Freddie Mac says that the trend toward increasing levels of cash out refinancing paused during the first quarter of 2016. The share of refinancing in which homeowners took a new mortgage that was at least 5 percent larger than their old mortgage eased back from 42 percent in the fourth quarter of 2015 to 40 percent. The volume was also down quarter-over-quarter from $11.0 to $10.9 billion.
During the housing bubble Americans pulled an unprecedented amount of equity out of their homes both through cash-out refinancing and through taking home equity lines of credit (HELOC). From the second quarter of 2005 through the fourth quarter of 2007 a minimum of 72 percent of all refinancing contained a cash out component. Both the percentage of cash-outs and the volume of equity taken peaked in the second quarter of 2006 at 89 percent and $84.0 billion respectively....(read more)
Mortgage rates fell modestly today despite some weakness in underlying bond markets. Typically, when bond yields (which move inversely with bond prices) are rising, mortgage rates tend to be higher as well. That wasn't the case today for a few reasons. The most obvious reason is that bond markets didn't move that much.
Slightly more subtle is the fact that most of today's trading activity took place within yesterday's range, and yesterday ended on a low note for yields. In other words, bonds yields were only "higher" when compared to yesterday afternoon's levels, but roughly in line with everything else....(read more)
Both S&P/Case-Shiller and Black Knight Financial Services report that home prices continued to rise in April. Their numbers, while covering different universes and utilizing different methodology, came in at fairly similar levels.
The Case-Shiller National Home Price Index rose 5.0 percent on an annual basis in April, a slightly slower rate of appreciation than in March when the gain was 5.1 percent. The 10-City Composite Index posted a 4.7 percent annual increase, and the 20-City rose 5.4 percent. Both city indices echoed the National Index, with their gains slowing by 0.1 percentage point from March.
Nine of the 20 cities reported greater price increases for the year ended in April than they had for the year ended in March. Once again the highest rates of year-over-year price gains were reported in Portland at 12.3 percent, Seattle at 10.7 percent, and Denver with a 9.5 percent increase....(read more)
Mortgage rates move lower again today following last week's Brexit headlines (the U.K.'s vote to leave the European Union). Indeed it's hard to turn on the TV, computer, or radio without hearing about Brexit. Global financial markets are still in the throes of the "initial reaction" time frame. That means selling stocks and buying bonds. When investors buy bonds, rates fall--albeit at a bit slower pace for mortgage rates compared to other popular rate benchmarks (like 10yr Treasury yields).
There's no telling how long this "initial reaction" period will continue and what the longer term effects will be, but for now, the short term effects have been strongly positive for rates. The most prevalent conventional 30yr fixed quote is still 3.5% on top tier scenarios, but 3.375% gained a lot of ground today. With just a bit more improvement, the average lender would be at 3.375% for the first time since early 2013. This is also the lowest stably-maintained rate we've ever recorded (there were scattered instances of 3.25% back in 2012)....(read more)
Will the homeownership rate fall below 50 percent? Not a question most housing industry stakeholders want to think about, but some analysts are speculating that it could happen. Freddie Mac, in its June edition of Outlook, takes a look at some of those predictions.
The company's economists start out by reiterating their oft-stated conviction that 2016 will be the best year for housing in a decade. Despite a generally weak economy they expect housing to "be an engine of growth," with residential investment providing a direct boost and higher home equity contributing to consumer confidence and leading to higher consumer expenditures. But they concede that the outlook for homeownership is mixed....(read more)
Mortgage rates plummeted today following the surprise victory of the referendum for the U.K. leaving the European Union (aka "Brexit"). This joins the ranks as one of the few days in history where rates have moved a full eighth of a point in a single day. There have only been 9 instances in the past decade, and the most recent example was in October 2014. In that sense, it's the single best day for mortgage rates in more than a year, not to mention the fact that outright levels are getting very close to all-time lows....(read more)
After two years of supervision and examinations of mortgage servicers by the Consumer Financial Protection Bureau (CFPB) the agency has criticized the industry's level of compliance and issued an updated mortgage servicing exam manual. CFPB said, two years of examinations have convinced the agency that some servicers "continue to use failed technology that has already harmed consumers, putting the company in violation of the CFPB's new servicing rules."
New servicing rules which took effect in January 2014, arose out of experiences during the Great Recession when millions of borrowers fell behind in their mortgage payments and CFPB says, "many servicers were unable to provide the level of service necessary to meet homeowners' needs." Even before the crisis "the mortgage servicing industry at times experienced problems with bad practices and sloppy recordkeeping."
A third of home sales in March were all-cash transactions according to CoreLogic. This was a decrease of 2.8 percentages points, the company termed it a sharp drop, from February. CoreLogic also said that the average cash share of sales over the first three months of 2016 was 34.7 percent, the lowest for a first quarter since 2008.
Cash sales peaked in January 2011 at 46.6 percent of total home sales nationally, close to double the average share prior to the housing crash. If those sales continue to decline at the same rate as the February-March pace, CoreLogic estimates they will return to the "normal" 25 percent level by mid-2018....(read more)
Mortgage rates moved higher for the 5th day in a row as financial markets prepare for the results of the U.K. referendum on its European Union membership (aka "Brexit"). In general, rates are expected to rise if the U.K. remains in the EU, and rates could fall back toward recent lows if the U.K. votes to leave the EU. These expectations pertain only to short term (i.e. within a week or two of the decision tomorrow morning). From there--especially in the case of a "remain" vote, the next jobs report on July 8th would be especially important as it could have a big impact on the Fed rate hike outlook (the Fed recently said that Brexit and a potential shift in employment data are the two biggest hurdles preventing a rate hike)....(read more)
New home sales dropped back in May after a reported 16.6 percent surge the previous month, an increase that was revised down from what was first reported. The U.S. Census Bureau and Department of Housing and Urban Development said sales were at a seasonally adjusted annual rate of 551,000 units, down 6.0 percent from April but 8.7 percent ahead of the same month last year. At the same time, the April number was revised down from the 619,000 units previously reported to 586,000, cutting the percentage increase by a third.
Analysts provided a wide range of estimates for the May number, from 500,000 to 610,000 but with a consensus of 565,000. In reporting the predictions gather by Econoday, Bloomberg noted that lack of supply has been limiting sales and permits for new home construction are rising at only a 5 percent pace....(read more)