Unemployment

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The share of mortgage loans in forbearance decreased by five basis points in June 2023 relative to May 2023 to 0.44% from 0.49%, according to the Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey.

Since March 2020, mortgage servicers have provided forbearance to approximately 7.9 million borrowers and 220,000 homeowners are currently in forbearance plans.  

“Mortgage forbearance has declined because most homeowners have maintained or improved their financial health,” said Marina Walsh, the MBA’s vice president of industry analysis. “Recent reporting by the U.S. Bureau of Labor Statistics shows continued job growth in June, and a 3.6% unemployment rate. The employment situation tracks with homeowners’ ability to make mortgage payments.”

Walsh also added, “MBA forecasts a slowing in the economy that could give rise to higher unemployment and mortgage delinquencies later in the year. Forbearance remains a viable loss mitigation option for homeowners who may struggle under more challenging economic conditions.”

Sorted by investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior month to 0.93% from 1.06%. The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month to 0.21% from 0.23%. The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior month to 0.52% from 0.58%.

Sorted by servicing portfolio volume, the share loans in forbearance for independent mortgage banks dropped to 0.56% from 0.64% in May. The share of loans in forbearance in depositories on the other hand decreased to 0.32% from 0.34%.

The vast majority of borrowers found themselves in such a place because of COVID-19 related repercussions (78.3%). Other major reasons were natural disasters (6.1%) and other temporary hardships such as a death, a divorce, a job loss or a disability.

In June, 34.9% of total loans in forbearance were in the initial forbearance plan stage, while 54.5% were in a extension. The remaining 12.6% were re-entries, including re-entries with extensions.

Washington, Idaho, Colorado, Oregon and California were the states with the highest rates of borrowers who were current. Mississippi, Louisiana, New York, Indiana and West Virginia had the lowest. Total loans that were current (not delinquent or in foreclosure) as a percentage of servicing portfolio volume was flat at 96.12% from the previous month.

Source: housingwire.com

Apache is functioning normally

Search Engine; Co-Issue, TPO, LO Survey, Credit, HELOC Servicing Products; Be Wary of Interest Rate Predictions

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Search Engine; Co-Issue, TPO, LO Survey, Credit, HELOC Servicing Products; Be Wary of Interest Rate Predictions

By:
Rob Chrisman

Thu, Jul 13 2023, 10:38 AM

As rumors continue to swirl regarding the purchase of a well-known Southeastern Texas mortgage bank, lenders are watching the current drop in rates. It is generally believed that a slowing economy, aka a recession, leads to lower rates. Some have been predicting a recession for a few years, and it becomes a little tiresome, especially with the Fed continuing to focus on inflation. At some point, there will be agreement that things have slowed (like small business optimism is now) and they’ll be right. Meanwhile, it is hard to have a recession when the labor market, housing prices in much of the nation, consumer spending, and credit availability, remain as strong as they are. At this point rates probably won’t drop much in the near future, and vendors and lenders can’t sit there, wringing their hands, waiting for things to get better on their own. Are lenders suddenly going to make huge margins on lots of volume in the second half? Are LOs who were doing 2-3 loans a month in the first half suddenly going to do 4-6? Are vendor reps suddenly going to double their clients? Are rates going to plummet? Is the number of houses for sale going to skyrocket? (Today’s podcast can be found here and this week’s is sponsored by SimpleNexus, the homeownership platform that unites the people, systems, and stages of the mortgage process into one seamless, end-to-end solution that spans engagement, origination, closing, incentive compensation, and business intelligence.)

Lender and Broker Software, Services, and Products

The MBA defends mortgage servicers…. In response to audit reports recently published by the HUD OIG, Bob Broeksmit, MBA president and CEO, spoke out in defense of mortgage servicers. As the HUD OIG looks at areas of “failure” that occurred in handling loss mitigation and COVID-19 forbearance, Broeksmit points out this is due to “never-before-seen volume”. It is possible to rise above the problems of the past, scale effectively, and overcome industry obstacles. CLARIFIRE®’s “Conquering Record-Breaking Change” blog lists the points of failure identified by the HUD OIG and the solutions you need to prepare for the future. It’s time to act on how you use the experiences of the past to ensure readiness by implementing proven modern, intelligent, seamless process automation software. CLARIFIRE® is Truly BRIGHTER AUTOMATION®.

“I am looking to sell my Vendor Surf search engine platform! After more than 5-years of an immensely gratifying journey, Vendor Surf is being retired. Having just successfully navigated a major cancer battle, life’s priorities have never been clearer. Sadly, my seemingly undying passion for the vendor marketplace has met its match. Life awaits! I offer my sincere thanks and gratitude to our superb client base, as well as those that listened to our story and read our content over the years. Ours is a special industry. Scott Roller (FYI, we have enlisted a liaison to market the search engine platform for purchase, transferrable to any global industry. It can be re-skinned and launched as fast as you can define your search filters. Email me.)”

Rising interest rates and inflation causing a dip in originations? Maximize your portfolio reach with HELOC options designed to help your customers tap into their home value to remodel kitchens, fund education, and more. LoanCare has a comprehensive understanding of the special nuances involved in servicing HELOCs such as knowing what’s required to appear on monthly statements, ensuring that interest calculations are accurate, and setting up the HELOCs correctly when the loans are on-boarded. We can accommodate segmented, fully amortized, and interest only HELOCs. Contact LoanCare today!

