Maryland Mortgage Loans

Here in Las Vegas (Why did the Dalai Lama go to Las Vegas? Because he loves Tibet) the population is about 650,000 with all manners of housing, subdivisions, and lifestyles. But around the nation and world, there are numerous ways and places to live. Here’s a story about a former NFL star who says he saved money by living inside Cincinnati Bengals stadium. What do Stowe, Vermont, Whitefish, Montana, and Lake Placid, New York have in common? The three U.S. towns made Travel & Leisure’s 25 Most Beautiful Small Towns. If you only want a house for part of the year, with elevated mortgage rates and home prices having risen considerably, the solution might be buying 1/6 of a house. Or sharing equity, which is what some of your borrowers and homeowner clients consider. “An Unlock HEA gives you cash in exchange for a portion of your home’s future value.” Or one can live underwater. (Today’s podcast can be found here and this week’s is sponsored by Built Technologies. Construction and real

One of the many reasons to buy a home is that it’s a major way to build wealth and gain financial stability. According to Freddie Mac: http://dlvr.it/Sk43fQ

On November 9th, 2022, the average lender was quoting 30yr fixed rates well over 7%.  On day later, that figure dropped to 6.625%.  It was one of the best individual days for rates on record and it was driven by an economic report that showed an unexpectedly large drop in inflation. Inflation and several other key sectors of the economy had pushed the Federal Reserve to hike rates at the fastest pace in decades.  When it looked like the data might provide some relief, rates quickly moderated. Strangely (or so it seemed at the time), the Fed was highly reluctant to read too much into several months of generally more palatable data.  They said it was too soon to draw any conclusions other than "it's a start."  With that, markets hesitated to push longer term rates any lower until the data made an even stronger case of that. Unfortunately, the data since then has made a case for rates to turn around and head right back up toward previous highs.  February has been particularl

Existing home sales data was released this morning by the National Association of Realtors for the month of January.  It was fairly close to forecasts, but nonetheless slid to the lowest levels since 2011 for the second straight month (just edging out the initial lockdown lows of 2020).  It's no surprise to see sharp declines in sales given the massive shift in rates and housing sentiment that unfolded over the course of 2022.  While there had been a glimmer of hope for a bounce over the past few months, rates are once again ripping up toward 7%.  As such, it makes sense to ask: how bad is it? We can all already see how bad it CURRENTLY is.  So the better question is how bad could things get.  Alternatively, we could ask when things will get better.  The second question is easy, but the answer isn't a huge relief in the short term. Things will get better when inflation is firmly under control and the economy stops periodically showing signs of "running hot."  Yes, I k

Heading into the 3 day weekend, we knew there was a risk that Friday's rally was driven by position squaring (i.e. traders buying bonds in order to cover short positions). Heading into the new week, new short positions are back in fashion.  While a certain amount of this selling pressure may have been our destiny regardless, it received a clear boost from stronger Eurozone services PMI data.  Yields were already testing their weakest levels since early November.  Then when US services PMI numbers came in stronger than expected, bond market weakness kicked into an even higher gear.   All of the above pertains to scarcely a few drops of paint against the broader backdrop of February.  This month has delivered a harsh new reality that has taken many market participants by surprise.  Surely, the rate spike of 2022 would be taking a bigger toll on economic data and the softer numbers would combine with tamer inflation to help rates ease back to lower levels. But in 3 short weeks w

Not every house is a 3 bedroom, 2 bath, single story subdivision home. Appraisers and underwriters aren’t big fans of places that aren’t, due to the lack of comps or the problems in “salability” should something go wrong. Inventive housing? Watch this house slide open to reveal Flexible Spaces (and an open-air bathroom). Some people have a home theater, but here’s a theater home for sale. And, finding homeowner’s insurance aside, what do kids do in this house when told to clean their room? Housing prices, just like mortgage rates, have at their base the influences of supply and demand. So this story is particularly interesting: “Investor purchases of U.S. homes fell by 45.8 percent on a year-over-year basis, with the largest declines occurring in pandemic boomtowns such as Las Vegas and Phoenix.” In other housing and finance trends, Seattle-based Flyhomes’ mortgage division is offering a “Buy Now Refi Later” promotion, where a homebuyer who takes out a loan with the company can refinan

