As with the law of supply and demand, Unusual Holiday Home-Buying Surge Pushes Mortgage Demand Higher for everyone this season

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 weeks 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

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