Rate Increases Affect Mortgage Applications

Mortgage applications fell last week as rates hovered around 7%. The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — slipped by 0.2%. The results include an adjustment for the Fourth of July. Adjusted purchase applications increased by 1%, while the unadjusted index was down 19% and 13% lower YOY. Rates have increased in the last couple of weeks following a brief downward trend. The average 30-year fixed rate actually declined last week, down from 7.03% to 7% flat, but remains too high to entice buyers back to the table. “Purchase activity picked up slightly, driven primarily by increases in FHA and VA applications. Refinance applications decreased for…

Powell Acknowledges Putting Pressure On Housing While Teeing Up Rate Cut

By KIMBERLEY HAAS The chair of the Federal Reserve acknowledges that their tightening policies to bring down inflation have affected the housing market, and he is offering a glimmer of hope for analysts who expect a rate cut within the next few months. Jerome Powell testified before the Senate Banking, Housing and Urban Affairs Committee on Tuesday where he talked about the Fed’s semiannual Monetary Policy Report, which details the state of the U.S. economy. Powell was peppered with housing questions by Sen. Jon Tester, a Democrat from Montana. “Regardless of where I go in the state of Montana, housing is a big issue,” Tester said. “Larger towns, the medium-sized towns, to small towns, housing is a huge issue. And…

How Employee Preferences Are Impacting Commercial Real Estate

By KIMBERLEY HAAS Remote work is being blamed for empty downtowns and looming bank failures but commercial real estate experts say the reality is employers are looking to lease the highest quality office spaces – leaving less desirable locations vacant – because that is what employees want. In March, Federal Reserve Chair Jerome Powell said because of the shift to remote work, he expects some smaller and medium-sized banks to fail due to their exposure to the commercial real estate sector. He was speaking before the Senate Banking Committee during a hearing on the Fed’s monetary policy. “In many cities, the downtown office district is very underpopulated. There are empty buildings in many major and minor cities. It also means…

Rates Fall But Remain Near 7%

Mortgage rates fell further last week but remain near 7%, putting pressure on affordability. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.95%, down from the week prior’s 6.99%. A year ago at this time, the 30-year FRM averaged 6.69%. The 15-year also fell to 6.17% from 6.29%. A year ago at this time, it was 6.10%. “Mortgage rates continued to fall back this week as incoming data suggests the economy is cooling to a more sustainable level of growth,” said Sam Khater, Freddie Mac’s Chief Economist. “Top-line inflation numbers were flat but shelter inflation, which measures rent and homeownership costs, increased showing that housing affordability continues to be an ongoing impediment for buyers on the…

Federal Reserve Not Budging On Rates Yet

By PATRICK LAVERY For the seventh straight meeting, dating back to last September 20, the Federal Open Market Committee on Wednesday voted to maintain the target range for its federal funds rate at 5.25% to 5.5%. That officially means, as experts and prediction tools had almost unanimously agreed going into the week, that the earliest there will be a change to the key rate is after the next FOMC summit on the final two days of July, one year since the last quarter-point increase, and there is skepticism anything will happen then either. In a public statement released after the vote was taken, the FOMC was perhaps not as pessimistic as in the past that the rate might in fact…

Mortgage Biz Focused On Upcoming Fed Meeting

By PATRICK LAVERY Merriam-Webster says the phrase “kick the can down the road,” derived from an old children’s game, first entered the American political lexicon in the mid-1980s, about 40 years ago. It may have seemed like 40 years, but it will be just one, come July – at least – since the Federal Reserve Board will have last budged its federal funds rate with all indications pointing to the range remaining the same, at 5.25% to 5.50%, when the Federal Open Market Committee concludes its next meeting this Wednesday. CME Group’s FedWatch tool places the probability that the rate will hold steady at 99.4%, followed by a 91.1% chance of staying the same at the meeting scheduled to conclude…

Rates Move Back Up Over 7%

Homebuyers only enjoyed one week of sub-7% rates before the 30-year mortgage moved above that mark again. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.03%, up from the week prior’s 6.94%. A year ago at this time, the 30-year FRM averaged 6.79%. The 15-year also rose from 6.24% to 6.36%. A year ago at this time, it was 6.18%. Rates dipped below 7% the week prior for the first time in more than a month but reversed course on shifting market dynamics. “More hawkish commentary about inflation and tepid demand for longer-dated Treasury auctions caused market yields to rise across the board. This reality, as well as economic signals that have moved sideways over the…

Housing Starts Rose, Permits Fell In April

Residential construction saw mixed results in April as builders approach the high-rate environment with caution. Housing starts were up by 5.7% to a 1.36 million annualized rate last month but down 0.6% YOY, according to data from the U.S. Census Bureau. Analysts expected construction to rise, which it did– but by far less than the 1.42 million rate forecasted. Permits slipped, down 3% from March’s revised rate of 1,485,000 and 2% YOY. This is the third straight month that this future construction indicator has fallen. It’s now at its lowest level since August. The data suggests builders are moving cautiously as mortgage rates remain elevated. Rates averaged 7.09% last week, an improvement after a long spell of increases but still…

Rates Cool For The First Time In Five Weeks

Average mortgage rates declined for the first time in five weeks following cooling employment, a sign of easing inflation. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.09%, down from the week prior’s 7.22%. A year ago at this time, the 30-year FRM averaged 6.35%. This is the first reversal after a multi-week upward streak that sent rates to their highest point since November 2023. Those weeks of increases pushed the median monthly housing payment to a new record high of $2,894 during the four weeks ending May 5, up 14% YOY. Recent government data found that the U.S. economy added 175,000 in April, below expectations of 240,000, while unemployment increased to 3.9%. This was good…

Rates Fall 11 BPS, Applications Rally

Mortgage applications rallied last week as a slowing jobs market and positive indications from the Central Bank led to rates plummeting.  The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — rose by 2.6%, reversing last week’s 2.3% dip. Adjusted purchase applications increased by 2%, while the unadjusted index was up 2% and 17% lower YOY.  Rates declined for the first time since March, falling a full 11 bps to 7.18%. FHA loans drove the upward push, jumping 5%, as their rates plummeted to 6.92%. It’s been weeks since these rates were last below 7%. “First-time homebuyers account for roughly half of purchase loans, and the government lending…