The digital online retail revolution has taught us that speeding up processes and increasing visibility can bring tremendous benefits. That’s exactly why Equifax is delivering Telco, Pay TV and Utilities insights alongside our traditional mortgage credit report. With a better view of 191 million potential homebuyers, you can help lenders automate and streamline their underwriting process, save costs, and build a better consumer experience. And just as importantly, grow your business. Ready to make inefficient mortgage lending a thing of the past? Learn more about the solutions and latest news from Equifax Mortgage and Housing.

“Hey there lenders, how important are surveys in your mortgage origination process? Maybe you use them to collect needed info from borrowers? Or to get client feedback and reviews once the loan is closed? Have you ever wanted to send surveys straight from your LOS? Velma wants to know and is conducting a quick 3-minute survey to find out how mortgage pros, just like you, are using surveys in their day-to-day operations. (Plus, if you’re interested, we’ll share the results with you…) Take the Velma Connector Survey on Surveys Today!”

TPO Channels for Lenders and Brokers

AmeriHome Correspondent, backed by the strength and stability of Western Alliance Bank, continues to grow market share in the correspondent space. When you combine AmeriHome’s industry leading loan purchase platform with Western Alliance Bank’s warehouse lending and treasury management services, this is one “must-have” relationship for mortgage bankers of all shapes and sizes. IMBs and financial institutions alike benefit from AmeriHome’s Delegated and Non-Delegated options, full suite of conventional and government products, and Bulk, Bulk/AOT and Best-Efforts delivery options. They are currently running a pricing special for Purchase loan amounts of $200,000 or less and offer a stable of temporary rate buy-down options. Catch them in August at the Colorado MLA Annual and the Western Secondary Conference or check out their Upcoming Events page for details on where they’ll be this summer! Find your local sales rep here or send them an email to learn more about the advantages of partnering with AmeriHome.

“The 3rd quarter of 2023 is already upon us, and Newrez Wholesale is excited to reveal our 2nd Quarter RezClub qualifiers next month. One of the many reasons for being a RezClub member is our non-solicitation protection of your business through RezConnect. Get in RezClub and get protected! To learn more, click here or call your AE for details. Here are just a few reasons why you should send Newrez-serviced borrowers back to us: A 1/8th price improvement, the ability to net escrows, saving your borrower cash out of pocket at closing (on same property refinances), priority service and faster turn times, and ease of transaction: We already know your borrower. These benefits apply to any new loan transaction in good standing, whether that’s a purchase of a new home or a refinance of another property. We want to be your partner of choice for new and repeat business, and we’re serious about retaining your borrowers.”

Interest Rate Predictions: Keep Them in Perspective

I am asked all the time, “Hey Rob, where do you think rates will be in six months?” My answer, after I say that I can’t even predict where I’m going to have lunch tomorrow, is always the same, “Higher, or lower, or possibly the same.” Or sure, one can have a prediction until a ship becomes stuck in the Suez Canal, or a pandemic occurs. STRATMOR’s current blog is titled, “Interest Rates are Like the Weather? Or Like Signs of the Zodiac?”

For some outside input I asked James Hedvall, grizzled capital markets veteran. He replied, “The interest rate markets have a way of humbling almost all the ‘experts’ and the very first thing you learn in Secondary Marketing is that you shouldn’t take a view on where rates are headed because half the time, you’re wrong anyway. In Q4 last year the arm-chair prognosticators were predicting that we’d see rates come down by the end of 2023, however, that simply does not appear to be the case as many LOs are originating in the 7% range currently.

“The Federal Reserve, in its attempts to control inflation and cool a very strong economy, have raised Fed Funds three times just in 2023 alone, with another 25-bps increase predicted for July’s meeting, and a window left open for another increase before the end of the year. I continue to read, however, inside the world of mortgage banking, opinions expressed that rates will not only come down, but when to expect this to happen. Based upon what data, I ask? Are their views speculative, biased, or just hopeful?

“I would challenge these prognosticators as to ‘why’ mortgage rates are positioned to fall. What leads them to predict that? I’m sure some opinions are based on fundamentals: Fed raises rates to control inflation, money is taken out of the economy, the economy cools, Fed cuts rates, and mortgages come down to some predicted level. A lot of the predictions I see are not rooted in actuality, but rather rooted in exuberance for mortgage banking.

“Here’s some additional perspective. None of the macro data even hints at a reduction of short-term interest rates. Current inflation is a tad north of 4% with the Federal Reserve’s target set at 2% Economists have modeled that unemployment would need to reach as high as 7% in order for inflation to come down to 2%; however, June’s unemployment report had very little change from May’s with the current rate at 3.6% Remember, when an economy ‘slows’ jobs are not created, historically they’re lost.

“Everything points to the Fed being hawkish in its monetary policy for the remainder of the year. Anyone predicting where interest rates will be in the future would need to start by predicting where the Federal Funds rate NEEDS to be in order to see inflation that’s appealing to the Fed, and then ultimately, HOW LONG rates needs to remain there; when is it warranted to reduce borrowing rates under recessionary fears? These are two almost impossible questions to answer since the number of variables that you need to get right, coupled with unpredictable world events, play such a strong role in forecasting interest rates.”

Like I said before, a year from now, rates will either be higher, lower or the same. So let’s discuss your products and services!

