finance Archives - Hillwood Loves Realtor

Lending Standards Tighten for Residential and Commercial Real Estate Loans in Q1 2023

David Logan2023-05-12T13:18:05-05:00

By David Logan on May 12, 2023 • According to the Federal Reserve Board’s April 2023 Senior Loan Officer Opinion Survey (SLOOS)—conducted for bank lending activity over the first quarter of 2023—banks reported that lending standards tightened for most residential real estate (RRE) and commercial real estate (CRE) loan categories. Demand for RRE and CRE loans weakened across all categories over the quarter. No banks expected their lending standards for most loans to ease over the remainder of 2023 and one-third expected more tightening. Residential mortgage lending standards tightened the most for subprime loans as the net share of banks reporting tighter standards for these loans climbed from 14.3% to 33.3%. Banks also reported substantial tightening for non-QM non-jumbo, non-QM jumbo, QM jumbo, and QM non-jumbo non-GSE eligible RRE loans. In contrast, GSE-eligible (+0.1 ppt) and government (+0.1 ppt) loans each saw a small increase in the net percent of banks reporting tighter standards in Q1 2023 than Q4 2022. Demand weakened for all RRE loan categories and home equity lines of credit (HELOCs). The net share of banks reporting weaker demand averaged 50.8% across loan categories. While high, it was a large improvement from the 87.4% average in Q4 2022. Banks tightened standards for all types of commercial real estate loans, on net, though tightening was more widely reported by mid-sized banks than the largest firms. Banks also reported weaker demand for construction and land development loans, loans secured by multifamily properties, and loans secured by nonfarm nonresidential properties. Banks reported having tightened all the terms surveyed on all categories of CRE loans over the past year. For multifamily and construction and land development loans, a substantial net share of banks widened the spread on loan rates, lowered the loan-to-value ratio, increased debt service coverage, and decreased maximum loan size. Related ‹ Building Materials Prices Decline in April Despite Increased Lumber CostsTags: bank lending, builder finance, construction finance, construction lending, finance, lending standards, mortgage finance, multifamily residential mortgages, residential mortgages, sloos, subprime

Lending Standards Tighten for Residential and Commercial Real Estate Loans in Q1 2023David Logan2023-05-12T13:18:05-05:00

Mortgage Activity Increases Despite Affordability Issues

Jesse Wade2023-05-10T11:20:29-05:00

By Jesse Wade on May 10, 2023 • Per the Mortgage Bankers Association’s (MBA) survey through the week ending May 5th, total mortgage activity increased 6.3% from the previous week and the average 30-year fixed-rate mortgage (FRM) rate fell two basis points to 6.48%. The FRM rate has risen 18 basis points over the past month. The Market Composite Index, a measure of mortgage loan application volume, rose by 6.3% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity increased 4.8%, while refinancing activity increased 10.0% week-over-week. Purchasing activity has remained muted this spring due to affordability issues in the market. The seasonally adjusted purchase index was 32.0% lower than one year ago. Refinancing activity has seen a slight increase over the past month as interest rates have stabilized around 6.5%; the seasonally adjusted refinancing index is down 44.5% from one year ago. The refinance share of mortgage activity rose from 27.2% to 28.0% over the week, while the adjustable-rate mortgage (ARM) share of activity decreased to 6.8% from 7.3%. The average loan size for purchases was $440,700 in the first week of May, up slightly from $435,600 over the month of April. The average loan size for a FRM rose to $363,400 in the first week up May; this amount as risen for seven consecutive months. The average loan size for refinancing grew by 5.5% from $263,300 over the month of April to $277,900 in the first week of May. Related ‹ Inflation Falls Below 5% For First Time in Two YearsTags: finance, home purchases, housing finance, interest rates, mba, mortgage applications, mortgage bankers association, mortgage lending, refinancing

Mortgage Activity Increases Despite Affordability IssuesJesse Wade2023-05-10T11:20:29-05:00

