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Mortgage Applications Set a Record for the Third Straight Week

March 25, 2019


Lower rates are not giving mortgage demand any sizable boost, except when it comes to higher-end homes.

Total mortgage application volume rose 1.6 percent last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 1.8 percent higher than a year ago.

The gains came mostly from refinance volume, which is highly rate-sensitive. Refinance applications rose 4 percent for the week and were 3.5 percent higher than a year ago. Interest rates had been higher last year, but as rates now fall, more borrowers can benefit from a refinance.

“Mortgage rates declined once again last week, as concerns about the slowing global economy and status of Brexit continued to drive investors’ demand for U.S. Treasuries, ultimately pushing yields lower,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting.

Mortgage applications to purchase a home, however, did not respond substantially. Purchase volume increased 0.3 percent for the week and was 1 percent higher than a year ago.

“Entry-level housing supply remains weak and is likely hindering some would-be first-time buyers from finding a home,” Kan said. “This, along with faster growth in the higher price tiers, is why the average loan application size has risen to a new high for three straight weeks.”

Source: CNBC


Homebuilder Sentiment Holds Steady Despite a Decline in Mortgage Rates

The nation’s homebuilders are feeling positive about their business, but not as much as they did a year ago.

A monthly sentiment measure held steady at 62 from February to March, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The index stood at 70 in March 2018. Anything above 50 is considered positive.

“Builders report the market is stabilizing following the slowdown at the end of 2018, and they anticipate a solid spring home buying season,” said NAHB Chairman Greg Ugalde, a homebuilder and developer from Torrington, Connecticut.

Mortgage rates rose throughout most of last year but have since fallen to below year-ago levels. That should help make all homes more affordable, but new homes come at a higher price than similar existing ones.

Weak affordability has been the biggest problem in the new home market, as builders have largely focused on move-up homes rather than cheaper entry-level products. The median price of a new home sold in January was down nearly 4 percent annually, according to the U.S. Census. That was not necessarily because builders were lowering prices, but because a larger share of entry-level homes sold that month. Sales in January fell to a three-month low.

“More builders are saying that lower price points are selling well, and this was reflected in the government’s new home sales report released last week,” said Robert Dietz, NAHB’s chief economist. “Increased inventory of affordably priced homes — in markets where government policies support such construction — will enable more entry-level buyers to enter the market.”

Builders say they continued to have trouble building lower-priced homes, however, due to shortages of skilled labor and buildable lots.

Of the index’s three components, sales expectations in the next six months rose 3 points over the past month to 71, current sales conditions increased 2 points to 68, and traffic of prospective buyers fell 4 points to 44. Buyer traffic has been in negative territory for several months.

Looking at three-month moving averages, builder sentiment in the Northeast rose 5 points to 48, the South was up 3 points to 66 and the West increased 2 points to 69. Sentiment in the Midwest fell 1 point to 51.

Source: CNBC

Weekly Mortgage Applications Hit a Record, But Not a Healthy One for Housing

March 18, 2019


Mortgage interest rates are now decidedly lower than a year ago, and home shoppers are buying in, but most are wealthier consumers purchasing more expensive homes.

U.S. New Home Sales Hit 7 Month High, Services Sector Rebounds

March 11, 2019


Sales of new U.S. single-family homes rose to a seven-month high in December, but November’s outsized jump was revised lower, pointing to continued weakness in the housing market.


Other data last week showed an acceleration in growth in the vast services sector in February, powered by a surge in new orders. But hiring appeared to be slowing, with a measure of services industries employment dropping to a six-month low.


The moderation in the pace of hiring fits in with expectations of slower economic growth as the stimulus from a $1.5 trillion tax cut and increased government spending ebbs. The economy’s outlook is also being clouded by slowing growth in China and Europe.


The Commerce Department said new home sales increased 3.7 percent to a seasonally adjusted annual rate of 621,000 units, the highest level since May 2018. November’s sales pace was revised down to 599,000 units from the previously reported 657,000 units.


Economists polled by Reuters had forecast new home sales, which account for about 11.2 percent of housing market sales, falling 8.7 percent to a pace of 600,000 units in December.