Capital Markets

As the market moves through different cycles, lenders are continuously evaluating whether to retain or release mortgage servicing rights (MSR) as part of their overall strategy. MCT & Mr. Cooper released a whitepaper, Getting Started with Co-Issue Transactions, that reviews the basics of co-issue transactions, helps dispel common MSR myths, and explains how to incorporate various strategies to achieve your business objectives. If you’re interested in co-issue executions, MCT’s BAMCO offers expanded execution options for sellers while providing new client acquisition options for buyers, creating a more convenient way to conduct co-issue transactions. BAMCO provides sellers with the ability to incorporate co-issue pricing from MSR buyers on the platform into the best execution analysis, regardless of approval status. Learn more about how MCT’s Marketplace is maximizing liquidity, eliminating barriers, and optimizing execution.

For those hoping for lower rates, yesterday’s report on the Consumer Price Index for June brought good news. Headline consumer price inflation cooled versus May, increasing just 0.2 percent over the month and 3.0 percent over the past year, the slowest rate in more than two years. Excluding food and energy prices, the core CPI increased 0.2 percent over the month, the smallest monthly increase in core inflation since February 2021. Consumer-price inflation is now just one-third of the level it reached a year ago, good news for consumers, the markets, and the Fed. The report likely isn’t enough to stop the Fed from going ahead with its well-signaled interest rate hike this month (92 percent probability) after the June jobs report showed wage increases still running hot, but it raises doubts about whether more hikes will be forthcoming. The implied likelihood of another increase in November fell to 26.8 percent from 42.4 percent on Tuesday.

Inflation has been moderating on the heels of severe tightening by the Fed, but core-inflation printed at 4.8 percent in June, still a far cry from the Fed’s 2 percent target. Speaking of the Fed, yesterday it released its Beige Book for June describing overall economic activity as having increased slightly since the May report. Five Fed Districts saw slight or modest growth while five saw no change and two reported slight declines. Consumer spending was mixed with some pressure on discretionary spending. Tourism was robust and demand for hospitality services is expected to remain strong during the summer. Auto sales were little changed while manufacturing improved in six Districts and weakened in the other six. Lending softened but demand for residential real estate remained solid. Employment increased modestly while growth in prices was also described as modest. Related to inflation, the report said, “price expectations were generally stable or lower over the next several months,” and “some Districts noted reluctance to raise prices because consumers had grown more sensitive to prices.”

Today’s economic calendar kicked off with two key economic releases: jobless claims (237k, lower than expected) and wholesale inflation for June (+.1 percent versus expectations of +0.2 percent month-over-month and 0.4 percent year-over-year). The other primary event for the market is the final leg of the mini-Refunding consisting of an auction of $18 billion reopened 30-year bonds, though markets will also receive remarks from San Francisco President Daly and Board Governor Waller. We begin the day with Agency MBS prices better by .125, the 10-year yielding 3.83 after closing yesterday at 3.86 percent, and the 2-year, which a week ago was north of 5.10, is at 4.66 after the producer price numbers.

Employment

Evergreen Home Loans™ is committed to its GROWTH conviction. One way is by positioning loan officers for success, beginning with its VIP onboarding experience. “Our onboarding team is amazing,” said Loan Officer and Branch Manager Amber Page. “They walk right beside you to make sure you are all plugged in with the right passwords and system setups. Makes you feel like you have a friend right from the start at the company.” Evergreen also invests heavily in digital mortgage technologies, offers product training and business coaching opportunities, and develops innovative programs to answer current and future market challenges, among other things. And not only do these advantages support loan officer growth, but they also help win business for agent partners. Loan officers looking to experience feeling supported in professional growth can explore current opportunities on the Evergreen careers page.

“Planet Home Lending is defying the odds and achieving remarkable retail growth. Halfway through one of the industry’s toughest years, we’ve welcomed more than 100 MLOs. Our response to the challenges of shrinking volume, constrained margins, and market unpredictability was to build a foundation for growth. You can expect financial stability, operational sophistication, approachable leadership, and unwavering multichannel support, along with competitive pricing to help you reach more borrowers and close more loans. To thrive in an ever-evolving market, reach out today for a confidential discussion with Brian Miller, Planet’s SVP Talent Acquisition, at 214-223-9986, or Peter Briggs, VP Talent Acquisition, at 949-202-8213.”

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

Source: mortgagenewsdaily.com

Apache is functioning normally

LONDON, June 29 (Reuters) – Major British lenders on Thursday announced another increase in mortgage rates offered via brokers, pushing many products above the 6% mark in painful news for many homeowners and potential buyers.

Lenders have re-priced home loan offerings repeatedly in recent weeks in a scramble to keep up with soaring funding costs, spurred by expectations of more interest rate hikes from the Bank of England as it battles stubbornly high inflation.

Barclays (BARC.L), NatWest (NWG.L) and Virgin Money (VMUK.L) informed brokers that rates on many mortgage offerings will rise again on Friday, according to emails seen by Reuters.

Nationwide Building Society, another major lender, raised rates on products offered via brokers earlier on Thursday.

“As mortgage rates continue to rise, the property market is being pushed further towards a cliff edge and there’s no real help in sight,” mortgage broker Lewis Shaw of Shaw Financial Services said.