Consumer Credit Growth Slows in Q1 2023

David Logan2023-05-08T12:16:26-05:00

By David Logan on May 8, 2023 • According to the Federal Reserve’s latest G.19 Consumer Credit report, the growth of total consumer credit outstanding slowed from 7.4% to 5.4% (seasonally adjusted annual rate) in the first quarter of 2023. Nonrevolving (excluding real estate debt) and revolving debt grew 3.1% and 12.3%, respectively, over the quarter. On an unadjusted basis, the level of nonevolving credit outstanding at the end of Q1 2023 was $3.6 trillion while the level of revolving debt—primarily credit card debt—was $1.2 trillion. Revolving and nonrevolving debt accounted for 24.6% and 75.4% of total consumer debt, respectively. Revolving consumer credit outstanding as a share of the total decreased 0.6 percentage point over the quarter but remains 1.6 ppt above the Q1 2023 level. With every quarterly G.19 report, the Federal Reserve releases a memo item covering student and motor vehicle loans’ outstanding. The most recent release shows that the balance of student loans was $1.8 trillion (not seasonally adjusted) at the end of the first quarter while the amount of auto loan debt outstanding stood at $1.4 trillion (NSA). Together, these loans made up 88.8% of nonrevolving credit balances (NSA)—the smallest share since Q2 2011 and 2.1 ppts lower than the share in Q1 2022. Related ‹ Solid Job Growth in AprilTags: auto loans, consumer credit, consumer debt, finance, mortgage finance, non-revolving debt, nonrevolving debt, revolving debt, student loan debt, student loans

Consumer Credit Growth Slows in Q1 2023David Logan2023-05-08T12:16:26-05:00

Mortgage Activity Increases as Rates Fall for 5th Straight week

Jesse Wade2023-04-12T13:16:26-05:00

By Jesse Wade on April 12, 2023 • Per the Mortgage Bankers Association’s (MBA) survey through the week ending April 7th, total mortgage activity increased 5.3% from the previous week and the average 30-year fixed-rate mortgage (FRM) rate fell ten basis points to 6.30%. The FRM rate has fallen 41 basis points over the past month. The Market Composite Index, a measure of mortgage loan application volume, rose by 5.3% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity increased 7.8%, while refinancing activity increased 0.1% week-over-week. Purchasing activity has risen over the past month as interest rates have fallen but the seasonally adjusted purchase index was 31.4% lower than one year ago. Refinancing activity has seen a slight uptick over the past month but will remain low as many who refinanced over a year ago locked into lower rates; the Refinancing Index is down 56.9% from one year ago. The refinance share of mortgage activity fell from 28.6% to 27.0% over the week, while the adjustable-rate mortgage (ARM) share of activity also decreased to 6.0% from 7.2%. The average loan size for purchases was $431,900 in the first week of April, up slightly from $430,500 over the month of March. The average loan size for a FRM surpassed the April 2022 level, up from $359,800 to $362,000 in the first week of April 2023. The average loan size for refinancing is well below the 2022 level, down from $288,500 to $267,700. Related ‹ Inflation Shows Further Signs of CoolingTags: finance, home purchases, housing finance, interest rates, mba, mortgage applications, mortgage bankers association, mortgage lending, refinancing

Mortgage Activity Increases as Rates Fall for 5th Straight weekJesse Wade2023-04-12T13:16:26-05:00

Distribution of 1-4 Unit Residential Construction Loans Among Banks by Asset Size

