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MBS RECAP: Bonds Continue Pushing The Record Pace, But MBS Are Lagging

August 3,2020
by admin

Yesterday we asked what would come next for bonds after breaking through resistance levels (.58 in 10yr yields and 103.00 in 2.0 UMBS), what comes next. Such breakouts can be the cue for a corrective bounce or a quick rush of additional momentum. It looks like we’re getting the latter, although it’s more apparent in Treasuries. MBS are lagging due to increased supply, but prices nonetheless hit new all-time highs.

New Mortgage Rate Record; What Is a “Top Tier” Scenario?

August 3,2020
by admin

Mortgage rates are on a tear, with the average lender easily hitting new all-time lows today. How low is that? At this point it’s safe to say that anything over 3% is too high as long as we’re talking about a top tier scenario. So let’s take a moment to discuss what might separate one scenario from another.

1. Loan-to-Value ratio (LTV)

As the name implies, it’s the ratio of the proposed new loan amount to the value of the home in question (note that the purchase price is used if it’s lower than the appraised value). This one of the two most important considerations that determines the pricing bracket your loan quote would fall into. By the time you get an LTV down under 75%, you’re paying almost no additional interest, but there’s a very important caveat.

2. Credit Score (FICO)

This is the important caveat. If the middle of your 3 credit scores (as pulled by your mortgage lender) is over 740, then the conclusion above (about LTV < 75%) stands. Fall under 740, and loan costs will begin increasing steadily. Even with 25% down (aka 75LTV), there’s a staggering difference between a 740 credit score and, say, 679. For example, someone with the lower score would pay an additional $6000 in closing costs assuming a $300k loan on a home worth $400k. Interestingly enough, if that person could find another $60k of equity (i.e. if they only needed a $240k loan on a $400k home), that $6000 would vanish completely.

3. Occupancy

This refers to whether you’ll live in the home as your primary residence or rent it out. There is a small hit for a bonafide second home, so we’ll focus on the investment property hit instead. On that same $300k loan, the difference between owner occupancy and investment property is roughly $6400 upfront. Unlike the credit score hit, this one wouldn’t go away if you decrease the LTV. And if you can’t make it down below 75 LTV, brace yourself. It’ll be close to $10k at 80LTV and over $12k for anything above that. And this is BEFORE any adjustments for credit score.

4. Cash-Out

If you’re not simply paying off purchase money loans during a refinance, you’ll be hit with a cash-out adjustment. At our example 75LTV, this will cost you just under $2k assuming the 740+ credit score and $3k if you’re between 700 and 740.

The aspects above are the big 4 when it comes to determining loan pricing, although there are several other potential factors (condos, multi-unit homes, high balance adjustments, subordinate financing hits, etc). The point of diving into this is to add clarity to the notion of a “top tier scenario.” Simply put, this would assume at least 25% equity (75 LTV), a 740+ FICO, no cash out in the event of a refi, and owner occupancy.

The current rate environment is very kind to those scenarios but relatively brutal for everything else. This is a normal byproduct of a big, sustained drop in rates. Even if we only change the credit score to 679 and leave everything else in its top tier position, the average lender would still need to raise your rate quote by .375-0.50% in order for your upfront closing costs to remain unchanged. Either that or you could simply opt to pay an additional 2.25% of your loan amount at the closing table.


Loan Originator Perspective

My rate sheets are about the best I have seen. Yes, the bond rally can continue but I think further gains will be very very slow. Clients right now are favoring to lock in and I feel that is the best call. –Victor Burek, Churchill Mortgage

2021 HAR BOD Election Results

August 3,2020
by admin

After several weeks of campaigning, the final results are in. Among a field of 52 candidates, eight members have been newly elected to the 2021 HAR Board of Directors. We understand how much of a time commitment every candidate gave to campaigning for the board and want each candidate to know how much their passion is appreciated. It is only with the leadership and input from members that HAR will continue to be the most transparent, progressive and responsive REALTOR® association in the nation. Congratulations to HAR’s newly elected leaders.

Report date: Monday 03 August 2020 17:00 CDT

Source: Houston Association of REALTORS®

MBS Day Ahead: Another Day, Another Record High For MBS

August 3,2020
by admin

While there’s no way to know how the day will wrap up for the MBS market, we know how it’s starting out. We also know how 4 of the past 5 days have started out (and wrapped up, for that matter): at all-time highs. The following chart of 2.0 UMBS candlesticks shows the consolidation and resistance around the 103.00 level. The breakout occurred last week, and resulted in a classic case of follow-through from a technical standpoint.

20200804 open2.png

Broader bond market trends have been more even-keeled even though we’re also seeing what is effectively a record run in 10yr yields (throw out March 9th, and we’re at record low yields on 3 out of the past 4 days including today). Although we can place the past few months of movement in a linear trend channel, Treasuries–like MBS–consolidated in a lower volatility pattern 2 weeks ago before breaking out last week.

20200804 open.png

The momentum metrics at the bottom of the chart (slow stochastics) were at risk of confirming a reversal toward higher rates (if the lines had crossed back above the lower horizontal 30% level. The gains of the past 2 weeks keep bonds in ‘overbought’ territory. This doesn’t really help us predict the future, but we can think of it like the stretching of a rubber band that tends to increase the odds of a move higher in rates the longer we remain under that bottom line.

Should we worry about that?

