interest rates Archives - Hillwood Loves Realtor

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

Credit for Builders Tightens as Rates Climb

Paul Emrath2023-02-16T10:19:37-06:00

During the fourth quarter of 2022, credit continued to become less available and generally more costly on loans for Acquisition, Development & Construction (AD&C) according to NAHB’s Survey on AD&C Financing. To analyze credit availability, responses from the NAHB survey are used to construct a net easing index, similar to the net easing index based on the Federal Reserve’s survey of senior loan officers (SLOOS). In the fourth quarter of 2022, both the NAHB and Fed indices were negative, indicating tightening credit conditions. This was the fourth consecutive quarter during which the indices from both surveys were not only negative, but declining (indicating tightening was more widespread than in the prior quarter). In the first quarter of the year, the NAHB net easing index stood at -2.3 before declining to -21.0 in the second quarter, -36.0 in the third and -43.3 in the fourth. Similarly, the Fed net easing index was -4.7 in the first quarter of 2022, but subsequently fell to -48.4 in the second quarter, -57.6 in the third and -69.2 in the fourth. The most common ways in which lenders tightened in the fourth quarter were by increasing the interest rate on the loans (cited by 77 percent of the builders and developers who reported tighter credit conditions), reducing amount they are willing to lend (67 percent) and lowering the allowable Loan-to-Value or Loan-to-Cost ratio (60 percent). Meanwhile, the average effective rate (based on rate of return to the lender over the assumed life of the loan taking both the contract interest rate and initial fee into account) increased on all four categories of loans tracked in the AD&C Survey: from 7.97 to 10.14 percent on loans for land acquisition, from 9.67 to 10.41 percent on loans for land development, from 9.95 to 11.30 percent on loans for speculative single-family construction, and from 10.76 to 10.85 percent on loans for pre-sold single-family construction. Increases in the effective rate may be due either to increases in the contract interest rate charged on outstanding balances, or increases in the initial points charged on the loans. In the fourth quarter, average initial points actually declined on two categories of loans: from 0.93 to 0.81 percent on development loans, and from 0.89 to 0.59 percent on loans for pre-sold single-family construction. Meanwhile, average initial points were unchanged at 0.79 percent on land acquisition loans, and up from 0.76 to 0.82 percent on loans for speculative single-family construction. However, any reduction in points was more than offset by the contract interest rate, which increased by more than a full percent on all four categories of AD&C loans tracked in the survey. The average contract rate increased from 6.07 to 7.80 percent on loans for land acquisition, from 6.42 to 7.37 percent on loans for land development, from 6.16 to 7.46 percent on loans for speculative single-family construction, and from 5.85 to 6.97 percent on loans for pre-sold single-family construction. The tightening credit conditions and higher rates on AD&C loans may be one of the reasons single-family production is off to a sluggish start in 2023 so far, despite the recent uptick in builder confidence. More detail on current credit conditions for builders and developers is available on NAHB’s AD&C Financing Survey web page. Related ‹ 2023 Off to A Sluggish Start for Single-Family ProductionTags: ad&c lending, ad&c loans, ADC, construciton loans, construction lending, credit conditions, economics, home building, housing, interest rates, lending

Credit for Builders Tightens as Rates ClimbPaul Emrath2023-02-16T10:19:37-06:00

Materials Remain Builders’ Top Challenge, but Inflation and Interest Rates are Threatening

Ashok Chaluvadi2023-02-13T09:19:33-06:00

By Ashok Chaluvadi on February 13, 2023 • The price and availability of building materials again topped the list of problems builders faced last year, while interest rates (along with general inflation and negative media reports) moved considerably up the list. According to special questions on the January 2023 survey for the NAHB/Wells Fargo Housing Market Index, building material prices were a significant issue for 96% of builders in 2022. The second most widespread problem in 2022 was availability/time it takes to obtain building materials, cited by 86% of builders. These were the same two problems that topped the list in 2021. Cost and availability of labor has also been a relatively widespread problem, reported as a significant by 82% of builders in 2021 and 85% in 2022, a result that is not surprising given the large number of unfilled job openings in the construction industry. Compared to 2021, some of the problems became significantly more widespread in 2022. High interest rates were a problem for only 2% of builders in 2021, but this increased to 66% in 2022. Rising inflation in the US economy was a significant problem for 63% of builders in 2021, compared to 85% in 2022. And 26 percent of builders said negative media reports making buyers cautious was a significant problem in 2021, compared to 55 percent in 2021. Even more builders—a full 93%—expect high interest rates to be a problem in 2023, up strongly from the 66% who said it was a problem in 2022. Moreover, both the current and expected numbers were much higher in the recent survey than at any time in the 2011-2021 span. Compared to the supply-side problems of materials and labor, problems attracting buyers have not been as widespread, but builders expect many of them to become more of a problem in 2023. Negative media reports making buyers caution was a significant problem for 55% of builders in 2022, but 79% expect them to be a problem in 2023. Buyers expecting prices or interest rates to decline if they wait was a significant problem for 49% of builders in 2022, compared to 80% who expected it to be an issue in 2023. Concern about employment/economic situation was a problem for only 41% of builders in 2022, but 73% expect it to be a problem in 2023. Gridlock/uncertainty in Washington making buyers cautious was a significant problem for 38% of builders in 2022, compared to 54% who expected it to be a problem in 2023. Finally, buyers unable to sell their existing homes was a significant problem for only 13% of builders in 2022, but 52% expect it to be a problem in 2023. For additional details, including a complete history for each reported and expected problem listed in the survey, please consult the full HMI January2023 Special Survey REPORT. Related ‹ Loan Demand Declines as Credit Standards Tighten in Q4 2022Tags: Building Materials, economics, eye on the economy, home building, housing trends report, inflation, interest rates, single-family