Jesse Wade2023-03-30T09:14:50-05:00

By Jesse Wade on March 30, 2023 • According to NAHB analysis of Federal Deposit Insurance Corporation (FDIC) data, large banks (assets greater than $10 billion) have increased their share of the residential construction loan market above pre-Great Recession levels in recent years. A 1-4 family residential construction loan is used for residential 1-4 family construction and land development. The majority of 1-4 residential construction loans are still held by small banks with less than $10 billion in assets, but their combined share of the residential construction market has decreased from 2014 highs. The total balance of outstanding 1-4 residential construction loans was $104.8 billion at the end of 2022. The most recent AD&C analysis notes that this loan balance is increasing because newly built homes are remaining in inventory for longer as builders wait for buyers to return to the market. This balance has risen from a minimum of $42.3 billion over the past 10 years but remains much lower than the balance in 2008 ($158.1 billion). The share of residential construction loans has fluctuated as markets recovered and returned to normal following the Great Recession. Smaller banks (less than $10 billion in assets) held a 66.34% share of residential construction loans in 2014; this share fell to 52.37% in 2022. Scaling the residential construction loan balances by total assets, the largest banks have the lowest concentration of residential construction lending. Banks with more than $100 million in assets but less than $1 billion have the highest share of residential construction loans relative to total assets. By the end of 2022, the share of residential construction loan balance to total assets was 2.01% for banks with assets between $100 million and $1 billion — this is the highest ratio historically among all the bank sizes. Across all bank sizes, the share of residential construction loans to total assets continues to remain low relative to 2008. Another differentiation among the bank sizes is that historically, a significant majority of banks with assets between $100 million and $10 billion have held a 1–4 residential construction loan balance. Approximately nine out of ten banks with this asset size held a balance in 2022. For banks with more than $10 billion in assets, the share drops to around eight in ten. The smallest banks with assets less than $100 million have seen a continual drop in the share that hold residential construction loans. In 2008, 67.98% of banks with assets less than $100 million held a 1-4 residential construction loan balance; this share fell 14.37 percentage points to 53.61% by 2022. Across all banks, the proportion that have a residential construction loan balance reached a 14-year maximum at 83.57% in 2022. While only about half of banks with under $100 million in assets hold a 1-4 residential construction loan balance, the lowest of any bank size group, 37.71% of these small banks have an outstanding 1-4 residential construction loan balance that exceeds their nonresidential construction loan balance, the second largest proportion. In 2008, the proportion of banks with more than $100 million but less than $1 billion in assets that had a larger 1-4 residential construction loan balance than nonresidential construction was 27.57%. During the Great Recession, this proportion fell to 22.37% but has well surpassed the 2008 level by reaching 37.72% in 2022. For banks with assets between $1 billion and $10 billion, their proportion in 2022 was 11.66%, which is 2.24 percentage points lower than their 2008 level. The largest banks with more than $10 billion in assets had a proportion of 3.16% in 2022, well below their 2008 level of 13.16%. Related ‹ Construction Self-Employment Rises Post PandemicTags: construction finance, economics, finance, home building, housing, housing finance

Distribution of 1-4 Unit Residential Construction Loans Among Banks by Asset SizeJesse Wade2023-03-30T09:14:50-05:00

Mortgage Activity Increases Despite Mortgage Rate Volatility

Jesse Wade2023-03-08T10:19:19-06:00

By Jesse Wade on March 8, 2023 • Per the Mortgage Bankers Association’s (MBA) survey through the week ending March 3rd, total mortgage activity increased 7.4% from the previous week and the average 30-year fixed-rate mortgage (FRM) rate rose eight basis points to 6.79%. The FRM rate has risen 61 basis points over the past month. The Market Composite Index, a measure of mortgage loan application volume, rose by 7.4% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity increased 7.0%, while refinancing activity increased 9.0% week-over-week. Purchasing activity has remained low as buyers wait for interest rates to fall back, the seasonally adjusted purchase index was 42.3% lower than a year ago when the FRM rate was 4.27%. Refinancing activity continues to remain low; the Refinancing Index is down 76.1% from one year ago. The refinance share of mortgage activity increased from 28.7% to 28.9% over the week, while the adjustable-rate mortgage (ARM) share of activity increased to 8.6% from 8.1%. The average loan size for purchases was $425,700 for the first week of March, down from $430,500 over the month of February. The average loan size across purchases, ARM and FRM was down in the first week of March after two consecutive months of increases. For refinancing, average loan size has fallen to $264,500 from $345,800 in March of 2020. Related ‹ Single-Family Market Share Continues to Shift from Large Population CentersTags: finance, home purchases, housing finance, interest rates, mba, mortgage applications, mortgage bankers association, mortgage lending, refinancing

Mortgage Activity Increases Despite Mortgage Rate VolatilityJesse Wade2023-03-08T10:19:19-06:00

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