The Refi Market is About to Bottom Out, says Black Knight while NAR Economist Predicts That Home Prices Won’t Decrease in 2023

NAR Economist

NAR Economist Predicts That Home Prices Won’t Decrease in 2023.

Lawrence Yun, the chief economist for the National Association of Realtors (NAR), examined the home market’s current position and provided his market forecast for 2023 on Friday at the NAR conference in Orlando.

Yun said that although high mortgage rates, slow home sales, and rising inflation have had a significant negative impact on the housing industry, it is unlikely that these problems will result in a decline in home prices in 2023. He also noted that even if mortgage rates remain at or close to 7%, we might see a further increase in home prices in 2023. Yun’s market predictions are counter to the majority of analysts. Most experts are predicting home values to decline by 15% or more.

Although Yun anticipates a 1% rise in the national median home price the following year, he pointed out that some markets will see price increases while others will see price drops.

Additionally, Yun anticipates a 7% drop in home sales in 2023. He projects a 10% increase in home sales and a 5% increase in the country’s median home price for 2024, leading to a significant resurgence in home sales.Whereas the view for 2023 was generally favorable, Yun voiced concern about the difference between mortgage and federal funds rates. “The gap between the 30-year fixed mortgage rate and the government borrowing rate is much higher today than it has been historically,” Yun said. “If we didn’t have this large gap, mortgage rates wouldn’t be 7%, they would be 5.8%. A normal spread would revive the economy. If inflation disappears, then we’d see less anxiety within the financial markets and lower interest rates, which would allow owners to refinance.”

The Refi Market is About to Bottom Out, says Black Knight

Mortgage loan rate locks have decreased significantly over the previous 12 months due to the slowing purchase and refinance activity brought on by the high mortgage rates, which ended October at 7.06%. The refinance market is getting close to the bottom despite the rising rates.

According to Black Knight, the decrease in rate lock volume was caused by a 25.1% drop in cash-out locks from September and an additional 15.7% drop in rate/term refi.

When property equity was close to all-time highs early in the year, cash-outs displayed some early resilience even as rates started to increase. However, rate/term refis have plummeted by a startling 92.6% year over year, and cash-out refis are currently down 83.6% compared to October 2021. 

Since Optimal Blue started monitoring the data in 2018, purchase mortgages account for the most significant percentage of rate locks at 86%. However, challenges to home affordability have continued to put downward pressure on purchase credit. By dollar volume, purchase locks declined 39% from October 2021 and 13% from September.

MBA Weekly Survey Nov. 16, 2022: Rates Fall; Applications Up 1st Time in 8 Weeks

According to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending November 11, mortgage applications increased for the first time in eight weeks as interest rates dropped below 7 percent. The outcomes for the week have been modified to account for Veterans Day.

On a seasonally adjusted basis, the Market Composite Index gained 2.7% over the previous week. The unadjusted Refinance Index dropped by 2%, and the number of mortgage applications for refinances fell from 28.1% the last week to 27.6% overall.

The seasonally adjusted Purchase Index went up 4% over the previous week. The share of FHA loans among all applications rose from 13.3% to 13.5%, and VA applications rose from 10.3% the prior week to 10.6%. The USDA’s percentage of all applications grew from 0.5% last week to 0.6%.

With points falling to 0.64 from 0.78 (including origination charge) for loans with an 80 percent loan-to-value (LTV), the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (more than $647,200) jumped from 6.50 percent to 6.51 percent on average.

Next week’s potential market-moving reports are:

  • Monday, November 21st – Chicago Fed National Activity Index
  • Tuesday, November 22nd – No Report
  • Wednesday, November 23rd – Initial Jobless Claims, New Home Sales (SAAR), FOMC Minutes
  • Thursday, November 24th – No Report
  • Friday, November 25th – 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.

California Platinum Loans

  https://californiaplatinumloans.com

Consumer Prices Rose 0.4% in October, Less Than Expected, as Inflation Eases while Purchase Applications Seen to Tick Higher Despite Growing Costs

Home Price Growth

Purchase Applications Tick Higher Despite Growing Costs

The number of mortgage applications generally decreased once again for the week ending November 4, according to the Mortgage Bankers Association (MBA). There was a slight uptick in purchase mortgage applications, reversing a six-week downward trend.

MBA’s Market Composite Index, which tracks the volume of all applications, fell by 0.1 percent more than a week earlier on a seasonally adjusted basis. At the same time, the Refinance Index dropped 4% and was 87% lower than it was during the same week last year. 

The seasonally adjusted Purchase Index increased by 1% from a week prior. Currently, the number of applications is 41% less than in the same week in 2021.

Average mortgage loan sizes increased to $368,100 from $357,900. Purchase loans increased from $394,900 to an average of $403,000 over the past week.

According to Joel Kan, MBA’s vice president, and deputy chief economist, in response to reports that the Federal Reserve will keep boosting short-term rates to combat high inflation, mortgage rates increased somewhat last week.

Early Indications Show September Home Prices Falling Less Than July/August

Home price indices (HPIs) for August were released by Case Shiller and the FHFA around two weeks ago. They both agreed that prices had fallen slightly more quickly than in July. For several reasons, the current state of home price changes is more intriguing than usual. First, it was only these past two months’ worth of HPIs that the statistics showed that prices had remained stagnant since this summer. Additionally, because Q3 is the final quarter of data required to determine a new conforming loan cap, July and August are crucial for this to occur.