Oxford Economics, a consultancy, said it now expected a peak-to-trough drop in house prices of around 13%.

“The high share of fixed-rate deals and a limited rise in unemployment mean we still expect the downturn to be more of a slow puncture, with prices falling steadily over a couple of years, rather than a sudden, sharp drop,” said Andrew Goodwin, Oxford Economics’ chief UK economist.

Two-year swap rates – a key determinant of mortgage borrowing costs – have soared by 0.83 percentage points over the course of June.

If sustained until the end of Friday, it would mark the biggest one-month increase since May 1989 – apart from during the market turmoil triggered by the economic agenda of former Prime Minister Liz Truss late last year.

Mortgage rates of 6% represent the same financial burden from repayments as they did in the late 1980s, even though mortgage rates were around 13% then, according to housing market analyst Neal Hudson, founder of consultancy BuiltPlace.

Mortgagors today borrow much greater sums against their income – a ratio that has risen from 2.0 in the late eighties to around 3.5 today – while changes to taxes and mortgage products have also altered the equation.

Bank of England data published on Thursday showed lenders approved more mortgages than expected in May but for the first time since records started in 1986, the value of mortgage lending contracted for a second month running.

Reporting by Andy Bruce
Editing by William Schomberg and Sachin Ravikumar

Our Standards: The Thomson Reuters Trust Principles.

Source: reuters.com

Apache is functioning normally

Is the labor market finally normalizing? Jobs Friday data came in as a beat of estimates, but the labor market is clearly starting to come back to earth, killing the fear of 1970s wage spiral inflation. We’ve had a good week’s worth of data to show that the Federal Reserve is starting to get what it wants if you know where to look. 

The headline jobs data beat estimates, but we did have 149,000 negative revisions to the previous month’s data. However, the cumulative labor data this week is a story of job growth returning back to normal and the Fed should be happy because the labor market has always been its target for pain.

From BLS: Total nonfarm payroll employment rose by 253,000 in April, and the unemployment rate changed little at 3.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in professional and business services, health care, leisure and hospitality, and social assistance.

Part of my COVID-19 recovery model on the labor market was that job opening should reach 10 million in this recovery. The Federal Reserve was terrified of this because this could send wages spiraling out of control, which means they had to kill this labor market. Nothing is worse to the Fed members than 1970s inflation.

That isn’t happening today. As we can see, wage growth has been cooling down, even with a tight labor market. Yes, wage growth has slowly decreased while millions of jobs were being created and we had massive job openings.

Even if we added other variables, such as hours worked, we could see the wage growth data cooling.

Also, this week we learned that the one data line Fed cares about, job openings, are no longer at 12 million. That number is down roughly 2.5 million since 2022. The Fed wants this to return to 7 million to feel more comfortable about the labor market. The reason I say 7 million is because that’s where we were before COVID-19 happened.

Job openings data

One thing to remember about this labor market and the historically low unemployment rate of 3.4% is If we didn’t have COVID-19, total employment in America would be 158 million to 159 million, just taking the pre-COVID-19 growth trends.

Based on demographics, I wasn’t a huge job creation person in the previous expansion. However, the shock of Covid created a significant fall in employment, and while it has been spectacular to see the rise of people being hired again, we are still in make-up mode as long as demand is growing.

If we didn’t have COVID-19, the total number of jobs would be higher today, but the job growth numbers would be lower. So, if some people are surprised about the job data at this cycle stage with all the rate hikes and bank drama, don’t forget this reality when considering the job growth we have seen since 2022. 

Total employment data: 155,673,000

Now let’s look at the internal report for more details.

One of the data lines I have stressed during the past decade is the unemployment rate tied to educational background. This is useful for housing data, especially when the next recession hits. Here is a breakdown of that data for those aged 25 and older:

  • Less than a high school diploma: 5.4% (previously 4.8%)
  • High school graduate and no college: 3.9%
  • Some college or associate degree: 2.9%
  • Bachelor’s degree or higher: 1.9%

Yes, you saw right, college-educated Americans with a Bachelor’s degree have an unemployment rate below 2%, which means they’re in great demand.

This report shows the sectors where the jobs were gained and lost. Most sectors this month had job gains, of course. But, if we take a three-month average of job gains in the private sector only, not accounting for the government, it’s running at 182,000 per month, the slowest pace of job growth since early 2021. Again, the Fed is getting what it wants, the labor market to cool off.

My 2023 forecast for the 10-year yield and mortgage rates was based on the economic data remaining firm, meaning that as long as jobless claims don’t get to 323,000, we should be in a range between 3.21%-4.25%, with mortgage rates between 5.75%-7.25%. Right now, jobless claims are at 242,000.

If the labor market breaks, the 10-year yield could reach 2.73%, which means mortgage rates could go lower, even down to 5.25% — the lowest end of my range for 2023. 

Even though we had a lot of drama this week in the market, my famous Gandalf line in the sand for the 10-year yield didn’t break. I’ve said for many months that this line is a tough nut to crack and on Friday afternoon before close the 10-year yield was around the 3.37%-3.42% level, as the chart below shows.

Overall, April was a good jobs report; nothing is wrong with the labor data now in a meaningful way, but we see that the growth of job creation is slowing down, which was always going to be the case coming back from the depths of COVID-19.

When does the labor market break, meaning jobless claims data shoot up much higher? Even though job openings data has noticeably come down, we haven’t seen jobless claims data spike out of control, which is the most critical data line we have with labor.

