Nath at [email protected]

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

After eight straight quarters of contraction, it looks like the slide in U.S. residential investment may be finished. The nascent rebound now underway is set to remove a major obstacle to ongoing economic expansion.

With new construction activity at the highest level in more than a year, the Federal Reserve Bank of Atlanta’s GDPNow tracker is projecting residential investment added 0.1% to growth in gross domestic product in the second quarter. Though it may not sound like much, that would mark the first positive contribution since early 2021.

The new-home market has been slowly coming out of the woods as falling materials costs and vanishing logistics constraints have allowed builders to work their way through pandemic-era backlogs. Limited availability in the resale market is also pushing many prospective buyers toward new construction, helping support demand even as mortgage rates remain elevated.

“Construction was at the center of the storm for the surge in inflation and the supply-chain turmoil of 2021 and 2022,” said Bill Adams, chief economist at Comerica Bank. “The recent good news for construction makes it easier to imagine a soft or at least soft-ish landing for the economy.”

Government data out earlier this week showed new construction surged in May by the most since 2016, and applications for permits to build — a proxy of future activity — also rose. The unexpected increase sent homebuilding stocks rallying to a fresh all-time high and helped explain why builder sentiment is the most upbeat in almost a year.

A growing number of prospective buyers are opting for new homes amid limited availability in the resale market, where high mortgage rates have had a big impact. Before the pandemic, existing properties made up about 90% of all homes for sale — a number that as of April was closer to 70%.

Monetary Policy

Much continues to hinge on the outlook for monetary policy. The Fed has already raised its benchmark interest rate by five percentage points in a little over a year, and further increases could start to weigh on new-home construction again, said Priscilla Thiagamoorthy, a senior economist at BMO Capital Markets.

“Now that the Fed has continued to signal that rate hikes are still at play, we won’t see further improvement from here,” Thiagamoorthy said. “If rates continue to rise more than one more time, that does risk the chance of a harder landing.”

Another risk is that the number of homes under construction could fall as backlogs ease and applications for permits lag the pace of housing starts. Elevated inventories of new homes could also make builders hesitant to boost output, which risks limiting upside momentum in residential investment.

Still, after subtracting from growth for the longest stretch since 2005-2009, home construction is finally poised to offer the economy some breathing room at a time when other sectors are starting to cool.  

Ahead of this week’s slew of housing data, Wells Fargo & Co. economists were anticipating residential investment to be a drag on GDP growth for the remainder of the year.

“Now, I would say some of the stronger-than-expected housing data means that there’s some upside risk to that forecast,” said Charles Dougherty, a senior economist at Wells Fargo. “We’re not looking for a massive run-up in new construction, but some modest pace seems very likely.”

Source: nationalmortgagenews.com