The biggest challenge the housing market’s facing is how few homes there are for sale. Mark Fleming, Chief Economist at First American, explains the root causes of today’s low supply: http://dlvr.it/SjlbdP

To sell your home this spring, it may need more preparation than it would have a year or two ago. Today’s housing market has a different feel. There are more homes for sale than there were at this time last year, but inventory is still historically low. So, if a house has been sitting on the market for a while, that’s a sign it may not be hitting the mark for potential buyers. But here’s the thing. Right now, homes that are updated and priced at market value are still selling fast. http://dlvr.it/SjhjMX

Yesterday's CPI data validated the Fed's constant refrain regarding persistent inflation.  This morning's Retail Sales data (for the month of January) is generally in the same column, suggesting the combination of economic strength and stubborn inflation is a bit more onerous than the bond market had been expecting based on average trading levels in December and January.   Given the size of the 'beat' (3.0 vs 1.8 f'cast, -1.1 previously), the bond market could probably justify a bit more panic than we've seen so far this morning.  Granted, 10yr yields are indeed at their highest levels in more than a month, but MBS are managing to hold in line with yesterday's low range so far.  Moreover, Fed Funds Futures merely blipped higher and then returned to yesterday's range. Our outlook is the same as it has been since the jobs report: if rates aren't moving lower, they're moving higher.  We continue waiting for data or some form of oversold ex

“I had a cousin who created a cold air balloon. But it never took off.” Like the intricacies of residential lending, few people are aware of the world of balloons. Meteorologists launch high-altitude balloons from the United States dozens of times each day. What’s more, weather balloons, are deployed twice a day, every day, at the same time from almost 900 locations around the world. Plenty of balloons fall to the earth. I really don’t like sensationalist headlines like “U.S. House Prices Plummet.” Especially when they’re false. Ask anyone who is in an area with starter homes, for example. The National Association of Realtors released its latest quarterly report showing that nearly 90 percent of all metro areas saw housing prices go up last quarter. (Today’s podcast can be found here and this week’s is sponsored by the STRATMOR Group, the data-driven mortgage advisory. At STRATMOR, insights and knowledge are applied to guide mortgage clients to make sound strategic decisions and take a

It was unrealistic to expect last week’s strong increase in mortgage activity to be sustainable in the current volatile rate environment, and indeed it was not. The Mortgage Bankers Association said its seasonally adjusted Market Composite Index, a measure of loan application volume, which had risen 7.4 during the week ended February 3, ended last week with a decline of 7.7 percent. On an unadjusted basis it was down 7.0 percent. Refinancing had driven last week’s surge, and it led the retreat, falling 13 percent . The index was 76 percent lower than the same week in 2022. The refinance share of applications dipped to 32.0 percent of the total from 33.9 percent the previous week. [refiappschart] The volume of purchase mortgages decreased 6.0 percent on a seasonally adjusted basis and was down 5.0 percent before adjustment. Purchase activity was 43 percent lower than the same week one year ago. [purchaseappschart] “Mortgage rates increased across the board last week, pushed higher by ma

If you’re thinking about buying a home, you might be focusing on previously owned ones. But with so few houses for sale today, it makes sense to consider all your options, and that includes a home that’s newly built. http://dlvr.it/SjS1nl

[:en]No matter how the housing market changes, there are some things about owning a home that never change—like the personal benefits it can provide. When you own your home, you likely feel a sense of attachment because of the comfort it gives and also because it’s a space that’s truly yours. http://dlvr.it/SjP5jb

What You Should Know About Closing Costs http://dlvr.it/SjNdHr http://dlvr.it/SjNdHr

Before you buy a home, it’s important to plan ahead. While most buyers consider how much they need to save for a down payment, many are surprised by the closing costs they have to pay. To ensure you aren’t caught off guard when it’s time to close on your home, you need to understand what closing costs are and how much you should budget for. http://dlvr.it/SjLDrX

Absolutely impossible to find words to describe the love a father has for his daughters. https://t.co/l035bhJrAX

