Rates Exceed 6%, Applications Tumble

Mortgage loan application volume fell last week as mortgage rates topped 6% for the first time since 2008, nearly doubling year over year. The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index, a measure of mortgage loan application volume, decreased by 1.2%. The adjusted purchase index rose 0.2%, while the unadjusted purchase index dropped 12% and was 29% lower YOY. The refinance index dropped by 4% and was 83% lower than the same time last year. Refis made up 30.2% of total applications. “Higher mortgage rates have pushed refinance activity down more than 80 percent from last year and have contributed to more homebuyers staying on the sidelines. Government loans, which tend to be favored by…

Affordability Falling Further As Interest Rates Move Back Up

Mortgage rates continued rising last week, up from 5.55% to 5.66%, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 5.66%, continuing its trek towards 6% after a few weeks of reprieve in the low 5’s. A year ago at this time, the 30-year FRM averaged 2.87%. “The market’s renewed perception of a more aggressive monetary policy stance has driven mortgage rates up to almost double what they were a year ago,” said Sam Khater, Freddie Mac’s Chief Economist.  “The increase in mortgage rates is coming at a particularly vulnerable time for the housing market as sellers are recalibrating their pricing due to lower purchase demand, likely resulting in continued price…

Inflation Up 9.1% YOY, Largest Gain Since 1981

Inflation jumped by 9.1% YOY in June, more than analysts predicted and the largest gain since 1981, according to data released by the Labor Department today. The Consumer Price Index showed inflation rising 1.3% month-over-month, its largest jump since 2005. Predictions ahead of the data’s release forecast a 1.1% rise from May and an 8.8% increase YOY. This is the fourth consecutive month that analyst predictions fell short. Another month of skyrocketing inflation suggests that officials will be forced to continue aggressively raising interest rates.  But rate hikes have stoked fears of a recession. Strategists at Goldman Sachs recently upgraded their recession probability to 30% from 15%. “We now see recession risk as higher and more front-loaded,” Goldman Sachs Chief…

Rate Cuts Could Come This Year If Fed Can’t Get Inflation Under Control, Analysts Suggest

With the July Federal Open Markets Committee meeting fast approaching, speculation about another substantial rate hike is running rampant. After June’s historic 0.75 percentage point interest rate hike, the third hike this year and the largest since 1994, analysts are watching the Fed closely. Recession fears are rapidly growing, with 70% of economists expecting it by 2023. But Federal Reserve Chairman Jerome Powell said he was more concerned about high inflation continuing than about the possibility of rising interest rates causing a recession. “Is there a risk we would go too far? Certainly there’s a risk,” Powell said this week. “The bigger mistake to make, let’s put it that way, would be to fail to restore price stability.” Some experts…

U.S. Mortgage Markets Heat Up As Interest Rates and Prices Rise

By SCOTT KIMBLER Potential homebuyers are rushing to mortgage offices to make sure they get a loan before prices and interest rates go even higher. Mortgage rates jumped again to an average of 4.67%, up from last week’s 4.42%, Freddie Mac reported Thursday. At the same time, the spring selling season is looking promising for sellers. Home prices rose 1.84% in February and 19.6% year-over-year – the largest annual gains on record – according to Black Knight’s Monthly Mortgage Monitor Report. These numbers, along with an awkward supply and demand situation, are pushing some buyers who are in a position to do so to go ahead with their home purchase now.  Jerry Stover, sales manager with Homeowners Financial, said this has been…

Consumer Sentiment Down To Its Lowest Point Since 2011

March brought another dip in consumer sentiment, with the University of Michigan’s index registering its lowest level since August 2011. The March index was revised down to 59.4 from a reading of 59.7 two weeks ago. An index of 100 is equal to sentiment in Q1 1966. A year ago at this time, the index was 84.9. Consumer sentiment is now down 41.6 points from its peak in February 2020 and is even below the lows seen in four of the last six recessions.  “When asked to explain changes in their finances in their own words, more consumers mentioned reduced living standards due to rising inflation than any other time except during the two worst recessions in the past fifty…

Morning Roundup (3/25/2022)– Rates, Forbearances Rise

Good Morning! Today is Friday, March 25. The U.S. imposed new sanctions on more than 300 members of Russia’s Parliament. Some journalists have quit jobs at Russian state media outlets, citing regret for promoting lies about the war. Arizona Republicans passed a bill banning most abortions after 15 weeks of pregnancy. The Mortgage Note Reports Rates Rise: Mortgage rates continued their upward march this week, averaging 4.42%. Forbearances Up: Forbearance plans rose for a second week, pushed up by plan re-starts, though new plan starts remained steady. And in other mortgage and housing news… Affordability Down: Homebuyer affordability decreased in February, with the national median payment applied for by applicants jumping 8.3% to $1,653. “We’re Concerned”: Liz Shuler, president of…

Forbearances Increase For Second Week

Forbearance plans rose for a second week, according to Black Knight’s blog, Vision. Overall, forbearances rose by 17,400 (2.4%). Forborne loans held by portfolios and PSLs drove the week with an increase of 7,800 (3.3%). FHA/VA loans saw an increase of 5,000 (3.3%), while GSE plans rose by 4,500 (2%). Black Knight said this week’s numbers “extended their upward trend this week following a typical pattern of increased mid-month restarts.” New plan starts held steady this week at 11,200, though restarts increased by 6,000 to a total of 31,700. Plan volume is down 47,000 (-6%) month-over-month.  The increase this week comes on the heels of a major drop in plans two weeks ago, so rates remain historically low. An analysis…

Rates Break 4% For The First Time Since 2019

Mortgage rates broke 4% for the first time since May 2019, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 4.16%. A year ago at this time, the 30-year FRM averaged 3.09%. “The 30-year fixed-rate mortgage exceeded four percent for the first time since May of 2019,” said Sam Khater, Freddie Mac’s Chief Economist.  “The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year. While home purchase demand has moderated, it remains competitive due to low existing inventory, suggesting high house price pressures will continue during the spring homebuying season.” The Federal Reserve raised interest rates by a…

Analysts React To Fed Rate Hike

The Federal Reserve raised interest rates for the first time since 2018 on Wednesday in an effort to combat rising inflation, and economists have mixed feelings about its impact on the housing market. The Consumer Price Index rose 0.8% in February, up 7.9% over the last year, to its highest rate in 40 years. As Americans spend more on less, the impact is becoming apparent. Retail sales rose 0.3% in February, a slowdown in the pace of spending that suggested inflation was taking its toll on American consumers. But while rising prices for gas and groceries may burden American households, it’s things like health insurance and housing that are the “silent killers,” according to Justin Wolfers, University of Michigan professor…