I joke that in the rock, paper, scissors game, jobless claims beat job openings always. The Fed knows that all their rate hikes have a lag before they hit the economy. We can clearly see that the fear of wage growth spiraling out of control is not happening and that, over time, the inflation growth rate will ease. 

What’s next?

Over the next 12 months, we will see more of an impact from the massive rate hikes and credit getting tighter from the banks, this is why it’s more critical than ever to track weekly economic and housing data, as we do in the Housing Market Tracker every week. Like every economic cycle post-WWII, if you know where to look for clues, they will guide you to the truth.

Source: housingwire.com

Apache is functioning normally

Apartment hunting in Southern California is notoriously difficult. In the last two years, the search turned particularly nightmarish.

In part for pandemic-related reasons, the number of units available to lease fell to historical lows. Rent soared.

Some apartments even had bidding wars — an unwelcome reality typically limited to the for-sale market.

But now, a little bit of sanity is returning.

If you’re looking for a new rental, don’t expect a deal, but you may find the search less maddening.

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What exactly is happening?

Simply put, there are more apartments for people to move into. Across the region, vacancy rates are rising after falling to decades-long lows in 2022 and 2021.

In Los Angeles County early last year, only 3.7% of apartments were vacant and available, the lowest level since 2001, according to real estate data firm CoStar. Now that measure is up to 4.4%.

It was even worse in both the Inland Empire and Orange County, where the vacancy level fell to about 2% in 2021. In Riverside and San Bernardino counties, that set a record in a data set that goes back to 1982; in Orange County it was essentially equal to a record set in 1984.

Vacancy has now doubled in both areas, up to 5.4% in the Inland Empire and 4.1% in Orange County.

In Ventura and San Diego counties, vacancy similarly fell below 3% in 2021 and is now 3.8% in San Diego and 5.4% in Ventura.

Rob Warnock, a researcher with the rental website Apartment List, said vacancy fell so low because many people moved out of shared living situations with family or roommates in 2021 and 2022. They wanted a place of their own and essentially created a wave of new households that gobbled up available rentals.

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A rebounding economy, stimulus payments and a desire to no longer be cooped up with others like early in the pandemic probably helped drive the surge, Warnock said.

Now, the switch is flipped.

As consumers worry about inflation and the direction of the overall economy, they’re forming fewer households as new apartments continue to open up.

“Unemployment still looks good, but there is that uncertainty,” said Ryan Patap, an analyst with CoStar. “That makes people more cautious in spending up, committing to a new lease, moving out of their parents’ house — all of those dynamics.”

Richard Green, director of the USC Lusk Center for Real Estate, said another factor may be at play.

“The mystery [was] people are leaving California — how come vacancies weren’t rising?” he said. “Maybe it’s starting to show up.”

What does that mean for me?

To be clear, vacancies are still far lower here than many markets around the country, which economists attribute to the difficulty of building housing in California. But if you are out there searching for a place, you may have an easier time than this time last year.

Michael Lucarelli is chief executive of RentSpree, a Sherman Oaks-based company that provides application and rent collection services for 41,000 leasing agents, property management firms and individual landlords in California.

With the rise in vacancy, he said renters are less likely to have to make snap decisions on whether a place is right for them, and he hears less and less about bidding wars at his client’s properties.

“It’s creating a little bit more leverage on the side of the renter,” Lucarelli.

What about rent?

By most measures, rent is still rising, but not as fast as it was.

Rising vacancy levels have not only made it harder for landlords to charge more, but after years of sharp increases some tenants are tapped out.

According to data from real estate firm RealPage, average asking rent for a vacant L.A. County apartment during the first quarter of 2022 was up 17% from the same period a year earlier.

But by the first three months of this year, rent growth had slowed, with prices rising 6% from 2022 levels.

A similar slowdown was seen in the Inland Empire, as well as Orange, Ventura and San Diego counties.

Data from Apartment List and CoStar indicate a more favorable environment for renters.

According to CoStar, average rent is still positive in all Southern California counties, but rising less than RealPage data show.

According to Apartment List, the median rent for a vacant unit has turned slightly negative in the Inland Empire, Orange County and Ventura County, dropping by less than 2% in April from the previous year.

In L.A. County, median rent was up just 0.21%.

Warnock says he expects rent across L.A. County to also turn negative in coming months, but he doesn’t expect rent there and elsewhere in Southern California to see a sustained, or meaningful drop, because too few rentals are being built.

“A 1% annual rent decrease is not going to bring much comfort to someone who is out there searching,” he said, particularly when Apartment List data show rent in L.A. County is 11% higher than the start of the pandemic and 33% higher in the Inland Empire.

What if I can’t afford the housing that is listed for rent?

That’s not uncommon in expensive Southern California.

One option you have is Section 8, a federal program run by local authorities. If you meet the income qualifications and receive one of the coveted vouchers, you can find housing with a private landlord on the open market and you’ll pay roughly a third of your income toward rent with the government paying the rest.

However, there aren’t enough vouchers for everyone who could qualify.

You can check with your local government to see whether it is accepting applications, but it may not be. The city of Los Angeles opened its wait list last fall for the first time in five years, but it is now closed.

Another option you have is to apply to apartments reserved specifically for people of lower incomes. This can be government-owned public housing or housing built by nonprofits.

