Last quote by Michael Fratantoni
Michael Fratantoni quotes
Mortgage rates increased at least partially as a result of the Federal Reserve's rate hike and move to a slightly more hawkish stance. Borrowers may have gotten applications into their lender in advance of the FOMC announcement, as most observers anticipated an increase in the Fed's rate target at the December meeting.
Purchase activity remains skewed towards the higher end, with the average purchase loan size at its second highest level in the history of the survey.
Refinances are almost entirely driven by mortgage rates, while purchase activity is a function of a broader set of variables including the state of the job market, demographics, and consumer confidence.
Over the last month, going back to the week prior to the election, mortgage rates on 30-year loans have increased 50 basis points, and refinance application volume has dropped by 28 percent. Over the same time period, purchase application volume is up almost 12 percent.
First-time buyers and buyers of lower priced units may have stepped away from the market to some extent given the jump in rates.
Mortgage lenders have been very thankful for a strong 2016 in terms of origination activity. However, mortgage application volume in the Thanksgiving week dropped sharply to the lowest level since early January, as mortgage rates increased to their highest point since July, 2015.
The increase in purchase activity was driven by borrowers seeking larger loans, with applications for purchase loans above $417,000 increasing 16.8 percent for the week.
This change led to the average purchase application loan amount reaching a new record of $310,000. One factor that likely contributed to this boom in jumbo purchase applications is that the jumbo rate is now 12 basis points below the conforming rate for a 30-year fixed rate loan. This is the widest spread between these rates since March 2016.
Mortgage rates have continued to move higher in the postelection period, as investors worldwide are looking for increases in growth and inflation.
The increase in purchase activity was driven by borrowers seeking larger loans and that drove up the average loan amount on home purchase applications to $310,000, the highest in the survey, which dates back to 1990.
Globally, rates have begun to creep upwards as investors anticipate less aggressive monetary policies from central banks, and U.S. rates are being pushed upwards in response. Additionally, new data show continued positive signals regarding the job market and rising inflation, indicating that the Fed is likely to hike in December and will continue increasing rates next year.
Strong household formation coupled with further job growth, rising wages, and continuing home price appreciation will drive strong growth in purchase originations in the coming years.
Refinance applications dropped to the lowest level since the week of the Brexit vote, as mortgage rates reached their highest level since then.
As incoming economic data reassured investors regarding U.S. growth, and financial markets returned to viewing a December Fed hike as increasingly likely, mortgage rates rose to their highest level in a month last week. Total and refinance application volume dropped to their lowest levels since June as a result.
Average purchase loan size increased again, indicating that the strength is at the higher end of the market.
Treasury rates fell through the course of last week, as the Fed left their target rate unchanged, and concerns grew again about global growth, particularly in Europe and Japan.
Mortgage rates increased to their highest level since June last week as comments by some Fed officials made it appear that the Federal Reserve is closer to raising rates. The average refi loan size fell to its lowest level in three months as more jumbo borrowers left the market.
Higher rates appeared to have a bigger impact on entry-level buyers, as the average purchase loan size increased to its highest level since June.
Although the pace of job growth slowed in August, purchase volume continues to run strong at 7 percent above last year at this time. This strength is broad based, with growth at both the high and low ends of the market.
The last time rates were at these levels, the refi index was almost twice as high. At these rate levels, there are borrowers who still stand to benefit, but there are many homeowners who have already taken advantage of refinancing and are not yet incentivized to do it again.
As the economy reaches full employment, the pace of job growth is slowing, and this will slow the growth in purchase activity as well, but we do continue to expect growth in home sales going forward.
Refinance volume continues to tail off as markets recover post Brexit.
A strong job market and low rates continue to support home sales.
The underwriting decisions in today's world are an automated system that's evaluating the applications.
Despite the 30 year fixed mortgage rate being almost 50 basis points lower than a year ago, refinance activity has been extremely sensitive to rate increases as the pool of borrowers who can benefit from refinancing continues to diminish.
Recent swings in mortgage rates have been relatively muted compared to Treasury rates, although on net both remain below their levels from just prior to the Brexit vote. Refinances fell slightly with rising rates last week, but the refinance share of 64.2 percent of applications was the highest since February of this year, as purchase volume was slow to come back following the July 4th holiday.
Mortgage rates have been low for years, but the impact of Brexit has brought us close to record lows once again, with jumbo rates already at their lowest levels, giving more borrowers a larger incentive to refinance.
MBA now predicts that the Fed will hike only once this year, likely in December. If the financial market disruption from Brexit persists, the likelihood of even a December hike would be reduced.
Given the weak employment report for May, we think it is unlikely that the Fed will raise rates in June. However, as other economic data are pointing to continued economic growth, we do expect that they will increase rates following their July meeting.
Refinance activity decreased for the second-straight week because fewer borrowers have an incentive to refi at the current level of rates, but there are still some who respond to the small changes we have seen in recent weeks.
Rates dropped last week in response to concerns about further slowing in global growth, despite the fact that the U.S. job market continues to show real strength. Rates also are increasingly volatile as markets react to different signals regarding the future path for the Fed. This drop in rates is providing what will likely be only a temporary boost in re-fi activity.
Mortgage rates fell below 4 percent in our survey for the first time since October 2015. The jumbo rate also decreased and was at its lowest level since April 2015. Despite the fall in rates, mortgage application activity was likely muted by the major East Coast snowstorm, although refinance activity increased very slightly.