Mortgage application volume bounced back into positive territory last week, even though banks and many businesses were closed on Friday for the Independence Day Holiday. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, was 2.2 percent higher on a seasonally adjusted basis, which included an adjustment for the holiday, from the previous week, although volume was down 8 percent before adjustment. The Refinance Index rose 0.4 percent week-over-week and was 111 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 60.1 percent of total applications from 61.2 percent the previous week. The seasonally adjusted Purchase Index gained 5 percent week-over-week while declining by the same amount before adjustment. It was up 33 percent compared to the same week in 2019. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
A study by the Urban Institute (UI) has found a strong correlation between the home price to income ratio in an area and its rate of gentrification. The results are published on UI's Urban Wire blog in a post written by analysts Ellen Seidman, Jun Zhu, and Laurie Goodman. The authors say it is important to understand what increases the pace of gentrification, which they define as how fast high-income homebuyers move into low-income neighborhoods. Using data from the 2018 Home Mortgage Disclosure Act and 2018 American Community Survey data, the researchers examined the movement of high-income borrowers into low-income areas and the varying pace of this movement across different metropolitan statistical areas (MSAs). The focus was on income rather than homebuyers' race or ethnicity as that data was not available with sufficient granularity. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Did the housing happy talk just get a little less so? CoreLogic's Housing Price Index Forecast (HPI) over the May 2020 to May 2021 window is seeing more rapid price deceleration in the face of the COVID-19 situation than did their previous 12-month forecast that ended in April of next year. In its report last month CoreLogic said it expected that "the housing market may be equipped to lead the broader economy through the recovery" but that home prices increases would slow and that the gain from April to May would be only 0.3 percent. They went on to predict that 2021 would bring the first decline in nine years, and by April 2021 the national price gain would turn negative, down 1.3 percent. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Despite any impact from the COVID-19 pandemic, construction spending is still largely managing to stay ahead of its 2019 levels. The U.S. Census Bureau said total spending in May was at a seasonally adjusted annual rate of $1.356 trillion, down 2.1 percent from April's $1.386 trillion rate. The April rate was revised significantly higher from the $1.346 trillion originally reported. On an annual basis, spending was 0.3 percent above the level in May of 2019. On a non-adjusted basis, total spending was $116.215 billion compared to $112.912 billion in April. For the year-to-date (YTD) spending is up 5.7 percent over the same period last year at $543.181 billion compared to $513.705 billion. Unadjusted spending has increased each month this year after starting at $101.121 billion in January....(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Black Knight has again taken a look at the number of Americans who could benefit significantly from refinancing their first mortgages, but the facts are shifting almost faster than they can report them. In its current Mortgage Monitor, the company reports that 90 percent of homeowners who have sufficient equity in their homes and the qualifying credit to refinance could improve their current interest rate. Sufficient, or what the company calls "tappable" equity is defined as allowing a refinance while keeping the loan-to-value (LTV) ratio at 80 percent or lower. That equity rose 8.0 percent from the first quarter of 2019 to the same quarter this year. The total is a record high of $6.5 trillion. Despite rising mortgage delinquencies, about 13.6 million homeowners still meet broad eligibility requirements to refinance. Refinance candidates are those who could lower their mortgage interest rate by 75 basis points or more. Mortgage rates as of June 18 were at a record low of 3.13 percent. At those rates, the 13.6 million refinance candidates could save an average of $283 per month on their mortgage payment. If all eligible candidates were to refinance their mortgages, they would see an aggregate savings of $3.9 billion per month, representing a potentially significant and much-needed stimulus to the economy. Of these, some 4.6 million could save at least $300 per month on their mortgage payments, while 2.6 million would be able to save at least $400 per month. More than three quarters of those refinancible homeowners have rates above 3.5 percent. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
The number of homeowners in COVID-19 forbearance dropped sharply this week, to the lowest level since the first week of May. The number of plans which hit a peak on May 22 then declined slowly over the next three weeks but shot up by nearly 80,000 loan plans during the week ended June 23. Black Knight's survey of mortgage loan servicers found a resumption of the downward trend this week, with plans falling by 104,000, the largest decline so far. As of June 30, there were 4.58 million homeowners in forbearance due to pandemic related financial problems, down 183,000 from the peak. This is 8.6 of the nation's active mortgages, compared to 8.8 last week and represents $995 billion in unpaid principal. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
The Consumer Financial Protection Bureau (Bureau) today issued a notice of proposed rulemaking (NPRM) that would amend Regulation Z of the Truth-in-Lending (TIL) Act. The rule would provide a new exemption for some insured depository institutions and insured credit unions from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs). Under Regulation Z, some insured depository institutions and credit unions are required to set up escrow accounts for specified higher-priced mortgage loans (HPMLs). These are closed-end residential loan transactions with an annual percentage rate that exceeds the current average prime offer rate for a comparable transaction by specific amounts. In setting up this escrow requirement, the 2008 Dodd-Frank Act generally adopted a similar rule the Federal Reserve had made in 2005 specifically targeting subprime loans. However Dodd-Frank excluded certain loans, such as reverse mortgages, from the escrow requirement and gave the Consumer Financial Protection Bureau (CRPF), which had rule-making authority, permission to exempt smaller creditors and those operating "predominantly" in rural or underserved areas....