As Higher-End Market Escalates, Mortgage Applications Fall

Bob Vaughan

Mortgage application volume fell 0.6% for the week ending December 17th according to a report from the Mortgage Bankers Association. The lower end of the market specifically saw less applications for purchases coming in. Compared to last year, refinance volume was down 42.4% year-over-year. However, refinances still made up 65.2% of total mortgage application volume last week, up 1.9% from the previous period. The average purchase loan amount increased to $416,200 for last week’s period.

 

  • The VA share of mortgage application volume was 11.5% last week.
  • The FHA share of mortgage application volume was 9.6% last week, remaining unchanged from the prior period.

FHA Refis Lead Surge in Mortgage Applications

Bob Vaughan

Mortgage application volume increased 2% for the period ending December 3rd according to a survey from the Mortgage Bankers Association. Compared to last year, mortgage application volume has dropped across all loan products, but still remains high overall. The main obstacle continues to be lack of inventory creating higher homes prices than some buyers are prepared for. Homebuying activity is still close to the highest levels the market has seen since March. Refinances made up 63.9% of total mortgage applications this past period.

 

  • The FHA share of mortgage application volume was 9.9%, up from 8.9% the previous period.
  • The VA share of mortgage application volume was 10.7%, up from 10.0% the previous period.

 

 

 

 

Average Home Prices See Historic Leap

Bob Vaughan

According to a Federal Housing Finance Agency report, home prices posted the largest ever year-over-year gains since the beginning of the FHFA House Price Index. Home prices across the country rose 18.5% this past year. Specifically, the “mountain division”, including Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming, went up 25% in the third quarter of this year. Annual gains can be seen in housing prices in every area of the country in 2021. As has been the case throughout the entirety of 2021, low inventory and high demand continue to play a part in the rising home prices in the United States. While home price increases month to month have started to slow, there is no doubt the demand for housing will remain high going into the new year.

Investors Spend Big in Q3

Bob Vaughan

According to a recent report by Redfin, real estate investors spent a record $63.6 billion on home purchases in the 3rd quarter of 2021. This number represents a 78% increase from this time last year. Investors acquired a total of 90,215 homes in Q3 which represents a 80.2% increase from 2020. As increasing home prices are forcing more Americans to consider renting, real estate investors have more opportunities for tenants in their properties. One negative impact that the market is seeing as a result of investors being more active in real estate is the competition this is bringing to individual homebuyers looking to purchase homes. These cash rich investors purchased homes with full cash offers 75% of the time in Q3. Of all real estate transactions in the third quarter of 2021, real estate investors made up 18.2%. This number is considerably higher than last year. In large markets such as Atlanta, Phoenix, and Charlotte investors made up over 30% of all transactions in Q3. As home prices continue to rise and more investors enter the housing market, it may become more difficult for homebuyers to compete for homes throughout the country.

Mortgage Application Volume Propped Up By Refinances

Bob Vaughan

For the week ending November 5th, mortgage application volume saw a 5.5% increase according to a Mortgage Bankers Association report. Refinances particularly saw a 7% increase in application volume despite being 28% lower than this time last year. New purchase application volume also rose 3% this past week.

 

  • The FHA share of total mortgage application volume increased from 9.9% to 10.2%.
  • The VA share of total mortgage application volume decreased from 9.2% to 8.8%.

As Q3 Ends, Purchase Mortgages Outpace Refinances

Bob Vaughan

This quarter marked the first time since the pandemic that applications for new purchase mortgages outpaced the application volume for refinances. New home purchase mortgages accounted for 53% of the total application volume in the 3rd quarter. The demand for rate and term refinances decreased 23% year-over-year marking the end of what many would consider a year plus long refinance boom.

With Rates Rising, Mortgage Activity Dips Again

Bob Vaughan

According to a report from the Mortgage Bankers Association, mortgage application activity dropped 6.3% for the week ending October 15th. As a part of this decrease, mortgage refinance application volume decreased for the fourth consecutive week marking the lowest level since July 2021. High levels of competition and rising home prices continue to scare some potential buyers out of the housing market.

 

 

Refi Appetite Falters with Rising Rates

Bob Vaughan

For the week ending October 1st, mortgage application volume dropped 6.9%. Refinance volume dropped 10% from the previous period amidst rising interest rates. Purchase activity also saw a 2% dip this past period. Year-over-year total mortgage application volume was down 15% compared to last year. Refinances still made up 64.5% of new mortgage applications despite falling from 66.4% the previous week.

 

  • The FHA share of mortgage application volume increased to 10.5% from 9.5% the previous period.
  • The VA share of mortgage application volume increased to 10.3% from 10.2% the previous period.

Equity Rises $2.9 Trillion for Homeowners in 2021 2nd Quarter

Bob Vaughan

According to a report by Corelogic, homeowners gained $2.9 trillion in equity during the second quarter. This $2.9 trillion gain equates to a 29.3% year-over-year increase from 2020. The growth in homeowner equity allows for tens of millions of Americans to feel a higher sense of financial cushion and fend off the fears of foreclosure brought about by the uncertainty of the pandemic. As the housing market continues to stay hot, equity in homes should continue to rise also.

Keys to the Appraisal Concerns within the Private Lender Sector

Bob Vaughan

According to John Tedesco, the senior VP of business development at Appraisal Nation, stiffer appraisal regulations and harder entry requirements for appraisers are leading to longer appraisal wait times with higher costs of completion. Because of the high demand for appraisals, appraisal wait times have increased from about five or six days to two or three weeks in some cases. Similarly, the price has risen from between $400-$500 to $700-$800. Appraisal Nation is one of the top appraisal management companies in the United States working with more than 26,000 appraisers every year completing 150,000 residential and commercial appraisals. Since 2013, the number of real estate appraisers has been rapidly falling. In 2013 there were over 89,000 licensed appraisers according to Appraisal Institute, but now there are only about 78,000 with 20% of them being older than 66. As the need for appraisals continues to rise and the work force ages towards retirement, new appraisers are needed to quell the increasing demand.

Mortgage Application Volume Stumbles

Bob Vaughan

Applications for new mortgages saw a 1.1% drop for the week ending September 24th according to a report from the Mortgage Bankers Association. Specifically, purchase mortgage applications dropped 1.2% while the refinance application volume dropped 0.9%. Mortgage rates were up slightly in this same period causing buyers and home owners looking to refi to consider waiting for the rates to fall again.

 

  • The FHA share of total application volume fell from 11.5% to 10.4% this past week.
  • The VA share of total application volume fell from 10.4% to 10.2% this past week.