An updated HPI is included in Black Knight’s Mortgage Monitor. According to this data, prices fell in September at a rate that was nearly half that of July and August. It’s not improbable that FHFA data, which will be released at the end of the month, would show a similar dip, given that Black Knight’s yearly appreciation level has dropped to 10.7%. Hypothetically, the FHFA price appreciation would drop to precisely 10.0% year over year if the ratios remained the same, and the new implied conforming loan ceiling would be at about $711,800.

Consumer Prices Rose 0.4% in October, Less Than Expected, as Inflation Eases

While inflation still threatens the U.S. economy, the consumer price index climbed less than predicted in October, suggesting that pressures may be beginning to ease. According to data released by the Bureau of Labor Statistics on Thursday, the index, a comprehensive gauge of prices for goods and services, rose 0.4% for the month and 7.7% from a year earlier. 

When volatile prices for food and energy are excluded, the so-called core CPI grew 0.3% for the month and 6.3% annually, above the corresponding estimates of 0.5% and 6.5%.

In October, workers received yet another pay reduction due to rising inflation. In a separate BLS press release, actual average hourly earnings showed a 0.1% monthly fall and a 2.8% annual decline.

Even if the inflation rate has slowed down, it still exceeds the Fed’s 2% target, and the report’s various sections suggest that the cost of living is still high. Inflation control is essential as we approach the holiday shopping season. According to a recent survey by Clever Real Estate, around one-third of Americans intend to reduce their spending this year due to rising costs.

Next week’s potential market-moving reports are:

  • Monday, November 14th – NY Fed 1-year Inflation Expectations
  • Tuesday, November 15th – Real Household Debt, Real Mortgage Debt 
  • Wednesday, November 16th – NAHB Home Builders’ Index, Business Inventories
  • Thursday, November 17th – Initial Jobless Claims, Building Permits, Housing Starts
  • Friday, November 18th – Existing Home Sales, Leading Economic Indicators

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.

California Platinum Loans

  https://californiaplatinumloans.com

Thriving Home Price Growth in Less Expensive Areas as Other Regions Moderate as MBA Nov. 2 Weekly Survey: Applications Fall 6th Straight Week

Home Price Growth in Less Expensive Areas

MBA Nov. 2 Weekly Survey: Applications Fall 6th Straight Week

Mortgage applications decreased for a sixth consecutive week, despite a slight decline in mortgage rates, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Oct. 28.

On a seasonally adjusted basis, the Market Composite Index decreased by 0.5%, and the unadjusted refinance index rose by 0.2% from the previous week. From 28.2% of all applications, the refinance percentage of mortgage activity increased to 28%. At the same time, the seasonally adjusted Purchase Index fell by 1%.

FHA applications dropped from 13.9% the week before to 13.5%. The percentage of VA applications dropped from 10.7% of all applications the previous week to 10.3% this week. The USDA’s portion of all applications stayed at 0.5% of the prior week.

“The 30-year fixed rate decreased for the first time in over two months to 7.06% but remained close to its highest since 2002,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “Apart from the ARM loan rate, rates for all other loan types were more than three percentage points higher than they were a year ago. These elevated rates continue to put pressure on both purchase and refinance activity and have added to the ongoing affordability challenges impacting the broader housing market, as seen in the deteriorating trends in housing starts and home sales.“

Kan added that refinance applications ran more than 80% behind last year’s rate, although most homeowners had locked in much-reduced rates. He said the refinancing proportion of applications was 28.6%, the seventh consecutive week where it fell below 30%.

CoreLogic: Thriving Home Price Growth in Less Expensive Areas as Other Regions Moderate

Even though home sales and the number of purchase mortgages continued their months-long declines in September, annual home price increases remained in the double digits. Compared to the same month in 2021, the CoreLogic Home Price Index (HPI), the first look each month at prices from the previous two months, increased by 11.4% this year. Even if mortgage rates are rising, appreciation is still substantial but has significantly decreased from the annual pace of 20.9% that it was in both March and April.

In July, month-to-month variations became negative. The growth rate dropped from August to September by 0.5%.

Homebuyer enthusiasm for properties in relatively cheaper places is probably being fueled by home prices in more expensive states on the West Coast and Northeast. According to CoreLogic, the states in the Southeast may benefit from this out-migration. Florida has led the country in home price growth for eight straight months. 

Additionally, CoreLogic projects the direction of price growth over the next year. According to the HPI, annual home price growth in the United States will continue to decelerate over the following 12 months, reaching 3.9% by September 2023, and prices won’t change between September and October 2022.

Next week’s potential market-moving reports are:

  • Monday, November 7th – Consumer Credit
  • Tuesday, November 8th – NFIB Small Business Index 
  • Wednesday, November 9th – No Report
  • Thursday, November 10th – Initial Jobless Claims, Continuing Jobless Claims, Federal Budget
  • Friday, November 11th – Consumer Sentiment

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.

California Platinum Loans

  https://californiaplatinumloans.com