(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Freddie Mac reported this week that its total mortgage portfolio increased at an annualized rate of 5.5 percent in May compared to a 14.3 percent gain in April. The portfolio balance at the end of the period was $2.407 trillion compared to $2.396 trillion at the end of April and $2.230 trillion a year earlier. The growth rate for the year to date is 7.8 percent. Purchases and Issuances totaled $78,329 billion and Sales were ($2.799) billion. The April numbers were $80,879 billion and ($0.770) billion, respectively. Single-family refinance loan purchase and guarantee volume was $54.500 billion in May compared to $52.100 billion in April and representing a 76 percent share of total single-family mortgage portfolio purchases and issuances compared to 69 percent the previous month. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Applications for both refinancing and purchase mortgages retreated last week, pulling the Mortgage Bankers Associations (MBA's) Market Composite Index lower for the second time in as many weeks. MBA said the index, a measure of application volume, declined by 1.8 percent on a seasonally adjusted basis during the week ended June 26 and was down 2.0 percent on an unadjusted basis. While the Refinance Index ticked down 2 percent from the week ended June 19, low interest rates kept the refinancing volume 74 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 61.2 percent of total applications from 61.3 percent the previous week. The seasonally adjusted Purchase Index dipped 1 percent and the unadjusted version was down 2 percent compared with the previous week. Volume was still 15 percent higher than the same week one year ago. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Home prices continued to hold up on a national basis in April. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, reported a 4.7 percent annual gain in April, up from 4.6 percent in March. The National Index posted a 1.1 percent month-over-month increase before seasonal adjustment and an 0.5 percent gain after it. The 10-City Composite appreciated at an annual rate of 3.4 percent, unchanged from the March rate while the 20-City Composite's annual increase rose to 4.0 percent from 3.9 percent the previous month. The 10-City and 20-City measures had monthly increases of 0.7 percent and 0.9 percent respectively before seasonal adjustment and both posted 0.3 percent increases after adjustment. In April, all 19 cities (excluding Detroit for which sufficient data was not available due to a county recording office shutdown) reported increases before seasonal adjustment. Sixteen of the 19 cities reported them afterward. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
The Supreme Court, in a 5-4 decision along partisan lines, took a chunk out of the intentions the Dodd-Frank Act had for the Consumer Financial Protection Bureau (CFPB) when it created it. The court ruled that the single-director structure of the agency is unconstitutional as is its limits on the President's ability to replace its occupant. When Congress established CFPB it set up its funding mechanism independent of the House appropriations process, ruling its budget should come from the Federal Reserve. It also established a single director to head the agency and protected the occupant from being fired except for "inefficiency, neglect of duty or malfeasance in office" during a five-year term, Each stricture was a bid to insulate the agency from political interference....(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Lawrence Yun, chief economist for the National Association of Realtors® (NAR), predicted last month that April's home sales contract activity "will be the lowest point for pending sales." That turns out to have been a huge understatement--at least for now. This morning's release of NAR's Pending Home Sales Index (PHSI) showed the number of those contracts for purchasing existing single-family houses, condos, townhomes, and cooperative apartments did indeed explode in May, soaring by 44.3 percent to 99.6. It was the greatest single month increase since NAR started tracking pending sales in 2001. Every major region recorded an increase in month-over-month activity, while the South also had a year-over-year increase in pending transactions....(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
After three weeks of declining totals, Black Knight says the number of active COVID-19 forbearance plans shot up over the past week. As of June 23, there were 4.68 million homeowners in forbearance, an increase of 79,000 from the prior week. This surge erased about half of the improvement the company has noted in its weekly report since forbearance plans peaked during the week of May 22. Forbearance plans are now in place for 8.8 percent of all active mortgages, up 0.1 point in a week. These loans have an aggregate balance of $1.025 trillion. FHA and VA loans posted the largest increase, 42,000, bringing the total number of forborne loans to 1.925 million or 12.5 percent of the two portfolios. Among loans serviced for Fannie Mae and Freddie Mac, 1.925 million or 6.9 percent are in plans, up 25,000 from the prior week. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
In his analysis of current mortgage credit tightening for the Joint Center on Housing Studies excerpted here earlier, Don Layton included a special section on lender overlays. The former Freddie Mac CEO focused specifically on how those overlays may be affected by the borrower forbearance mandated by the CAREs Act for borrowers impacted financially by the COVIC-19 pandemic. During and after the 2008 housing crisis mortgage intermediaries (originators) added their own underwriting requirements to those required by the GSEs, FHA, and the VA. These overlays were designed to counter "representation and warranty risk," - i.e., the possibility they would be required to... ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.
House prices continued to be unfazed by the current economic upheaval. The Federal Housing Finance Agency (FHFA) reports that its U.S. House Price Index for April, the first full month that reflects the impact of the pandemic, continued to rise almost unabated. The index increased by 0.2 percent from March compared to a 0.1 percent increase from February to March. On an annual basis the index rose 5.5 percent, down slightly from the 5.7 percent gain in both February and March. Prices did decline from March in two of the nine census divisions, New England was down 0.2 percent and the South Atlantic was off by 0.5 percent. The index in both the Pacific and Mountain regions were unchanged. Gains elsewhere were topped by an 0.8 percent increase in the West South Central division. The 12-month changes were all positive, ranging from 5.0 percent in the Middle Atlantic division to 6.8 percent in the Mountain division. ...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.