At times, for-profit developers include a handful of low-income units in their new projects as a condition of the project’s approval.

You can find more information on how to apply for these various apartments and subsidies in the following guides from The Times.

If I don’t want to move, will my rent to go up?

Potentially.

Landlords say their costs to manage and maintain buildings have risen along with overall inflation, meaning unless they cut back on those expenses, they’ll need to raise rent if they want to keep earning the same amount.

At the same time, rising vacancies can be a threat to a property owner’s bottom line, and many landlords are likely to be “more amenable to doing what it takes to keep you there,” Warnock said.

Some landlords have different financial motivations, however.

For example, one popular investment strategy in the real estate industry is to purchase buildings that have rent well below the typical going rate, then increase rents rapidly to what is considered market.

According to RealPage, whose data cover mostly large complexes, the average renewal increase for L.A. County tenants was 5.5% in the first quarter of 2023, down from from nearly 8% in the second quarter of 2022.

Is there any law that limits how high my rent can increase?

In most cases, yes.

In California, landlords of non-income restricted units can charge whatever they can get for vacant units but usually face some sort of limit on rent increases for existing tenants.

If you live in an apartment building built more than 15 years ago, a state rent cap law limits your annual rent increase to no more than 5%, plus inflation, with a maximum of a 10% increase. Since inflation is so high, the current cap is set at that 10% level.

Some cities have stricter rules often referred to as rent control or rent stabilization.

In the city of Los Angeles, buildings built on or before Oct. 1. 1978 — and even some new buildings — fall under the city’s rent stabilization ordinance.

In the years before the pandemic, the law limited annual rent increases for existing tenants in those buildings to 3% or 4%.

Currently, city law prohibits any rent increases for existing tenants in rent stabilized buildings. The ban, passed in the early days of the pandemic, is scheduled to expire in 2024.

In most cases, if you live in a building built within the last 15 years, there are no legal limits to how much your rent can increase in both Los Angeles and statewide.

However, during declared states of emergencies — like during the recent storms — anti-price gouging rules come into effect and bar rent increases above 10%.

As of May 1, according the website for the Governor’s Office of Emergency Services, those anti-gouging rules currently apply only to Riverside, San Diego, Contra Costa and Yola counties. They are set to expire May 20.

More information on how to tell whether your building falls under some of these limits can be found here.

Are there any other tips I should know when looking for a new place?

Yes. Though vacancy is increasing, it is still tight and you may need to apply to multiple places before finding a home. With each landlord typically charging an application fee, those costs can add up.

If you want to limit fees, check to see whether the landlord does, or will, accept applications from companies like Zillow or RentSpree that allow you to apply to multiple properties for a flat rate

For more tips, check out The Times’ overall guide to renting in Southern California.

Source: latimes.com

Apache is functioning normally

average two-year fixed mortgage rates have just hit a 15-year high of 6.66%.

UK two-year fixed mortgage rates hit highest level since 2008Read more

Here’s what to expect, from the committee:

The cross-party Committee of MPs will examine the current state of the mortgage market, including levels of mortgage stress, arrears and forbearance, and the outlook for the market in light of higher interest rates.

The Committee will question mortgage providers on consumer behaviour following recent rate rises, the impact on house prices and the wider housing market, and mortgage affordability and availability.

Government support schemes and the recently agreed ‘mortgage charter’ are also likely to be discussed, as are buy-to-let mortgages and the rental market, and the take-up of long-term fixed rate deals.

Here’s the panel:

  • Andrew Asaam, Homes Director, Lloyds Banking Group

  • Bradley Fordham, Mortgage Director, Santander UK

  • Charlotte Harrison, Interim CEO (Home Financing), Skipton Building Society

  • Henry Jordan, Home Commercial Director, Nationwide

  • Nigel Terrington, Chief Executive, Paragon Banking Group

Time for a recap.

UK borrowers continue to be hit by rising interest rates as the fight against inflation continues, and there may be more pain ahead.

Average two-year mortgage rate have risen over their peak last autumn, averaging 6.66% today for the first time in 15 years.

UK two-year fixed mortgage rates hit highest level since 2008Read more

MPs have heard that rising mortgage rates are causing financial stress to customers, and that the situation will worsen. However, lenders also reported that they have not seen a significant pick-up in arrears yet.

Bradley Fordham, mortgage director at Santander UK, told the Treasury Committee the bank had seen a “small tick up in arrears, still 20% below pre-pandemic, 70% below 2009 post-financial crisis, so relatively low levels”.

He said mortgage customers coming off deals and going onto new ones were seeing payment increases of “over £200 per month”.

But, the UK could be approaching a ‘tipping point’ where mortgage rates rise to levels where borrowers cannot fully protect themselves by extending the terms of their loans or moving to interest-only deals.

The International Monetary Fund warned that UK interest rates may need to keep rates higher for longer, to fight inflation.

The financial markets are anticipating that UK interest rates will hit 6% by November, up from 5% at present.

The latest labour market report has shown that UK wages increased at a faster rate than expected in May.

Earnings growth hit 7.3% in the three months to May compared with a year earlier, driven by the strongest rise in private sector pay growth outside the pandemic period of 7.7%, the Office for National Statistics said. It was the joint highest since modern records began in 2001.

