Americans who bought a home this year are facing rising underwater risk as home prices cool. Black Knight’s October Mortgage Monitor found that 8% of homes bought in 2022 are now at least marginally underwater, while almost 40% have less than a 10% equity stake in their homes. “Make no mistake: negative equity rates continue to run far below historical averages, but a clear bifurcation of risk has emerged between mortgaged homes purchased relatively recently versus those bought early in or before the pandemic,” said Black Knight President Ben Graboske. “Risk among earlier purchases is essentially nonexistent given the large equity cushions these mortgage holders are sitting on. More recent homebuyers don’t fare as well.” This is a particular issue…
Mortgage interest rates fell again last week to 6.49%, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey found that the 30-year fixed-rate mortgage averaged 6.49%, down from 6.58% the week prior. Weeks of decline have made some analysts optimistic that rates have peaked. “We probably have seen peak mortgage rates unless there is some other major shock to the economy,” Cris deRitis, deputy chief economist at Moody’s Analytics, told NextAdvisor. The 15-year fixed-rate mortgage also fell from 5.90% to 5.76%. A year ago, it averaged 2.39%. “Mortgage rates continued to drop this week as optimism grows around the prospect that the Federal Reserve will slow its pace of rate hikes,” said Sam Khater, Freddie Mac’s Chief Economist. “Even as…
Mortgage loan application volume dipped last week despite rates slipping, affected by the holiday and the weakening economy, according to the Mortgage Bankers Association’s weekly survey. The adjusted Market Composite Index, a measure of mortgage loan application volume, decreased by 0.8%. The adjusted purchase index rose 4%, while the unadjusted purchase index decreased by 31% and was 41% lower YOY. The 30-year fixed rate dropped to 6.49%, having now fallen 57 bps in just four weeks. Rates declined for all other loan types, as well. “The economy here and abroad is weakening, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase…
Real house prices jumped 10.5% in September and logged a 60.6% YOY increase, according to First American’s Real House Price Index. As a result, consumer buying power, or how much a person can buy based on changes in income and interest rates, fell by 8.9% month-over-month and 29.3% YOY. The significant dip in affordability measured here results from skyrocketing home prices and rapidly increasing mortgage rates. “Even though household income increased 3.1% since September 2021 and boosted consumer house-buying power, it was not enough to offset the affordability loss from higher mortgage rates and fast-rising nominal prices,” said Mark Fleming, chief economist at First American. Florida, Georgia, Arkansas, South Carolina, and Alabama saw the largest annual increases in real house…
Mortgage interest rates sank to 6.60% last week, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey found that the 30-year fixed-rate mortgage averaged 6.60%, down from 7.08% the week prior. This is the largest weekly drop in 40 years. The 15-year fixed-rate mortgage also fell from 6.38% to 5.98%. A year ago, it averaged 2.39%. As a result, the typical monthly mortgage payment declined by $100, giving a typical homebuyer with a $2,500 budget $12,000 more purchasing power over the course of just one week. “Mortgage rates tumbled this week due to incoming data that suggests inflation may have peaked,” said Sam Khater, Freddie Mac’s Chief Economist. “While the decline in mortgage rates is welcome news, there is still…
By CHUCK GREEN Despite a plethora of obstacles, there are prospective buyers chomping at the bit to purchase a home, according to experts. On Wednesday, Zillow Home Loans Senior Economist Matthew Speakman released a statement on mortgage rates dropping after a report on inflation showed that price pressures may finally be easing. “The arrival of weaker-than-expected October Consumer Price Index data was just the sign investors had been waiting for, and markets viewed it as a signal that the Federal Reserve may finally take its foot off the brakes as it determines the path forward for monetary policy,” Speakman said. “Bond yields tumbled as a result and mortgage rates – which had spent the last few weeks oscillating at or…
Mortgage loan application volume rose last week, responding to a dip in rates, according to the Mortgage Bankers Association’s weekly survey. The adjusted Market Composite Index, a measure of mortgage loan application volume, increased by 2.7%. The 30-year fixed rate once again fell below 7%, propelling potential buyers into action. Rates have been going back and forth between the high 6.90s and low 7s for several weeks. This drop from 7.14% to 6.90% is the largest single-week decline since July 2022. The adjusted purchase index rose 4%, while the unadjusted purchase index decreased by 10% and was 46% lower YOY. “Application activity, adjusted to account for the Veterans Day holiday, increased in response to the drop in rates – driven…
Origination activity continues to sink as the market corrects, with refinances seeing major drops. Black Knight’s October 2022 Originations Market Monitor report found that rate lock dollar volume dropped 14.3% month-over-month to its lowest level since February 2019. Refinances have been hit especially hard, making up just 14% of all origination activity in October. Cash-out refis, which had previously seemed resilient due to widespread equity gains, fell 25.1% from September and are down 83.6% YOY. Rate/term refis sank an additional 15.7% and are now down 92.6% YOY. “With interest rates now at their highest level in 20 years, the refi market is rapidly approaching a bottom,” said Scott Happ, president of Optimal Blue, a division of Black Knight. “Indeed, our…
First Home Mortgage is launching a rate discount program for first-time homebuyers, the company announced in a press release. The program, First Home Advantage, gives eligible first-time homeowners access to lower interest rates. “We are excited to provide such a timely program,” said First Home Mortgage founder and CEO David Waters. “The First Home Advantage program levels the playing field for those who may have been overlooked in the past due to credit score issues.” Eligibility is based on annual income and geography, with different income limits in different areas. Borrowers in high-cost regions could be eligible with incomes as high as $168,600 a year. First Home says it created the program because more than 40% of loans it originated…
Mortgage interest rates tipped back over 7% last week, continuing to yo-yo back and forth from the high 6.90s, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey found that the 30-year fixed-rate mortgage averaged 7.08%, up from 6.95% the week prior. A year ago at this time, the 30-year FRM averaged 2.98%. “As the housing market adjusts to rapidly tightening monetary policy, mortgage rates again surpassed 7%,” said Sam Khater, Freddie Mac’s Chief Economist. “The housing market is the most interest-rate sensitive segment of the economy, and the impact rates have on homebuyers continues to evolve. Home sales have declined significantly and, as we approach year-end, they are not expected to improve.” Purchase loans ticked up recently after a…