The order of business this week has been fairly simple.  The market had been telling itself that the Fed would end up cutting rates by the end of 2023 while the Fed had been telling the market that rates would remain at the ceiling level for quite a bit longer.  Friday's jobs report put the market in the mood to listen.  Powell delivered the message gently on Tuesday.  Williams delivered it more forcefully on Wednesday, but the market had already acquiesced by pricing in at least another 25bp hike in 2022 and completely pricing out the previously foreseen rate cut.  The rest of the week is anyone's guess at this point.  Markets look like they've found their footing and there's no new major data to cause a stir. The most actionable items on the calendar after the Fed comments in the first half of the week have been the Treasury auctions.  We saw this with yesterday's 10yr auction and we may see another reaction after today's 30yr auction.  Once again, the longe

As noted in yesterday’s commentary, mergers and acquisitions of lenders are in the news across the nation. For curious lenders, it is good to have a general guide in how a buyer goes about valuing a lender. I happen to be in rainy Chicago now, but 1,700 miles away, there’s interesting news from the Phoenix area and the desert. How would you appraise a perfectly fine home that had no water? Rio Verde, aptly named Green River, a neighborhood outside of Scottsdale, Arizona, with some 2,000 homes, recently learned that there is not a stable water supply. The 1980s Groundwater Management Act required that in order for a development six lots or larger to proceed in Arizona, it had to secure a 100-year supply of water. The Rio Verde Foothills developers kept splitting parcels into four to five lots, putting them under the six-lot minimum that applied to the law and avoiding that requirement. About 30 percent of the residents now face a dramatic change in price as the city has cut them off fro

Today's mortgage rate recap is largely similar to yesterday's--not because the same things happened, but rather because the bigger stories and bigger movements had already taken place by yesterday.  Today was more of an afterthought in terms of movement even if there are one or two potentially important takeaways. Let's talk about the movement first.  It was modestly friendly, but not too big.  To put things in perspective, yesterday's rates were the highest in more than a month.  Today's were a close second.  The average lender remains in the mid 6% range for a top tier conventional 30yr fixed scenario. How about those important takeaways?  Fair warning: this may be a bit abstruse for those who just want to know what rates did today.   Today's takeaway is that the members of the Federal Reserve (aka "the Fed") are as unified as ever when it comes to the belief that the market is too optimistic about a potential drop in inflation.  One prominent Fed sp

One of the biggest uncertainties of the week was resolved on Tuesday with Fed Chair Powell answering questions about the policy outlook without any real surprises.  Unfortunately, the absence of any rate-friendly surprises meant that rates found no reason to abandon their defensive stance with additional hurdles remaining.  Several of those hurdles need to be cleared today, including multiple Fed speakers to help round out Powell's thoughts as well as 10yr Treasury auction in the afternoon. Right out of the gate, NY Fed Pres Williams is taking an even more hawkish tone than Powell, saying that the Fed will need to maintain a restrictive stance for a few years.  Combine that with his assertion that policy is just "barely restrictive" right now and it's essentially a forecast for rates to remain flat to slightly higher for a long time. Of course these are just words today.  Things can change in the economy that would change the outlook and ultimately affect the Fed&

“Where can you always find money? In the dictionary.” Plenty of lenders and finding the money to buy other companies while smaller ones are looking for the right buyer. Eat or be eaten seems to be the name of the game as lenders hungry for production are courting other lenders. Some just get out of the game entirely. (See lender and investor section below.) Cutting costs and being efficient continue to be of paramount importance regardless of plans for the future. Is the credit process cost effective and efficient? Yesterday I mentioned changes in the credit world and received, “Rob, when will companies learn that there are ‘too many snouts in the credit trough’? There’s Fair Isaac, the Bureaus, and the credit resellers. It is not a level playing field, and now, like the old days of having different gfees for different lenders, lenders are slotted into ‘tiers’. In the next few years, we’ll be moving from a tri-merge environment to a bi-merge environment. Regardless of what comes our wa