Record UK pay growth adds to pressure for interest rate riseRead more

And with unemployment rising, number of job vacancies down, jobs growth slowing and more people looking for work, there are signs that the UK labour market is starting to slow.

UK interest rates likely to rise again despite slowing labour marketRead more

And in other news…

Britain’s debt-laden “zombie” companies are expected to be wiped out by the surge in interest rates, an insolvency specialist has predicted.

UK’s ‘zombie’ firms will be wiped out by interest rates, says insolvency specialistRead more

Britain’s retailers recorded a sharp rise in spending in June as hot weather prompted consumers to buy summer clothing and outdoor goods, despite growing pressure on budgets from the cost of living crisis.

UK retailers report sizzling sales in hot June weatherRead more

Morrissey has written to Jet2holidays urging the tour operator to drop its association with marine parks that continue to use captive orcas and dolphins for entertainment.

Morrissey: Jet2holidays must cut ties to marine parks over orcas and dolphinsRead more

https://t.co/FFaoEzL7Ky pic.twitter.com/EsaH4hzcWk

— TRADING ECONOMICS (@tEconomics) July 11, 2023

On a monthly basis, prices fell – by 0.08% – the first deflation registered since September of last year.

This may encourage Brazil’s central bank to consider cutting interest rates from their current six-year high of 13.75%….

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Rate cut expectations are gaining momentum as Brazil's annual inflation reaches its lowest point in almost three years.

&mdash; Roensch Capital News (@RoenschNews) July 11, 2023

Britain’s debt-laden “zombie” companies are expected to be wiped out by the surge in interest rates, an insolvency specialist has predicted.

Begbies Traynor, a business recovery and financial consultancy, has said all of the nation’s zombies – companies struggling to service debts that have avoided bankruptcy through cheap borrowing costs – will have failed by the end of next year.

“Over the next 18 months, we’ll see virtually all of them finally come to an end,” Ric Traynor, the executive chairman of the company, which is seen as a bellwether for the health of UK businesses, told Bloomberg.

UK’s ‘zombie’ firms will be wiped out by interest rates, says insolvency specialistRead more

mortgage costs hitting their highest level in 15 years with an average rate of 6.66% will worry people further, at a time when “mortgage pressures on ordinary households are huge”, says Douglas Chapman, SNP MP for Dunfermline and West Fife.

Following today’s Treasury Committee hearing on the mortgage market, Chapman says:

Research this month from Citizens Advice Scotland reveals that around 11% of people always run out of money before payday, with a further 14% saying that this happens to them “most of the time”.

This percentage will surely rise given today’s Committee panellists’ discussing averages of £235 increases on monthly mortgage repayments due to large interest rises and deals coming to an end, which on top of a crippling cost of living crisis, consistently high energy prices and rampant inflation explains why many people feel their financial resilience is being pushed to the limit.”

“In addition, there was little encouragement for first time buyers today, who it appears need to spend longer amassing a larger deposit or tap into the Bank of Mum and Dad (which isn’t an option for everyone), and then also choose from a narrower portfolio of smaller properties in order to meet monthly mortgage payments and pass banks affordability stress tests.”

the increase in fixed-rate mortgage costs today is a sign of “Tory economic failure”

“Too often, families who are saving for their first home but getting no closer to buying it feel like they’re doing something wrong.

“But the fact of the matter is that the Tories have inflicted households with a mortgage bombshell, let renters down and failed to build the homes we need.

“Millions are feeling the pain from this Tory economic failure.

“Labour has a plan to start fixing this crisis. We would stop households missing out on the mortgage support they need by making measures mandatory, we will give greater rights and protections to renters, and we will take the tough choices to get Britain building.”

A chart showing Nationwide house prices

Andrew Asaam from Lloyds Banking Group told MPs house price falls could leave some mortgage holders in negative equity (owing more than their property is worth).

But MP also heard there is less risk than in previous financial crisis, as loan-to-value rates are relatively low.

Asaam told the Treasury committee this morning

“The place that this probably bites most is for first-time buyers, who will be typically at higher LTVs (loan to value rates).

“It’s a completely individual situation, but we still think owning a home for most people is better than renting.

“And therefore we want to keep products available at higher LTVs for first-time buyers.

“But we need to make sure that those first-time buyers are resilient, ie they can afford to stay in their homes through a two-year period where house prices might be falling, for example, and they are aware that they could end up in negative equity.”

Source: theguardian.com

Apache is functioning normally

Consumer fears of a recession are growing, and experts say it could cause some Americans to get skittish about possible knock-on effects on the housing market.

One reason for that is many Americans remain haunted by memories of the Great Recession last decade, which caused thousands to lose their homes to foreclosure. But experts say we’re unlikely to see another “real estate fire sale” in the event a new recession.

“This is going to be a much shorter recession than the last one,” George Ratiu, senior economist with realtor.com, wrote in a recent article. “I don’t think the next recession will be a repeat of 2008. The housing market is in a better position.”

And fears of a recession coming any time soon could be overblown, realtor.com noted. According to a survey of 200 members of the National Association for Business Economics, just 2% of economists, academics, policymakers and strategists believe we’ll see a recession this year. However, 38% believe we could see a recession begin next year, while 25% don’t expect one until 2021 at the earliest. Another 14% said the good times would likely continue beyond then.

