Mortgage Weekly Roundup – July 27

July 27, 2018 Best Rate Referrals

Mortgage rates have stopped climbing, but home price increases and inventory challenges endure. Meanwhile, lower-income consumers are fueling the economy with increased auto and credit card debt. Some first-time home buyers are finding themselves in bidding wars, while other first-time buyers are discovering they’re unable to secure mortgage debt due.

Originations are down, but there is hope for late summer and beyond.

Here are the big stories in the mortgage market for the week ending July 24.

“Average US Mortgage Rates Dip; 30-Year at 4.52 Percent"

Published by ABCNews on July 19, 2018

  • The rate decline continued this week when interest rates for the 30-year-fixed loan slipped from 4.53% to 4.52%
  • The 15-year-fixed rate mortgage also fell — down to 4.00%.

“Mortgage Rates Tick Down, But Can Borrowers Seize the Opportunity?”

Published by MarketWatch on July 20, 2018

  • Low rates are music to the ears of borrowers, but affordable inventory is still a challenge for many.
  • Home builders are not rushing to ramp up project pace, according to data released by the Commerce Department.
  • Remodeling may be a rising trend as equity rises and interest rate fears encourage homeowners to stay put and invest inside their current walls.
  • Remodeling expenses are expected to grow 7% during the remainder of 2018, according to a report released by the Joint Center for Housing Studies of Harvard University,

“Mortgage Rates Behind the Curve for 2nd Straight Day”

Published by MortgageNewsDaily on July 20, 2018

  • On July 20, the bond market spent most of the day weakening, but lenders did not capitalize quickly enough and mid-day rates were not adjusted.
  • “Rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up,” projected reporter Matthew Graham.

“Flat Rates, Slow Price Appreciation Could Boost Home Sales: Freddie”

Published by NationalMortgageNews on July 23, 2018

  • If mortgage rates remain flat, price appreciation slows and supply increases home sales could experience a breakthrough, according to Freddie Mac projections.
  • Mortgage origination forecasts for this year were lowered from 1.71 trillion to 1.69 trillion. Last year’s origination volume was 1.82 trillion.
  • "June's decrease in existing-home sales continues this year's trend of coming in below expectations. But mortgage rates barely moved in the month of June, which should have given some relief to prospective homebuyers," said Freddie Mac Chief Economist Sam Khater.
  • Overall, Freddie Mac anticipates market conditions for late summer to slightly improve with new home construction in July and August alleviating some of the inventory pressures.
  • For 2018, home prices are still expected to grow 6.7%.

“Mortgage, Groupon and Card Debt: How the Bottom Half Bolsters U.S. Economy”

Published by Reuters on July 23, 2018

  • Unlike in the past, currently the bottom 60% of income-earners fueled most of the rise in spending over the past two years, according to a Reuters analysis of U.S. household data.
  • For the last ten years, consumption growth was primarily led by the top 60% of income earners. 
  • U.S. consumer savings are rapidly draining, and data shows they are at the lowest levels since 2005. Meanwhile, there has been a rise in both credit card and car loan delinquencies.
  • Unemployment is at its lowest level since 2000. But even with a robust job market, pay increases have been disappointing.
  • In lieu of cutting back on spending or eliminating expenses, many consumers may instead opt to work more hours, take on additional jobs or obtain credit cards or personal loans to make up the gap.

“Existing-Home Sales Subside 0.6 Percent in June”

Published by National Association of Realtors on July 23, 2018

  • Existing-home sales are down for the third consecutive month, according to the National Association of Realtors (NAR). Combined with May’s decline, sales are down now 2.2% from this time in 2017.
  • Closings on new homes continue their streak, down for four months.
  • Sales gains in the Northeast and Midwest were not enough to bolster growth in existing-home sales in June.
  •  “The root cause is, without a doubt, the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales,” said NAR Chief Economist Lawrence Yun.
  • Year-over-year gains climbed the past 76 months, and in June the median existing-home price in the U.S rose 5.2% to $276,900 — a new record high.
  • 53% of homes sold in June had an were on the market for less than 30 days, according to NAR data.

“How Irresponsible Mortgage Lenders Created A Second Housing Bubble”

Published by SeekingAlpha on July 24, 2018

  • Home prices are rising, but rent prices have remained consistent.
  • Lenient mortgage requirements, including low down payments, may be partially to blame for the rising home prices.

What Do Recent Mortgage Reports Mean?

Interest rate volatility has cooled this summer now making affordability the main area of concern. Buyer demand is high, and unemployment is at its lowest in eighteen years. But there is a shortage of homes in the right price range for most first-time buyers. Existing-home sales and originations are both down, and inventory shortages are still causing the housing market to struggle.

Even with increased home purchase volume this month, originations are down as more owners stay in their current properties. Remodel and home renovation projects are anticipated to increase.  

If new home construction ramps up toward the end of summer, fall could be a productive season for mortgage origination. Freddie Mac projects mortgage market conditions to improve in the coming weeks. There is certainly pent up demand, and buyers are ready to move quickly.

What Should Mortgage Marketers Do Next?

Examine your database and identify clients exceeding seven years in their properties. They may be gearing up for renovations if they are not able to transition into a new space. Evaluate your refinance content, and be sure to position the benefits of utilizing the cash-out refinance to fund projects for refurbishing the interior of a home.

If rates remain steady, the purchase market should gain steam in late summer. Days-on-market are averaging less than one month for new listings. Revisit your company’s relationships with real estate partners and determine if you can leverage digital marketing to grow attendance at open houses and home tours. Consider hosting a webinar or producing a report for real estate partners to teach the benefits of niche loans, such as the 203k, Fannie Mae Homestyle and adjustable rate mortgages. Be sure to create content for August that explains the urgency of rate locks and extensions.

Debt is a major priority for originators. Lower-income prospects may increase their debt in areas such as credit card spending and auto loans, preventing quick action in a bidding-war market. Mortgage marketers should consider adding resourceful information on eliminating debt to social media and email marketing content. For buyers not yet eligible for a loan, educational content can launch relationships between high-debt borrowers and loan originators that can be nurtured as the future home buyers decrease revolving debt.  

Contact the expert team at Best Rate Referrals to gain insight on how to best tackle the current market conditions and win.

About the Author

Best Rate Referrals

Best Rate Referrals is an award-winning mortgage marketing firm and an industry leader in generating high-quality mortgage leads and driving inbound calls to mortgage lenders. The Best Rate Referrals team has broad mortgage market experience with proven lead generation practices that produce measured results for the lending and real estate industry. Best Rate Referrals has a long history of connecting high-intent consumers with a diverse network of lenders for a variety of financing products including Home Purchase, HARP, VA, FHA, Cash-Out, 203k, USDA, Conventional, Reverse Mortgage, ARM, Fannie Mae, Freddie Mac, First-Time Homebuyer, Jumbo and Debt Consolidation. The company's flagship website, www.MortgageAdvisor.com, is a one-stop mortgage financing shop that matches consumers with mortgage lenders and provides an array of online tools and information to educate potential borrowers on achieving their financing goals. Best Rate Referrals is a subsidiary of Digital Media Solutions.

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