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MBA: Mortgage Applications Decrease in Latest Weekly Survey, Refi Index lowest since December 2000

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MBA: Mortgage Applications Decrease in Latest Weekly Survey, Refi Index lowest since December 2000

by Bill McBride on 5/30/2018 07:00:00 AM

From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 2.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 25, 2018.

… The Refinance Index decreased 5 percent from the previous week to its lowest level since December 2000. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 2 percent higher than the same week one year ago. …

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.77 percent from 4.78 percent, with points remaining unchanged at 0.50 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Mortgage Refinance Index Click on graph for larger image.

The first graph shows the refinance index since 1990.

Refinance activity is at the lowest level since December 2000.

Refinance activity will not pick up significantly unless mortgage rates fall 50 bps or more from the recent level.

Mortgage Purchase IndexThe second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 2% year-over-year.

Published at Wed, 30 May 2018 11:00:00 +0000

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“Mortgage Rates Back at 4-Year Highs Ahead of Inflation Data”

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“Mortgage Rates Back at 4-Year Highs Ahead of Inflation Data”

by Bill McBride on 5/09/2018 06:03:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Back at 4-Year Highs Ahead of Inflation Data

Mortgage rates moved higher today as bond markets braced for impact from several upcoming events. … [T]omorrow’s Consumer Price Index–a key inflation report that can have an immediate impact on the bond market. If inflation is lower than expected, rates could recover. But if it’s as strong as expected (or higher), rates could easily continue higher. That would be unfortunate as today’s rate sheets are very close to being the worst in more than 4 years, depending on the lender. [30YR FIXED – 4.625%-4.75%] emphasis added

• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 220 thousand initial claims, up from 211 thousand the previous week.

• Also at 8:30 AM, The Consumer Price Index for April from the BLS. The consensus is for a 0.3% increase in CPI, and a 0.2% increase in core CPI.

Published at Wed, 09 May 2018 22:03:00 +0000

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“Mortgage Rates Push Farther Into 4-Year Highs”

“Mortgage Rates Push Farther Into 4-Year Highs”

by Bill McBride on 4/24/2018 09:26:00 PM

• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

From Matthew Graham at Mortgage News Daily: Mortgage Rates Push Farther Into 4-Year Highs

Mortgage rates moved somewhat higher again today, thus pushing them farther into the highest levels in more than 4 years. [30YR FIXED – 4.625%-4.75%] emphasis added

Here is a table from Mortgage News Daily:

Averages Current Previous Change
Mortgage News Daily updated daily
30 Yr Fixed 4.64 4.61 +0.03
15 Yr Fixed 4.02 3.99 +0.03
FHA 30 Yr 4.45 4.43 +0.02
Jumbo 30 Yr 4.69 4.65 +0.04
5/1 Yr ARM 3.80 3.75 +0.05
FHFA updated monthly
15 Yr Fixed 3.65 3.56 +0.09
30 Yr Fixed 4.19 4.17 +0.02
Freddie Mac updated weekly
30 Yr Fixed 4.47 3.95 +0.52
15 Yr Fixed 3.94 3.31 +0.63
1 Yr ARM 2.68 2.68
5/1 Yr ARM 3.67 3.21 +0.46
30 Year Fixed



Published at Wed, 25 Apr 2018 01:26:00 +0000

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Your money: How to deal with mortgage-rate envy

by paulbr75 from Pixabay

Your money: How to deal with mortgage-rate envy

NEW YORK (Reuters) – Kristin Tassi spent last weekend happily settling into her new home in the Chicago area, but part of her brain was still obsessing over the mortgage rate she got for it.

“I don’t think we’ll ever not think about it,” said the 33-year-old public relations professional.

After watching friends who had bought houses over the past few years snag historically low rates, Tassi and her husband were shocked to find themselves looking at rates above 4 percent when they started house hunting in earnest in January.

They found a house they liked, but then it fell through. A few weeks later, when they were running the numbers on another prospective home, rate increases had already pushed up the payments by $100 a month.

They ended up having to pay points for a 4 percent rate, which raised their closing costs because they were paying a fee of several thousand dollars to lower the rate on their loan.

“It caused me so much anxiety,” Tassi said.

Mortgage shoppers and refinancers have been so accustomed to good news since rates started to slide below 4 percent in 2011 that the run-up in the past few months has been shocking.

While most housing-market experts do not expect rates to affect home affordability yet, the refinance market has already significantly declined; the total number of refis dropped 29 percent in 2017 from the prior year, according to Black Knight’s Mortgage Monitor Report.

Todd Jones, president of BBMC Mortgage, which is headquartered in Chicago, is training his brokers all over the country how to deliver bad news. Chief among his lessons is showing empathy to clients. While $100 a month might not sound like too much, it might adjust a client’s debt-to-loan ratio, which could push the size of a house they can afford down by $40,000 or $50,000.

“It’s not just a number to them, it’s looking at paying more for the house of their dreams,” Jones said.

At some point, rates increases could go up so much that people stop buying. Jones said he is already starting to see a pause in the market as rates approach 5 percent.

A survey from Redfin in February found 6 percent of homebuyers would cancel plans to buy if mortgage rates went above 5 percent, while 42 percent would start to hurry up.

While rates could be at that level later in 2018 or 2019, Zillow senior economist Skylar Olsen does not expect rates to cross above 6 percent until 2020. The good news is that Olsen does not expect rates to climb past that level, and certainly not just to keep ascending endlessly.

But the chance to go below 4 percent again?

“Not any time soon,” Olsen said.


Workarounds are few, since rates tend not to fluctuate too much between different companies. But shopping is always a good idea. Tassi went to three different mortgage brokers in her journey, and ended up working directly with the bank where she keeps most of her accounts.