Also, there are many signs the real estate market is still strong. For example, the Federal Reserve is widely expected to cut interest rates again in September, which would bring mortgage rates down even more. Unemployment is at its lowest point in 50 years, wages are growing, and the U.S. is still going through its longest economic expansion in history.

But if the economy does fall aparet, will home prices plunge again like they did in the Great Recession?

Most economists say no.

Ratiu said that at worst, home prices might flatten during the next recession, but not drop. He said a shortage of homes for sale, combined with the low number being built would likely cushion any price falls against buyer demand.

In addition, the National Association of Realtors’ chief economist Lawrence Yun points out that lending laws are much tighter now than during the last housing crisis. In addition, homeowners these days have record amounts of equity built up in their homes, which means that even if they do lose their jobs they’re unlikely to head directly into foreclosure, and would instead have more time to sell their property by themselves.

However, one expert said that the fragile American psyche means that many are still nervous.
“With people having PTSD from the last time, they’re still afraid of buying at the wrong time,” Ali Wolf, director of economic research at Meyers Research, told realtor.com. “But prices aren’t likely to fall 50% like they did last time.”

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
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Source: realtybiznews.com

Apache is functioning normally

Mortgage rates continue to tick higher in 2018. Fed Chair Jerome Powell is back on Capitol Hill today, so there’s the potential for him to make some comments that impact the direction of current mortgage rates today. Long-term, rates are expected to continue to move higher. Read on for more details.

Where are mortgage rates going?                         

Rates up again in Freddie Mac PMMS

Every Thursday at 10:00am the Freddie Mac Primary Mortgage Market Survey (PMMS) gets released, revealing where mortgage rates are at for borrowers in the U.S. For the past two months now, we’ve seen mortgage rates steadily climb higher. Here are the numbers from today’s survey:

  • The average rate on a 30-year fixed rate mortgage moved up three basis points to 4.43% (0.5 points)
  • The average rate on a 15-year fixed rate mortgage went up five basis points to 3.90% (0.5 points)
  • The average rate on a 5-year adjustable rate mortgage fell three basis points to 3.62% (0.4 points)

This is what the Freddie Mac Economic & Housing Research Group had to say about mortgage rates this week:

“An optimistic testimony on Capitol Hill from Federal Reserve Chairman Jerome Powell sent Treasury yields higher as Powell stated his outlook for the economy has strengthened since December. Following Treasurys, the 30-year fixed mortgage rate jumped 3 basis points to reach 4.43 percent. The benchmark 30-year rate has been on a tear in 2018, climbing 48 basis points since the start of the year and increasing for 8 consecutive weeks. The 30-year fixed mortgage rate averaged 4.33 percent in February, up 30 basis points from last month and the highest monthly average since April of 2014.

As we documented, historically when mortgage rates surge, housing swoons. But we think strength in the economy and pent up housing demand should allow U.S. housing markets to post modest growth this year even with higher mortgage rates. We really have to wait for housing markets to heat up in spring, but early indications are that housing demand remains robust to these rate increases. The MBA reported in their latest weekly applications survey that home purchase mortgage originations were up 3 percent from a year ago.”

Rate/Float Recommendation                

Lock in a rate soon before they rise significantly

Mortgage rates have moved higher for two months. The average rate on a 30-year fixed has shot up forty-eight basis points since the first survey in January. Looking ahead to the rest of the year, the general consensus is that mortgage rates will continue to rise, potentially reaching past 5%.

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

Given this expectation, it stands to reason that borrowers who take action on a purchase or refinance soon will likely get the better deal. The longer you wait, the more risk there is for a higher mortgage rate.

Today’s economic data:                                 

Jobless Claims

  • Applications for U.S. unemployment benefits came in at 210,000 for the week of 2/24/18. That puts the four-week moving average at 220,500.

Personal Income and Outlays

  • The personal income and outlays report for January got released this morning showing the personal income rose 0.4% from the prior month. Consumer spending rose 0.2%. The PCE Price Index ticked up 0.4%, putting it at 1.7% year over year. Core PCE rose 0.3%, month over month, bringing it to 1.5% year over year.

PMI Manufacturing Index

  • The PMI Mfg Index hit a 55.3 for February. That’s slightly below the consensus for 55.7.

ISM Mfg Index

  • The ISM Mfg Index came in at 60.8 for February. That’s higher than both the consensus and prior reading.

Construction Spending  

  • Construction spending was unchanged in January, putting it at 3.2% year over year.

Fedspeak

  • New York Fed President William Dudley will speak at 11:00am.

Jerome Powell Testimony

  • Fed Chair Jerome Powell will go before the Senate Banking Committee today.

Notable events this week:                

Monday: 

  • Fedspeak
  • Chicago Fed National Activity Index
  • New Home Sales
  • Dallas Fed Mfg Survey

Tuesday:    

  • Durable Goods Orders
  • International Trade in Goods
  • Jerome Powell Testimony
  • FHFA House Price Index
  • Consumer Confidence
  • Richmond Fed Manufacturing Index

Wednesday:      

  • GDP
  • Chicago PMI
  • Pending Home Sales Index
  • EIA Petroleum Status Report

Thursday:        

  • Jobless Claims
  • Personal Income and Outlays
  • PMI Manufacturing Index
  • ISM Mfg Index
  • Construction Spending
  • Fedspeak
  • Jerome Powell Testimony

Friday:       

  • Consumer Sentiment

*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