Daily Rate Update: April 18th-22nd

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Thursday – April 21, 2022

Home borrowing costs rose this week as they continue their trek higher. Freddie Mac reports that the 30-year fixed-rate mortgage rose to 5.11% this week from 5% last week with an average 0.8 in points and fees. A year ago the rate was 2.97%. The 15-year rose to 4.38% from 4.17%, also with a 0.8 point. A year ago it was 2.35%. Sam Khater, Freddie Mac’s Chief Economist said, “While springtime is typically the busiest homebuying season, the upswing in rates has caused some volatility in demand. It continues to be a seller’s market, but buyers who remain interested in purchasing a home may find that competition has moderately softened.”

In economic news, Weekly Initial Jobless Claims hover at a 52-year low of 184,000 while the Philly Fed Manufacturing Index fell to 17.6 in April from 27.4 in March. The date had little impact on the markets with bond prices lower, stocks higher on solid earnings from Tesla and United Airlines. Of the 12% of S&P 500 companies that have reported, 80% have beaten earnings expectations.

Courtesy of Mortgage Market Guide 

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Wednesday – April 20, 2022

Existing Homes Sales in March fell 2.7% from February to an annual rate of 5.77 million units versus the 5.80 million expected, reports the National Association of REALTORS®. It was the second straight monthly loss, with declines seen in three of the four major regions across the U.S. Sales were down 4.5% from a year ago. The median home price was $375,300, up 15.0% from March 2021 ($326,300) with annual prices rising in each region. This marks 121 consecutive months of year-over-year increases for median prices, the longest-running streak on record. Inventories inched higher to two months worth of homes for sale on the market, or 950,000 units.

Mortgage rates jumped last week to their highest level in 12 years for the week ending April 15, 2022, reports the MBA. The 30-year fixed-rate mortgage rose to 5.20% with 0.66 in points. Within the data it showed that the Market Composite Index, a measure of total mortgage application volume, fell 5%, the Refinance Index decreased 7.7% while the Purchase Index saw a loss of 3. Spokesprson Joel Kan said, “Ongoing concerns about rapid inflation and tighter US monetary policy continued to push Treasury yields higher, driving mortgage rates to their highest level in over a decade.”

Freddie Mac released its quarterly forecast this week and here are the highlights. The 30-year fixed-rate mortgage is to average 4.6% for full-year 2022 before reaching 5% for full-year 2023. It averaged 3.8% in Q1 2022. Total originations to decline from the high of $4.8 trillion in 2021 to $3.1 trillion in 2022 and $2.8 trillion in 2023. Purchase mortgage originations will grow from $1.9 trillion in 2021 to $2.1 trillion in 2022, and to $2.2 trillion in 2023. Freddie Mac anticipates refinance activity will slow from $2.8 trillion in 2021 to $960 billion in 2022 and to $535 billion in 2023.

Courtesy of Mortgage Market Guide 

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Tuesday – April 19, 2022

A New York Fed Housing Survey (consumer) revealed that Americans feel that costs for rent and all housing-related costs are set to spiral. Also, households feel that the 30-year fixed-rate will hit 6.7% a year from now and 8.2% in three years. The survey went on to read that households expect a sharp rise in rents over the next twelve months: on average, respondents expect rents to increase by 11.5%. This increase was even more pronounced among current renters, who expect rents to rise by 12.8% one year from now.

The U.S. Census Bureau reports that March Housing Starts rose 0.3% from February to an annual rate of 1.793 million units versus the 1.745 million expected. Starts were up 4% from March 2021. Single-family starts fell 1.7% monthly and 4.4% annually. Building Permits, a sign of future construction, were up 0.4% to an annual rate of 1.873 million units. Multi-family construction jumped 7.5% monthly and surged 28% annually.

Redfin reports almost one-third of homeowners to have a mortgage rate well below current levels. The technology-powered real estate brokerage reports that 51% have a mortgage rates below 4%; the current conforming 30-year fixed-rate is 5%. That is up from the all-time low of 2.65% hit back in early January 2021. This is leading current owners to remain in their homes for selling and purchasing a new home would cost more every month. That is why the market has seen home listings decrease.

Courtesy of Mortgage Market Guide 

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Monday – April 18, 2022

Higher mortgage rates and frothy home prices are early indicators of homebuyer activity faltering further as mortgage rates are at 5% for the 30-year fixed. This is pushing more sellers to drop asking prices as new listings decline 7% from a year ago, reports Redfin. The median asking price rose to $397,747, which brings the typical homebuyer’s monthly payment up 35% year over year to an all-time high of $2,288.

The MBA reports that March new home purchase mortgage applications rose 10% from February but were down 5% from a year ago. By product type, conventional loans made up 76.6% of loan applications, FHA loans 13%t, RHS/USDA loans 0.2% and VA loans 10.2%. The average loan size of new homes increased from $432,359 in February to $436,151 in March.
“Mortgage applications for new home purchases increased in March, which is consistent with typical seasonal trends and a sign of strong underlying demand for housing,” said spokesperson Joel Kan.

Oil prices are back on the rise after the Organization of the Petroleum Exporting Countries (OPEC) has reported lower production. West Texas Intermediate has risen to $109 after hitting $92 last Monday. The national average price for a regular gallon of gasoline is $4.08 down for the record high of $4.33 in March. However, GAS Buddy is forecasting that gas prices could rise $0.30 in the next few week.

Courtesy of Mortgage Market Guide 

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