New home sales are drawn from permits and tend to be volatile on a month-to-month basis. They fell 2.4 percent from a year ago. Single-family home sales rose 1.5 percent in 2018.


The release of the December report was delayed by a five-week partial shutdown of the federal government that ended on Jan. 25.


The housing market hit a soft patch last year amid higher mortgage rates, expensive lumber as well as land and labor shortages, which led to tight inventories and less affordable homes. Reports last month showed homebuilding dropping to more than a two-year trough in December and home resales in January hitting their lowest level since November 2015.


Though house price inflation has slowed and mortgage rates are hovering at 12-month lows, economists expect the housing market to remain weak for a while because of persistent land and labor shortages. Investment in homebuilding contracted 0.2 percent in 2018, the weakest performance since 2010.


The soft housing data added to weak December construction spending, retail sales, factory orders, exports and business spending plans on equipment in setting the economy on a slower growth path in the first quarter.


Source: CNBC


VA loans skyrocket in popularity for first-time homebuyers


Servicemembers are far more likely to opt for a Department of Veterans Affairs mortgage than any other type of loan when buying their first home, a new report from the Consumer Financial Protection Bureau shows.


The CFPB report, the first of its kind, looks at mortgages for first-time homebuying servicemembers, shows that in 2007, servicemembers buying their first home used VA loans approximately 30% of the time. By 2016, that figure had risen to 78%, meaning more than three out of four servicemembers bought their first home using a VA loan.

Conversely, with servicemembers increasingly preferring VA loans, their share of conventional mortgages fell precipitously.


“The greater share of VA loans among servicemembers was part of a larger shift away from conventional to government-guaranteed mortgages between 2006 and 2009 for both servicemembers and non-servicemembers,” the CFPB noted in its report.


According to the CFPB, conventional mortgages made up approximately 60% of all loans among first-time homebuying servicemembers in 2006 and 2007, but this share fell all the way to 13% by 2016.


As for why the shift has taken place, the CFPB said that the features of the VA loan, namely “allowing a purchase with no down payment and without mortgage insurance and providing stronger loan-servicing protections than many other mortgages,” make the loan far more attractive than other options among first-time buyers.


Beyond the frequency at which servicemembers are buying their first houses with a VA loan, the median loan amount on those loans is also rising.


According to the CFPB report, the median servicemember first-time homebuyer VA loan amount increased in nominal dollars from $156,000 in 2006 to $212,000 in 2016, which closely tracks with the median value of conventional home loans taken out by non-servicemembers during that same time.


Additionally, early delinquency rates (the share of loans 60 days or more delinquent within one year of origination) have fallen for both prime and non-prime first-time homebuyers using VA loans.


As the CFPB notes, among non-prime borrowers, VA loan delinquency rates for servicemembers peaked in 2007 at approximately 7% before falling to just over 3% in 2016.


Delinquency rates for prime borrowers using VA loans also fell from 2006 through 2016 as the market improved.


Source: | Ben Lane

Qualify for a Mortgage With Assets Instead of Income

March 6, 2019


If you have funds in the bank, the SmartFunds loan product may be the smart way to qualify for a mortgage. 

The No. 1 Sign That We May See a Cooler Spring Home-Buying Market

March 4, 2019


This year’s spring home-buying season, when the frenzy typically kicks off for the year, appears to be off to a slow start—particularly in and around some of the nation’s most expensive, coastal cities.


That’s because for the fifth month in a row, the number of homes on the market surged 6% in February compared with the same time the year before, according to ‘s recent inventory report. Until last year, the nation had seen several years of housing shortages.


“It suggests that the housing market is starting on a cooler footing this spring than last spring,” says’s chief economist, Danielle Hale. That’s partly a result of the long-term housing shortage that pushed prices up so high, fewer people were able to actually buy a home. “Sales have slowed. … Affordability is a challenge.”

Which markets are seeing the biggest boost in homes on the market?

The big, pricey, tech-fueled cities on the West Coast saw the greatest influx of homes on the market. The nation’s most expensive market, Silicon Valley’s San Jose, CA, experienced a 125% jump in the metro area in February compared with a year earlier. (The metropolitan area includes the main city and the surrounding suburbs.) The median home price in the metro is a whopping $1,079,800—and that’s down 10% from the previous year!


