Fed Moves Up Timetables
On Wednesday, the Federal Open Market Committee said that it would accelerate its tapering of agency mortgage-backed securities and signaled that its schedule for increasing the federal funds rate would be pushed as well.
MBA Weekly Applications Survey December 8, 2021: Rates Drop; Refis Up
The Mortgage Bankers Association said Wednesday in its Weekly Mortgage Applications Survey for the week ending December 3rd that mortgage interest rates declined for the first time in four weeks, spurring an increase in refinancing activity.
The Market Composite Index gained by 2% over the previous week on a seasonally adjusted basis. The unadjusted Refinance Index rose 9% from the prior week, and the refinance percentage of total mortgage applications grew to 63.9 percent from 59.4 percent the week before.
The seasonally adjusted Purchase Index fell by 5% from the week prior. The FHA’s percentage of total applications grew to 9.9% from 8.9% the previous week. The share of overall applications submitted by veterans increased to 10.7%.
Home Purchase Sentiment Unfazed By Negative Economic SentimentM
Fannie Mae‘s November Home Purchase Sentiment Index reports that the US housing market remains solid despite rising economic negativity to its highest level in a decade (HPSI).
In November, the index fell 0.8 points to 74.7, with 74 percent of consumers believing now is a good time to sell a property and 29 percent considering it is an excellent time to buy. The HPSI was down 5.3 points from the same time last year.
However, any bad economic sentiment has yet to convert into a meaningful decline in actual demand for purchase mortgages. According to Mark Palim, Fannie Mae’s deputy chief economist, most of the pessimism about the economy’s direction is likely due to inflation. He also added that “An even greater share of consumers (particularly those with low and moderate incomes) expect mortgage rates to go up in the next 12 months, which may be a signal that some households plan to pull forward their home purchase plans; despite growing economic apprehension.”
Weekly Jobless Claims Fall To 184,000, Lowest Level In Over 52 Years
The Labor Department said Thursday that weekly unemployment claims fell to a new 52-year low last week as the US jobs market emerges from its pandemic-era rut.
The week ending December 4th saw 184,000 initial unemployment insurance claims, the lowest since September 6, 1969, when 182,000 were filed. Continuing claims increased from 38,000 to slightly under 2 million, a week below the headline number. The four-week moving average for continuing claims, which smooths out weekly volatility, fell by 54,250 to 2.03 million.
Next week’s potential market-moving reports are:
- Monday, December 13th – No Report
- Tuesday, December 14th – Small Business Index
- Wednesday, December 15th – Home Builders’ Index, Federal Reserve FOMC Announcement
- Thursday, December 16th – Initial Jobless Claims, Building Permits, and Housing Starts
- Friday, December 17th – No Report
As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047
Case-Shiller Home-Price Index Slows In September
In September, the S&P CoreLogic Case-Shiller national home-price index began to fall, with a year-over-year increase of 19.5 percent. Although this increase was significant, it was down from 19.8% the previous month. Moreover, the U.S. index declined on a month-to-month basis for the first time in 14 months. The 10-city and 20-city composite indexes also saw smaller annualized increases month over month, with the 10-city index growing 17.8% (down from 18.6% in August) and the 20-city index rising 19.1 percent (down from 19.6 percent in August).
According to CoreLogic deputy chief economist Selma Hepp, the slowdown is in part usual and seasonal. Still, there are signs of “a slow, but welcome return to a more sustainable balance between buyers and sellers.”
2022 Conforming Limits Rise 18 Percent to $647,200
The Federal Housing Finance Agency announced new conforming loan limits for mortgages that can be purchased by Fannie Mae and Freddie Mac (FHFA). The changes, as anticipated, reflect the near-unprecedented price increases of the previous year. The FHFA released third-quarter adjustments in its Housing Price Index as well (HPI). The expanded-data index grew by an average of 18.05 percent between the third quarter of 2020 and the third quarter of 2021. The baseline conforming limit will be raised by the same proportion.
Effective January 1st, 2022, the single-family residential unit limit in most U.S. counties will be $647,200, a $98,950 increase over the previous year’s ceiling of $548,250. The baseline limit for two-unit properties will be $828,700, and for three-unit houses will be $1,001,650. In most counties, a loan for a four-unit dwelling will be capped to $1,244,850.
Unusual Holiday Home-Buying Surge Pushes Mortgage Demand Higher
Mortgage demand increases due to an unusual rise in home purchases, just as the market is entering the typically slow Christmas season. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume increased by 1.8 percent last week compared to the prior week. The increase was mostly fueled by a 5 percent increase in home purchase applications for the week, the third consecutive weekly rise.
Mortgage rates have been steadily rising for the past month, and this trend continued last week. For 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less), the average contract interest rate rose to 3.24 percent from 3.20 percent. Mortgage refinancing applications were virtually unchanged from the prior week, gaining only 0.4 percent.
Next week’s potential market-moving reports are:
- Monday, December 6th – No Report
- Tuesday, December 7th – Unit Labor Costs Revision, Consumer Credit
- Wednesday, December 8th – Job Openings, Job Quits
- Thursday, December 9th – Initial Jobless Claims, Continuing Jobless Claims
- Friday, December 10th – Consumer Price Index, Federal Budget
As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047