George Burkley, a mortgage broker in northern Indiana, said he has been searching more aggressively for government-backed loans for his clients, especially VA loans, where rates may be lower and downpayment requirements less strict.

Jones said he has also been loosening up credit score minimums on some of these loans, down to 580 for VA loans, in particular.

The best thing for clients to do is shore up their finances and get educated on today’s rates.

Jones says much of what people see is outdated, since blog posts and advertisements do not just go away after a few weeks.

Another recalibration that buyers need to do pertains to their expectations of how much house they can afford. Nathan Pierce, a mortgage broker in the Salt Lake City area, has seen people who pre-qualified at one level have to go through the process again when rates go up.

One couple found a home at the top-end of their range and by the time they tried to lock a rate, the monthly payment had jumped several hundred dollars and the bank balked. They got their earnest money back, and went out looking again.

“The problem was, the prices on the homes they were looking at went up $10,000 in the meantime,” Pierce said. “It was very stressful for them.”

Editing by Bernadette Baum

Published at Tue, 03 Apr 2018 17:27:49 +0000

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Fannie Mae: Mortgage Serious Delinquency rate decreased slightly in February

Fannie Mae: Mortgage Serious Delinquency rate decreased slightly in February

by Bill McBride on 3/30/2018 04:23:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate decreased to 1.22% in February, down from 1.23% in January. The serious delinquency rate is up from 1.19% in February 2017.

These are mortgage loans that are “three monthly payments or more past due or in foreclosure”.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Fannie Freddie Seriously Delinquent Rate

Click on graph for larger image

By vintage, for loans made in 2004 or earlier (3% of portfolio), 3.35% are seriously delinquent. For loans made in 2005 through 2008 (6% of portfolio), 6.49% are seriously delinquent, For recent loans, originated in 2009 through 2017 (91% of portfolio), only 0.53% are seriously delinquent. So Fannie is still working through poor performing loans from the bubble years.

The recent increase in the delinquency rate was due to the hurricanes – no worries about the overall market (These are serious delinquencies, so it took three months late to be counted).

After the hurricane bump, maybe the rate will decline to 0.5 to 0.7 percent or so to a cycle bottom.


Published at Fri, 30 Mar 2018 20:23:00 +0000

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A Few Comments on February Existing Home Sales

A Few Comments on February Existing Home Sales

by Bill McBride on 3/21/2018 03:46:00 PM

Earlier: NAR: “Existing-Home Sales Rebound 3.0 Percent in February”

A few key points:

1) As usual, housing economist Tom Lawler’s forecast was closer to the NAR report than the consensus (although only slightly closer this month). See: Lawler: Early Read on Existing Home Sales in January.

2) Inventory is still very low and falling year-over-year (down 8.1% year-over-year in February). More inventory would probably mean smaller price increases, and less inventory somewhat larger price increases.    This was the 33rd consecutive month with a year-over-year decline in inventory.

The following graph shows existing home sales Not Seasonally Adjusted (NSA).

Existing Home Sales NSA

Click on graph for larger image.

Sales NSA in February (319,000, red column) were above sales in February 2017 (315,000, NSA).

Sales NSA are always low in January and February, and we will have to wait until March – at the earliest – to draw any conclusions about the impact of higher interest rates and the new tax law on home sales.


Published at Wed, 21 Mar 2018 19:46:00 +0000

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CoreLogic: “2.5 million Homes still in negative equity” at end of Q4 2017

CoreLogic: “2.5 million Homes still in negative equity” at end of Q4 2017

by Bill McBride on 3/15/2018 12:54:00 PM

From CoreLogic: Homeowner Equity Q4 2017

CoreLogic analysis shows U.S. homeowners with mortgages (roughly 63 percent of all properties) have seen their equity increase by a total of $908.4 billion since the fourth quarter 2016, an increase of 12.2 percent, year over year.

In the fourth quarter 2017, the total number of mortgaged residential properties with negative equity decreased 1 percent from the third quarter 2017 to 2.5 million homes, or 4.9 percent of all mortgaged properties. Compared to the fourth quarter 2016, negative equity decreased 21percent from 3.2 million homes, or 6.3 percent of all mortgaged properties.

Negative equity peaked at 26 percent of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis which began in the third quarter of 2009.
emphasis added

CR Note: A year ago, in Q4 2016, there were 3.2 million properties with negative equity – now there are 2.5 million.  A significant change.

Published at Thu, 15 Mar 2018 16:54:00 +0000

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The Housing Bubble, Mortgage Debt as Percent of GDP

The Housing Bubble, Mortgage Debt as Percent of GDP

by Bill McBride on 2/19/2018 12:09:00 PM

Last year on Presidents’ Day, I excerpted from a post I wrote in February 2005 (yes, 13 years ago).

In that 2005 post, I included a graph of household mortgage debt as a percent of GDP. Several readers asked if I could update the graph.

First, from 2005:

The following chart shows household mortgage debt as a % of GDP. Although mortgage debt has been increasing for years, the last four years have seen a tremendous increase in debt. Last year alone mortgage debt increased close to $800 Billion – almost 7% of GDP.

Source: Federal Reserve


Household Real Estate Assets Percent GDP

The second graph shows household mortgage debt as a percent of GDP through Q4 2017.  Yes, the graphs have improved!

Mortgage debt has declined by $0.7 trillion from the peak. Studies suggest most of the decline in debt has been because of foreclosures (or short sales), but some of the decline is from homeowners paying down debt (sometimes so they can refinance at better rates).

The “bubble” is pretty obvious on this graph, and the sharp increase in mortgage debt was one of the warning signs.

Published at Mon, 19 Feb 2018 17:09:00 +0000

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