That sky-high price tag is one of several reasons buyers suddenly have more choices in Silicon Valley—if they have the means.


“Prices are so high there that even with a high-paying job, it’s difficult to afford homes,” says Hale. Therefore, residences are taking a little longer to sell.


“Builders are definitely trying to build in that area. Buyers are being a bit more hesitant [to purchase properties], while existing residents who are thinking about downsizing or retiring or moving somewhere else think now is a good time to put their home on the market, while home prices are still high.”


Overall, the most selection is on the high end. The number of homes priced at $750,000 and above shot up 11% year over year in February.


That’s because cheaper properties are most in demand, so they sell fast. And there simply aren’t as many buyers with large-enough bank accounts to snap up the pricey homes.


Source: | Clare Trapasso

Weekly mortgage applications continue to grow as lower rates seem here to stay

It’s almost as if consumers didn’t believe interest rates would stay low, but so far this year they have. Now, finally, consumers are responding.


Mortgage application volume increased 5.3 percent last week from the previous week and was 0.4 percent higher than a year ago, the Mortgage Bankers Association said in its seasonally adjusted index that accounted for the President’s Day holiday.


“Mortgage rates were little changed last week, but as we anticipated, homebuyers are responding favorably to this more stable rate environment,” said Mike Fratantoni, MBA senior vice president and chief economist.


With the spring buying season just getting started, house hunters may be reacting to lower rates, even as prices are still historically high.


Mortgage applications to purchase a home rose 6 percent for the week and were 3 percent higher annually. Purchase demand is still running well below historical norms, however, as today’s buyers are facing the weakest affordability levels in a decade. Home prices are still rising faster than incomes, and first-time buyers are having trouble saving for down payments due to high levels of student loan debt and high rents.


Applications to refinance a home loan increased 5 percent from the previous week and were 3 percent lower annually. Refinance volume cratered last year, so the annual comparisons are becoming smaller, simply because refinance volume has essentially flat lined at this low level. Volume did hit the highest level in a month because jumbo loan borrowers tend to be more responsive to lower rates and banks compete hard for their business, reducing rates.


“Therefore, it was not surprising to see the average rate for a 30-year fixed jumbo loan drop to its lowest level since January 2018,” Fratantoni said.

Mortgage rates were largely unaffected by Tuesday’s testimony from Federal Reserve Chairman Jerome Powell before Congress.


Source: CNBC

Weekly Mortgage Applications Rise, a Sign of Hope for the Spring Homebuying Season

February 25, 2019


Mortgage application volume increased 3.6 percent last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.


Applications to purchase a home increased 2 percent for the week — the first uptick in a month — a sign of optimism in the housing market.


“After four consecutive declines, purchase applications increased almost 2 percent over the week and 2.5 percent compared to a year ago — showing some promise as we edge closer to the spring homebuying season,” said Joel Kan, MBA associate vice president.


Some real estate agents have reported surprise at better-than-expected traffic at open houses this month, and the new numbers seem to confirm those perceptions.


Still, overall volume was 2.3 percent lower than a year ago.


The biggest boost came from applications to refinance a home loan, which are far more sensitive to weekly interest rate moves. The 30-year fixed rate was essentially unchanged. Homeowners clearly saw an opportunity, as refinance applications increased 6 percent from the previous week. They were 8 percent lower than a year ago.


The positive numbers in mortgage application volume are in line with this month’s homebuilder sentiment, which rose 4 points, according to a monthly survey from the National Association of Home Builders/Wells Fargo Housing Market Index. That index showed an increase in buyer traffic, sales expectations and current sales conditions in February.


Builders still point to a concern in affordability, however, which is at a 10-year low, according to the index’s data. There continues to be a critical shortage of affordable single-family homes for sale.


“Ongoing job creation and solid household formations will keep demand firm, but builders will continue to grapple with supply-side headwinds that will dampen more vigorous growth in the single-family sector,” said NAHB chief economist Robert Dietz.