Materials Remain Builders’ Top Challenge, but Inflation and Interest Rates are ThreateningAshok Chaluvadi2023-02-13T09:19:33-06:00

Growth of Revolving Debt Slows, Auto Loan Rates Spike in Q4 2022

David Logan2023-02-08T12:17:05-06:00

By David Logan on February 8, 2023 • The balance of consumer credit outstanding grew 6.5% in the fourth quarter of 2022 (seasonal adjusted annual rate) after climbing 6.7% (SAAR) in the third quarter according to the Federal Reserve’s latest G.19 Consumer Credit report. Revolving debt—which consists primarily of credit card debt—increased at a 12.0% rate, as the level of nonrevolving debt (excluding real estate) grew 4.8% (SAAR). Total outstanding consumer credit currently stands at $4.78 trillion, an increase of $79 billion over the third quarter. Nonrevolving credit outstanding increased $191 billion, year-over-year, while the level of revolving debt rose $154 billion. Revolving debt accounted for 25.0% of total consumer debt outstanding, up from 23.5% in Q4 2021. The average interest rate of a 60-month auto loan increased by more than a full percentage point over the quarter, from 5.50% to 6.55%. Over the past three quarters, the rate has climbed 2.03 ppts and is at its highest level since 2009. With every quarterly G.19 report, the Federal Reserve releases a memo item covering student and motor vehicle loans’ outstanding levels on a non-seasonally adjusted (NSA) basis. The most recent release shows that the balance of student loans was $1.8 trillion at the end of the third quarter while the amount of auto loan debt outstanding stood at $1.4 trillion. Together, these loans made up 88.6% of nonrevolving credit balances (NSA)—1.3 percentage points lower than the share in Q4 2021 and 4.4 ppts below the series high reached in 2010. Related ‹ Mortgage Activity Increases after Dip in RatesTags: auto loans, consumer credit, consumer debt, credit card debt, g.19, interest rates, nonrevolving debt, revolving debt, student loan debt, student loans

Growth of Revolving Debt Slows, Auto Loan Rates Spike in Q4 2022David Logan2023-02-08T12:17:05-06:00

Mortgage Activity Increases after Dip in Rates

Jesse Wade2023-02-08T10:19:56-06:00

By Jesse Wade on February 8, 2023 • Per the Mortgage Bankers Association’s (MBA) survey through the week ending February 3rd, total mortgage activity increased 7.4% from the previous week and the average 30-year fixed-rate mortgage (FRM) rate fell one basis point to 6.18%. The FRM rate has fallen around 100 basis points since October of 2022. 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 3.1%, while refinancing activity increased 17.7% week-over-week. Purchasing activity has slightly increased as interest rates have fallen for 5 consecutive weeks, but it remains 32.7% lower than one year ago. Refinancing activity continues to remain at lower levels, the refinancing index is down 74.8% from one year ago. The refinance share of mortgage activity increased from 31.2% to 33.9% over the week, while the adjustable-rate mortgage (ARM) share of activity decreased to 6.6% from 6.7%. The average loan size for purchases was $428,500 for the first week of February, up from $405,500 over the month of January. The average loan size across all products has increased since December 2022. Many buyers remain priced out by the unaffordability of homes currently available. Related ‹ Age of Housing Stock by StateTags: finance, home purchases, housing finance, interest rates, mba, mortgage applications, mortgage bankers association, mortgage lending, refinancing

Mortgage Activity Increases after Dip in RatesJesse Wade2023-02-08T10:19:56-06:00

Further Downshift for the Fed

Robert Dietz2023-02-01T18:25:49-06:00

By Robert Dietz on February 1, 2023 • Further downshifting its pace of tightening of monetary policy, the Federal Reserve’s monetary policy committee raised the federal funds target rate by 25 basis points, increasing that target to an upper bound of 4.75%. This marked a smaller increase after four previous 75 basis point hikes and a decelerated 50 basis point increase last December. While not the end of tight monetary policy, the end of tightening is in sight, with a final 25 basis point increase expected in March. However, the Fed has clearly communicated it will hold at these elevated rates through much if not all of 2023 as progress on inflation is realized. We do not expect an easing of the federal funds rate until 2024. What does this mean for housing? While the economy is expected to fall into a mild, official recession during the first half of 2023, the period of peak mortgage rates may now be behind us. Thus, recent soft optimism for a rebound of the housing market is gaining traction (such as the January uptick for the NAHB/Wells Fargo HMI). Starts will decline in the near-term and existing home prices will continue to decline during the year, but a turning point for single-family construction is now in view. Related ‹ Uptick for Construction Job Openings in DecemberTags: economics, FOMC, home building, housing, interest rates