Refinancing pushed the volume of mortgage loan applications to one of its biggest week-over-week increases in ten months, during the period that ended February 3. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, jumped 7.4 percent on a seasonally adjusted basis from one week earlier and was 8.0 percent higher on an unadjusted basis. The Refinance Index was 18.0 percent higher than the previous week and the refinance share of application activity rose to 33.9 percent from 31.2 percent. Volume, however, is still 75 percent lower than the same week one year ago when the share of applications was at 56.2 percent. [refiappschart] The seasonally adjusted Purchase Index gained 3.0 percent week-over-week and was 4 percent higher on an unadjusted basis. Volume was down 37 percent from the same week in 2022. [purchaseappschart] “Applications rose last week as the 30-year fixed mortgage rate inched lower to 6.18 percent, its fifth consecutive weekl

The biggest challenge in the housing market right now, and likely for years to come, is how few homes there are for sale compared to the number of people who want to buy. That’s why, if you’re thinking about selling your house, this is a great time to do so. Your house would be welcome in a market that has fewer homes for sale than it did in the years leading up to the pandemic. http://dlvr.it/Sj6FMG

In the wake of last week's strong economic data on Friday and follow-through weakness in overseas markets, traders are gearing up for additional Fed rate hikes.  They figure they can get some sort of comment on those conclusions in a Q&A session with Fed Chair Powell today (previously scheduled) at the Economic Club of Washington.  The event kicks off at 11am and runs through 1:30pm.  There is no scheduled time for Powell, but we've heard 12:30 is a good possibility.  Either way, the entire time frame will warrant vigilance.  In its wake, markets may breath a sigh of relief if Powell doesn't acknowledge Friday's data the same way that a few other Fed speakers have in the past 24 hours. How realistic is it for Powell to have some new reaction to one day's worth of econ data?  Again, other Fed speakers have already acknowledged their surprise.  The clearest example came from Kashkari this morning which we covered in detail in an update you can read HERE. As sa

As we celebrate Black History Month, we reflect on the past and present experiences of Black Americans. This includes the path toward investing in a home of their own. And while equitable access to housing has come a long way, homeownership can be a steeper climb for households of color. It’s an important experience to talk about, along with how it can make all the difference for diverse homebuyers to work with the right real estate experts. http://dlvr.it/Sj3Tdw

Friday's strong jobs report and ISM data caused obvious, immediate problems for rates, but bonds held their ground fairly well all things considered.  As the new week began, Asia took its turn selling Treasuries before strong European data added to the pressure.  Traders are apprehensive about this week's bond market supply (both Treasury auction and corporate bonds) as well as a Q&A with Fed Chair Powell.  Perhaps he'll be more hawkish in light of the jobs report?  That's the fear anyway and it's easy to see in the 25bp uptick in rate expectations for September's Fed meeting.  The chart above suggests traders don't see the Fed returning to 50bp hikes, but rather adding an additional 25bp hike before leveling off. In terms of the bigger picture, this morning's weakness has 10yr yields up against the 3.62% range ceiling and well above the 3.56 ceiling that had been in play for most of the past 3 weeks.  http://dlvr.it/Sj1KlB

I travel a fair amount via commercial airplane. (Greetings today from Ft. Lauderdale; this afternoon it’ll be Chicago.) But forget traveling in heavier-than-air-craft: there are people who live in airplanes! Meet Jo Ann, a beautician. Let’s see this baby appraise out for a refi! But the price is right for anyone willing to make the effort, as airplane carcasses are very affordable. One big topic at the Bank of England Mortgage event going on here is how interest rates impact affordability. Last week the Commentary included a link to a “handy-dandy chart for LOs to help borrowers to see how rates impact affordability.” I received several emails pointing something out, succinctly summed up by Fairway’s Mike S. “A quick glance shows that only 20% of the population’s affordability is determined by interest rates. At 3%, 65% of the country is already priced out. At 9%, that number is 85%. That means for 80% of the population, the interest rate is not a factor in determining whether they can

Many of today’s homeowners bought or refinanced their homes during the pandemic when mortgage rates were at history-making lows. Since rates doubled in 2022, some of those homeowners put their plans to move on hold, not wanting to lose the low mortgage rate they have on their current house. And while today’s rates have started coming down from last year’s peak, they’re still higher than they were a couple of years ago. http://dlvr.it/Sj0hjX