Source: CNBC


Homebuilder Sentiment Rises as Interest Rates Stay in Check


The nation’s homebuilders are feeling better about the state of their industry as lower interest rates boost consumer confidence.


Builder sentiment rose 4 points to 62 in February, according to a monthly survey from the National Association of Home Builders/Wells Fargo Housing Market Index. The survey stood at 71 last February. Anything above 50 on the index is considered positive.


Sentiment fell at the end of last year, largely because mortgage rates jumped in the fall, hurting affordability. Newly built homes come at a price premium to existing homes, so higher interest rates can have an outsize effect on the new construction market. Interest rates then fell sharply at the end of the year and have remained lower this year.


“Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment,” said NAHB Chairman Randy Noel.

“In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season.”


Sales of newly built homes have been hard to read, due to the recent government shutdown and delays in reporting from the U.S. Census. Several sources noted a sharp decline in sales toward the end of the year, with a slight improvement in January. Mortgage applications to purchase newly built homes were flat in January compared with January 2018, according to the Mortgage Bankers Association. The cost to build homes continues to be a concern.


“Rising costs stemming from excessive regulations, a dearth of buildable lots, a persistent labor shortage and tariffs on lumber and other key building materials continue to make it increasingly difficult to produce housing at affordable price points,” said NAHB Chief Economist Robert Dietz.


Housing starts and builder permits data have not been reported since last year, but they have been running well below demand and historical averages since the housing crash. While single-family starts are slowly rising, there continues to be a critical shortage of homes for sale, especially at lower, more affordable prices.


Builders are still focused most on the move-up sector of the housing market, as the costs of land, labor and materials continue to run high, making it more difficult financially to build lower-priced homes.


Source: Ben Lane | HousingWire

Investor Loans Make Complex Financial Moves Simple

February 20, 2019


When you’re looking for a home loan, there are many factors that determine the terms and interest rates you’ll receive from lenders. One of these is whether you’re buying a first home or an investment property. Second loans may be more difficult to secure than mortgages for your primary personal home. The issues around securing a second loan are complicated by the fact that some of your finances are tied up in paying for the first house, potentially making lenders hesitant.

If you work with partners that understand and plan for the process of buying or refinancing an investment property, however, you can find options that suit your needs and situation, with favorable terms that will help you make this potentially complex transaction very simple. That is the kind of service you get when you apply for our SmartVest loan, part of the Smart Series aimed directly at individuals with investment properties.

Unique features of the SmartVest loan

When you’re ready to branch out from a first home and start investing in properties, your finances will have naturally grown beyond the state they were in at the time you bought the house where you live. A SmartVest loan takes this more developed situation into account and offers features that work for you. For instance, rather than being based on a debt-to-income ratio calculation, the approval process depends on your cash flow.

SmartVest loans can be flexible, with options ranging from 30-year fixed-rate mortgages to adjustable-rate financing plans with 5/1, 7/1 and 10/1 versions. The loan can cover values of up to $1.5 million, and you may be eligible if your FICO credit score is 640 or higher. By seeking out this loan designed to assist you in assembling a multi-property portfolio, you turn a potentially difficult application process into a focused and streamlined transaction.

Non-traditional loans for any situation

Qualified Mortgages are the default offering in the home loan space, but they’re not right for every situation, due to their relatively inflexible terms. This is where the Smart Series, SmartVest included, shows its true value. When you want to receive features such as an interest-only loan, non-qualified mortgages are the way to find that type of coverage.

When working with your loan officer, you don’t have to limit your scope. Exploring options based on your current financial status may reveal new offerings, including those for people with 2-4 properties under their control, as well as condominium units. Investing in real estate and using this asset as a major source of income is fundamentally different from just owning your own house, and our options reflect this situation, in all its complexity and promise.

The simplified loan process, combined with the specialized and favorable terms, allow you to worry less about getting your investment property funded. SmartVest and the rest of the Smart Series – including options such as SmartCondo for condominium purchases and SmartFunds for situations in which your money is mostly in savings rather than income – show off the best of non-qualified mortgage options. They’re not just different from basic loans but serve as specialized and targeted financial possibilities.