Further Downshift for the FedRobert Dietz2023-02-01T18:25:49-06:00

Mortgage Activity Remains at Low Levels

Jesse Wade2023-01-11T11:27:58-06:00

By Jesse Wade on January 11, 2023 • Per the Mortgage Bankers Association’s (MBA) survey through the week ending January 6th, total mortgage activity increased 1.2% from the previous week and the average 30-year fixed-rate mortgage (FRM) rate fell sixteen basis points to 6.42%. The FRM rate has remained near 6.4% over the past month. The Market Composite Index, a measure of mortgage loan application volume, rose by 1.2% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity decreased 0.5%, while refinancing activity increased 5.1% week-over-week. Purchasing activity has reached its lowest level since the first week of January 2015 (159.2). While interest rates remain elevated, purchasing activity will likely remain low as buyers wait for rates to decrease further. Refinancing activity continues to see little activity as many homeowners refinanced when interest rates were significantly lower than today. The refinance share of mortgage activity increased from 30.3% to 30.7% over the week, while the adjustable-rate mortgage (ARM) share of activity remained at 7.3%. The average loan size for purchases was $389,000 for the first week of January after peaking at $454,300 in March of 2022. The average loan size across FRMs, ARMs, purchases and refinances had steadily fallen as we approached the end of 2022. Related ‹ Revolving Debt Climbs as Credit Card Interest Rates Set New RecordsTags: finance, home purchases, housing finance, interest rates, mba, mortgage applications, mortgage bankers association, mortgage lending, refinancing

Mortgage Activity Remains at Low LevelsJesse Wade2023-01-11T11:27:58-06:00

Mortgage Activity Increases as Rates Fall

Jesse Wade2022-12-14T09:26:26-06:00

By Jesse Wade on December 14, 2022 • Per the Mortgage Bankers Association’s (MBA) survey through the week ending December 9th, total mortgage activity increased 3.2% from the previous week and the average 30-year fixed-rate mortgage (FRM) rate rose one basis points to 6.42%. The FRM rate has fallen 48 basis points over the past month. The Market Composite Index, a measure of mortgage loan application volume, rose by 3.2% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity increased 4.0%, while refinancing activity increased 2.8% week-over-week. Despite the week-over-week 4.0% increase in the purchasing activity index, purchasing activity was 38.6% lower than the same week the previous year. The refinancing activity index is down 85.1% from the same week one year ago while having two consecutive weeks of index increases. The refinance share of mortgage activity increased from 28.7% to 29.4% over the week, while the adjustable-rate mortgage (ARM) share of activity marginally increased from 7.6% to 7.7%. Potential home buyers may begin to enter the market as home price growth stabilizes and interest rates decrease. Related ‹ Inflation Continues to Cool in NovemberTags: finance, interest rates, mba, mortgage applications, mortgage bankers association, mortgage lending, refinancing

Mortgage Activity Increases as Rates FallJesse Wade2022-12-14T09:26:26-06:00

How Interest Rates Affect Your Home Purchase

Texas REALTORS Staff2022-10-26T19:14:33-05:00

Your monthly house payment depends on many factors, including the interest rate on your mortgage. Here are some things to keep in mind about interest rates when you’re planning to buy a home. Rates Change Over Time The rate you can get on a loan today will likely vary slightly from yesterday’s or tomorrow’s rate. Over longer periods, rates can fluctuate dramatically. Interest on a 30-year mortgage topped 18% in 1981 and dipped below 3% in 2020. People will predict which direction rates are heading, but no one knows for sure. If you’re concerned rates will rise while you’re looking for a home, some lenders give you the option to lock in a rate for a period of time. Different Loans Charge Different Rates The interest on a 30-year fixed-rate mortgage is typically higher than the rate on a 15-year fixed-rate loan. Interest rates on adjustable-rate mortgages are usually even lower; however, as the name suggests, those rates can change over time. How Much Will a Loan Payment Change? The difference in a monthly payment depends not only on the loan’s interest rate but also the amount of money borrowed. A buyer who borrows $250,000 at 5% will pay $148 more per month than if the rate was 4%. On a $400,000 loan, though, the difference would be $237 each month. Interest rates are just one aspect of a mortgage, and a mortgage is one of dozens of considerations when you purchase a home. Working with a REALTOR® ensures that you have a professional at your side to guide you through the entire process.

How Interest Rates Affect Your Home PurchaseTexas REALTORS Staff2022-10-26T19:14:33-05:00

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