BREAKING: US Fighter jets have DESTROYED the Chinese Spy Balloon over Myrtle Beach, SC. https://t.co/KuvlrDWgof http://dlvr.it/Shxgcf

Perfect Storm Leaves Rate Range Perfectly Intact Coming into the week, yields were near the top of a narrow range (3.4-3.56 give or take).  With both ISM reports, the jobs report, and policy announcements from the Fed/ECB/BOE, it was a distinct possibility that we'd see that range broken.  By Thursday morning, that looked like it was a work in progress, but by the end of the day, yields were back to 3.40.  Then in a cruel twist of fate this morning, NFP beat forecasts by the widest margin in a year and half.  90 minutes later, ISM crushed its forecasts as well.  These events combined to push yields right up to the top of the range, leaving us to hurry up and wait for the next set of potential market movers. Econ Data / Events NFP 517k vs 185k f'cast, 260k prev unemployment 3.4 vs 3.6 f'cast, 3.5 prev earnings 0.3 vs 0.3 f'cast, 0.4 prev ISM Non Manufacturing  55.2 vs 50.4 f'cast, 49.2 prev Market Movement Recap 09:29 AM Heavy selling af

Interest rates take cues from several places. Regularly scheduled economic data is always a consideration because a stronger economy implies more growth and tighter Fed policy, both of which are bad for rates. Certain reports carry significantly more weight than others.  If put to a vote, the perennial top dog would be The Employment Situation (aka "the jobs report").  Over the years it is responsible for more volume and volatility in rates than any other data.  The most recent installment came out this morning and it was a doozy. The headline number of the jobs report is a tally of new job creation reported by employers: nonfarm payrolls (NFP).  That's just a fancy name for "jobs."  Today's data reported the new jobs added in January, and there were quite a bit more than expected. NFP can be fairly volatile.  It's not uncommon to see the number deviate from forecasts by more than 100k a few times a year.  Those big deviations usually result in big react

While we may not have a great explanation or even the capacity to believe it, nonfarm payrolls came in at 517,000 this morning versus a median forecast of 185,000.  The bond market has reacted about like you'd expect: with a large, immediate sell-off.  While that number does indeed seem very high (and it is--especially relative to the forecast), there are two caveats. 1. It doesn't look ridiculously high in the context of the past 2 years.   2. Today's data was also affected by the annual re-working of seasonal adjustment factors.  This isn't some conspiracy or deception.  The BLS (the entity that collects and publishes this data) has an established procedure for updating seasonal adjustments once per year.  The changing landscape of the post-pandemic labor market has thrown a few curve balls to revision processes such as this.  And while we can't comment on whether this particular revision caused overly optimistic distortion of today's number, it's fai

Fun with numbers! 1: the number of Chinese surveillance balloons over Montana. (That we know of.) Did you know that the last day of 2023 is 123123? (You heard it here first!) While we’re on random numbers, Atlanta has almost 25 thousand surveillance cameras, grabbing the honors as the most heavily surveilled city in the U.S. with 50 CCTV cameras for every 1,000 inhabitants. (“The research also suggests that there is little correlation between higher camera figures and lower crime indexes.”) Shifting to mortgage-related numbers, given the Fed news this week, overnight interest rates aren’t the same as 30-year mortgage rates, of course, but moves in interest rates impact a potential borrower’s ability to buy a home in a given price range. Here’s a handy-dandy chart for LOs to help borrowers to see how rates impact affordability. With generic rates in the 6’s for home loans, LOs are keenly interested in how that compares to, say, student loan rates. Federal student loans for undergraduate

Some Highlights * Many people believe you need to put down 20% of the purchase price when you buy a home. But recent homebuyers actually put down far less on their purchase. * And with programs like FHA loans, VA loans, and USDA loans, some qualified buyers are able to put down as little as 0-3.5%. http://dlvr.it/ShtCw0

If you’re a homeowner ready to make a move, you may be thinking about using your current house as a short-term rental property instead of selling it. A short-term rental (STR) is typically offered as an alternative to a hotel, and they’re an investment that’s gained popularity in recent years. According to a Harris Poll survey, 28% of homeowners have considered using a rental service to temporarily rent out their home for additional income. http://dlvr.it/ShmSRL