Mortgage Rates

Largest Drop in Mortgage Rates in 41 Years

Last week saw the most significant weekly drop in mortgage rates since November 1981, falling by almost a half percent.

According to Freddie Mac, the typical 30-year fixed mortgage rate decreased from 7.08% to 6.61%. The dip comes after a 10-year Treasury rate sharply fell last week after data from the government revealed that inflation slowed last month. The rapid price drop provided some respite to still-active homebuyers and sellers who were under pressure from high prices, which increased activity in the otherwise slow market.

“The drop in rates incentivized buyers to rush and try to lock rates this weekend, the difference in demand was significant,” said Adriana Perezchica, president of Via Real Estate. “Until recently, buyer demand had weakened as borrowers have had a hard time keeping up with higher rates and home prices. We don’t know how long this dip in rates will last…and buyers are absolutely racing to lock a rate.“

As per the Mortgage Bankers Association‘s most recent survey of applications, demand for mortgages increased last week as the number of purchase applications rose by 4%.

October Sees 29% Drop in New Home Mortgage Applications

According to data from the Mortgage Bankers Association (MBA), mortgage applications for new home purchases have slowed down in October on both a monthly and annual basis.

Based on the most recent data from the MBA’s builder application survey, there were even fewer new home purchases in October (-13%) than in September and a 28.6% decrease from last year. The data does not include the usual seasonal pattern corrections.

The abrupt increase in mortgage rates to 7%, according to MBA vice president and deputy chief economist Joel Kan, reduced both the overall demand for new homes and the spending power of many potential buyers, which had a negative impact on the results of new home purchases.

Kan further observes that the average loan size dropped to $400,616 from $406,767 the month prior and an 8% reduction from its peak in April of this year. The MBA cited slower home price growth and a decline in demand for more expensive properties as the causes of the most recent “moderation” in loan amounts.

Conventional loans accounted for 68.6% of loan applications in October, followed by FHA loans (20%), Veterans Affairs loans (11%), and USDA rural housing service loans (0.3%).

Existing Home Sales Fall 9th Straight Month

According to the National Association of Realtors report, a seasonally adjusted annual rate of 4.43 million existing homes was sold overall in October, a 5.9% decrease from September, marking the ninth consecutive monthly decline. Sales were down 28.4% yearly from 6.19 million in October 2021.

A seasonally adjusted annual rate of 3.95 million single-family homes was sold in October, a decrease of 6.4% from 4.22 million in September and 28.2% a year earlier. Also, the price of an existing single-family home jumped to $384,900, an increase of 6.2% over the previous year. 

The data further reports that there were 1.22 million housing units available nationwide at the end of October, a 0.8% decrease from September and one year earlier (1.23 million). At the current sales rate, unsold inventory has a 3.3-month supply, which is an increase from 2.4 months and 3.1 months in September.

As prices increased across the board, the median existing-home price for all dwelling types in October rose to $379,100, 6.6% from October 2021 ($355,700). The longest streak in history has been 128 months straight months of year-over-year growth.

Next week’s potential market-moving reports are:

• Monday, November 28^th – No Report
• Tuesday, November 29^th – U.S. Home Price Index, Consumer Confidence Index 
• Wednesday, November 30^th – Job Openings, Quits, Pending Home Sales Index
• Thursday, December 1^st – – Initial and Continuing Jobless Claims, Construction Spending
• Friday, December 2^nd – Unemployment Rate, Average Hourly Earnings

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

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

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