Mortgage Activity Remains at Low Levels

2023-01-11T11:27:58-06:00

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 Levels2023-01-11T11:27:58-06:00

Mortgage Activity Increases as Rates Fall

2022-12-14T09:26:26-06:00

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 Fall2022-12-14T09:26:26-06:00

Mortgage Activity Remains Low Due to Market Uncertainty

2022-11-09T10:17:32-06:00

By Jesse Wade on November 9, 2022 • Per the Mortgage Bankers Association’s (MBA) survey through the week ending November 4th, total mortgage activity declined 0.1% from the previous week and the average 30-year fixed-rate mortgage (FRM) rate rose eight basis points to 7.14%. The FRM rate has risen 33 basis points over the past month and has been above 7% for the past three weeks. The Market Composite Index, a measure of mortgage loan application volume, decreased by 0.1% on a seasonally adjusted (SA) basis from one week earlier. Purchasing activity increased 1.3%, while refinancing activity decreased 3.5% week-over-week. The 1.3% increase in purchasing activity was the first increase in the past six weeks even though purchasing activity has decreased 41.6% on a year-over-year basis. The refinancing activity index is down 86.9% from the same week one year ago, the index has hit its lowest point since August 2000. The refinance share of mortgage activity declined from 28.6% to 28.1% over the week, while the adjustable-rate mortgage (ARM) share of activity slightly increased from 11.8% to 12.0%. With continued increases in FRM rates, buyers are looking for ways to save when purchasing. ARMs offer lower rates than FRMs which has led to an increase in activity with buyers more likely to use an ARM to purchase a home. According to Freddie Mac, the current 5/1-ARM rate is at 5.95%. Related ‹ Revolving Debt Surges as Credit Card Rates Hit 18-Year HighTags: finance, interest rates, mba, mortgage applications, mortgage bankers association, mortgage lending, refinancing

Mortgage Activity Remains Low Due to Market Uncertainty2022-11-09T10:17:32-06:00

All-Cash New Home Sales Outnumber FHA-Backed for the First Time Since 2007

2022-10-28T12:21:21-05:00

NAHB analysis of the most recent Quarterly Sales by Price and Financing published by the U.S. Census Bureau reveals that new home sales financed through FHA numbered 11,000 and accounted for 7.5% of the total in Q3 2022–the smallest share since the fourth quarter of 2007.  The share has dropped by nearly two-thirds since the spring of 2020. In contrast, the share of cash purchases has climbed each of the past three quarters to reach a 20-year high of 9.5% (14,000 sales). This is first time since 2007 that cash sales accounted for both a larger number as well as a larger share of the total. Conventional loans financed 77.6% of new home sales in the third quarter—a 1.2 percentage point quarter-over-quarter increase. The share has risen each of the prior seven quarters. The share of VA-backed sales declined 0.8 percentage point to 5.4% in the third quarter–0.8 ppts higher than the share one year prior. Although cash sales typically make up a small portion of new home sales, they constitute a larger share of existing home sales. According to estimates from the National Association of Realtors, 22% of existing home transactions were all-cash sales in September 2022, down from 24% in August and 23% in September 2021. The average interest rate of a 30-year fixed rate mortgage increased 100 basis points, quarter-over-quarter.  Over the four quarters ending Q3 2022, the average rate of a conventional 30-year FRM spiked 369 basis points—the largest yearly increase since 1981. Stock market returns (proxied by the S&P 500®) in the third quarter were -5.3%, quarter-over-quarter, and -16.8% year-over-year. Each of these factors plays an important role in the dynamics among market share by type of financing. Higher stock returns and the resulting increased wealth aids borrowers in the underwriting process as well as increasing the down payment a household can afford (should they cash out some of their portfolio). Higher mortgage rates decrease the odds that a given loan will be approved, all else held equal, as they make monthly payments larger than they would otherwise be. Different sources of financing also serve distinct market segments, which is revealed in part by the median new home price associated with each. In the second quarter, the national median sales price of a new home was $454,900. Split by types of financing, the median prices of new homes financed with conventional loans, FHA loans, VA loans, and cash were $503,200, $340,300, $432,200, and $494,200, respectively. The median new home price has increased 5.0% in 2022 but there is a large variance by type of financing.  The price of a new home purchased with cash has increased 27.3% since Q1 2022 while the price of an FHA-backed sale has fallen 7.6%. Related ‹ Inflation Brings Savings Rate Down In SeptemberTags: conventional loans, Existing Home Sales, FHA, financing, mortgage finance, mortgage lending, new home cash purchases, new home financing, new home sales, sales by financing, single-family sales, VA

All-Cash New Home Sales Outnumber FHA-Backed for the First Time Since 20072022-10-28T12:21:21-05:00

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