Banks are selling a new type of bond that is allowing them to distribute risk among investors and more effectively cover potential losses from defaults. The “risk-transfer securities” are “backed by short-term loans the bank makes to mortgage lenders,” the Wall Street Journal reports. In the case of borrower default, “the investors in the bonds effectively cover the loss.” The bond is reportedly “a niche product,” the Journal reports, one that is “supported by a surging housing market and a recovery that has improved borrowers’ credit quality,” undercutting fears of risky lending practices and unstable securities that marked the 2008 financial crisis. “People want exposure to housing and consumer markets that are performing,” JPMorgan analyst Kaustub Samant told the paper.…
The number of mortgage applications in the U.S. jumped this week after a brief decline last week, amid signs of a broader modest downward trend in housing market activity. Mortgage applications “increased 5.7 percent from one week earlier,” the Mortgage Bankers Association said on Wednesday, drawing data from its Weekly Mortgage Applications Survey. The increase represents a reversal from last week’s numbers, which indicated a decline in week-over-week mortgage applications. The overall trend, meanwhile, is one of cooling off after well over a year of an unrelenting real estate market throughout the country. Year-over-year mortgage applications last month fell by nearly 24 percent. Construction permits for new housing were also lately down; mortgage credit availability has also declined, a sign…
A recent report by realty company Redfin shows that buyers from outside a housing market are often responsible for driving housing prices even higher in the area to which they’re moving. Out-of-towners “tend to be able to pay more than locals in popular migration destinations because they’re often relocating from more expensive areas,” the company said in its report. The company analyzed several locations from which it drew its data, including Austin, Texas, where outside home purchasers were markedly higher than in-town ones: The typical home purchased by out-of-towners in Austin sells for $470,000, versus $447,500 for locals. Out-of-towners also tend to buy homes that are priced higher from the beginning: The typical list price for a home purchased by out-of-towners is…
The Fair Housing Finance Agency House Price Index (FHFA HPI®) rose 1.7 percent in May, sending the annual price increase to 18 percent. The previously reported 1.8 percent price change for April 2021 was unrevised. “House prices continued their record-setting growth into May,” said Dr. Lynn Fisher, FHFA’s Deputy Director of the Division of Research and Statistics. “This trend will likely continue around the country as busy summer homebuying months maintain the pressure being felt in already tight housing markets.” The increase in home prices was not evenly distributed across the country. Among the nine census divisions, the Pacific enjoyed the highest monthly price spike (2.4 percent), while prices rose least in the Middle Atlantic division (1 percent). The 12-month…
Having to make mortgage and rent payments was linked to lower health outcomes in the early stages of the pandemic, according to new research out of the University of Michigan. The study found that “during the early months of the COVID-19 pandemic, having to make rent or mortgage payments was significantly associated with health and mental distress,” the university said in a press release. The researchers found that “compared to those without mortgage debt, homeowners with mortgage debt and renters reported worse self-rated health and higher levels of mental distress” in the earliest months of the SARS-Cov-2 crisis in the U.S. “We know housing is a social determinant of health,” said lead study researcher Roshanak Mehdipanah. “We need to invest…
The share of U.S. mortgages in forbearance declined over the past week, signaling an ongoing steady improvement in those numbers, although the rate of decline slowed slightly over earlier weeks. The number of mortgages in forbearance declined “by 2 basis points from 3.50% of servicers’ portfolio volume in the prior week to 3.48% as of July 18,” the Mortgage Bankers Association said in a Monday press release. “As is typical for mid-month reporting, forbearance exits slowed, and there was a slight increase in new requests,” MBA Senior Vice President and Chief Economist Mike Fratantoni said in the release. “The net result was a small drop in the share of loans in forbearance – the 21st consecutive week of declines.” The…
The still-searing housing market has reached such dizzying heights in some regions that many homebuyers are giving up searching altogether, at least until prices come down. Many would-be buyers “are calling off their search, for reasons that range from an inability to compete financially, to an unwillingness to waive contingencies like an inspection, to a belief the market will cool in time,” the New York Times reports. Prospective buyers have been resorting to drastic measures like waiving inspections and paying full closing fees in efforts to get a leg up and out-compete other buyers. But in some markets the competition is nearly stratospheric: Buyers in Utah, for instance, recently put an offer for a hour $60,000 over asking price with…
A large number of low-to-nothing-down-payment mortgages in Canada have experts worried that the country could be on track to a U.S. subprime mortgage-style fallout in the near future. A growing number of buyers are reportedly “opting for loans that either allow them to borrow the money for their down payment or that provide cash back after the closing,” Bloomberg News reports. “Massive loans” are “being taken out by borrowers with relatively low incomes,” the news service reports, with mortgages with a “high loan-to-income ratio” making up around 17% of loans this year, more than double the rate two years ago. One Canadian investment banker, meanwhile, claims that “the number of her clients who call for advice on how to help…
Homebuyers are seeking out more condos after a long period of disinterest exacerbated by the COVID-19 pandemic. The “pandemic-fueled slump” in condo interest appears to be coming to an end with “renewed homebuyer competition,” Redfin reports, with an increasing number of condos selling for more than their listed price. Condos have sold below asking price for years, Redfin’s data show, but a relatively steady upward trend since around 2012 dropped in 2019 and appears to have been kept depressed over the past year and a half, coinciding with the SARS-Cov-2 crisis. June was only the second time condos have sold above asking price since at least 2012, the brokerage company said; May was the first.…
Sales of existing homes increased marginally last month, according to the National Association of Realtors, with housing stock also edging upwards. Existing home sales “rose 1.4% on a seasonally adjusted annual rate from May to June, with no region showing a sales decline,” the NAR said on Thursday. Unsold homes throughout the country “increased 3.3% to 1.25 million from May to June ,” the organization added, which it said was “equivalent to 2.6 months of the monthly sales pace.” The median existing home sales price rose nearly 25 percent year-over-year, the NAR noted, which it said was “the second highest level recorded since January 1999.”…