Yes and no. Mid 2019 is an informative comparison. Between May and July we spent even more time at overbought levels. A relatively sharp spike in unfriendly momentum took yields just over 20bps higher over the course of a week. 2 weeks later, they were moving lower again. If the same pattern were to play out here, it would suggest a move down to yields of .45%, roughly, a quick bounce up to .67%, some sideways movement around the .58% pivot point, and ultimately another quick drop to new all-time lows.

20200804 open3.png

Of course none of the above will be decided in a day–let alone today (no significant events on the calendar). We’re along for the ride at the moment, simply remaining vigilant in the event a big picture risk materializes. It’s hard to imagine what sort of singular event that could be. Rather, we’re looking for a collection of evidence arguing in favor of a big picture reversal in rates–even if it’s only comparable to the reversal seen in September-December of 2019. Some would say we’ve already seen a comparable reversal in March-June of 2020.

Ops Jobs; Marketing, Database Tools; Disaster Updates; Capital Markets

August 3,2020
by admin

Sure, you’re making bank now, but are you planning for next year? Is your company doing anything to “team up”? Many lenders, vendors, and real estate companies have strategic partnerships with other companies. There’s strength in numbers, and they are not “against the law”. Here’s a new one. Online real estate company Zillow and D.R. Horton, the nation’s largest builder by sales volume, have announced a new strategic partnership that gives D.R. Horton home buyers the opportunity to sell their existing home through Zillow Offers, providing an easier, more certain move. To start the process, sellers can answer a few questions about their home, upload some photos, and receive a free, no-obligation offer in about 48 hours. There’s lots of things changing out there. I haven’t bought a piece of clothing in six months, but hey, when I do again, Chipotle’s there for me with its line of clothing dyed from avocado pits!


Lender and Broker Products

For-purchase mortgage applications sat 19 percent above last year’s level in the third week of July. How many of your current customers are shopping for a new mortgage? Leveraging Zillow’s data of over 110 million homes, Mortech Protection flags addresses in your database that are likely to list in the next 90 days and monitors those already on the market, allowing you to be the first lender to reach out to these sellers, before they look to someone else for financing. In a refi market it’s important to be intentional with your purchase lead spend by targeting your outreach to specific homeowners at the exact moment they need financing for their next home. In Mortech’s recent webinar, they share how you can leverage their customer retention solution to help put your marketing plan in place now, so you’re top of mind for homebuyers when they need financing. View Mortech’s latest webinar recording to learn more.

XINNIX is hosting a free live webinar, “Transforming Live Meetings to Powerful Virtual Presentations”, on Wednesday, August 12 at 12 PM ET. When conducting presentations, it’s important to capture your audience’s attention immediately. Delivering a presentation that captures your audience’s attention immediately is more crucial than ever now that many loan officers are communicating virtually amidst the new normal of social distancing and working from home. In this webinar, attendees will uncover the keys to conducting powerful virtual sales presentations to capture more business, learn to create a marketing strategy to capture business from a closed office, gain the confidence needed to make impactful connections in a virtual environment and more. Leaders, you and your team won’t want to miss this opportunity to take your virtual presentations to the next level! Reserve your seat today!

“The independent mortgage broker community faces a defining moment in time, outpacing retail with 20 percent market share and growing! To keep up this unprecedented momentum, join Home Point Financial this Thursday at 1 pm Central time for an exclusive HousingWire webinar, “Taking the Mortgage Boom to the Next Level.” You’ll learn best practices and strategies from Phil Shoemaker, President of Originations at Home Point Financial, and hear from three of today’s fastest growing wholesale brokerages about what it’s like to work in the wholesale channel today. We’ll cover how brokerages are using today’s mortgage boom to accelerate and scale growth, and how the broker community can continue its momentum. All mortgage loan originators should register now for this exciting event!”


Disaster Updates

In the Northern Atlantic Ocean, hurricane season occurs from June 1 to November 30, sharply peaking from late August through September. And in other parts of the nation we’re one earthquake, fire, flood, or tornado away from FEMA declaring a disaster. And FEMA’s decisions drive disaster policies kicking in for lenders and investors.

Flagstar posted information regarding Utah Earthquakes and Aftershocks and Michigan Severe Storms and Flooding.

First Community Mortgage posted FEMA disaster update for Counties in Utah in Wholesale Announcement 2020-2033 and Correspondent Announcement 2020-31, issued a disaster update for Counties in South Carolina for both its Correspondent and Wholesale channels, and posted Delegated Correspondent Announcement 2020-05 Disaster Update.

LoanStream announced Disaster Declaration for Michigan and Utah.

Sun West Mortgage Company posted FEMA Disaster Area Update information in the state of Utah and provided additional Disaster Update information in the state of Michigan.

FAMC Correspondent announced a clarification to the disaster policy requirements for Conventional Conforming loans with an appraisal waiver in Bulletin 2020-30.

loanDepot’s weekly announcement includes Temporary Guideline Relief Extension, COVID-19 Flexibilities extension related to MI, and Disaster Announcement for Utah and Michigan.


Capital Markets

Would you rather hear about U.S.-China tensions or the coronavirus? I’d rather have a root canal, but that wouldn’t exactly make CNN. What is pushing the bond market these days?

Last week we were reminded that June’s reoccurring monthly economic data showed many signs of an improving economy, however with rising Covid-19 cases across many states and a pullback of re-openings the outlook for the rest of the summer has diminished. The realities of high unemployment, disruptions to schooling, and work from home will increase stress in many areas of the economy that depended on normal routines. State and local governments that rely on income and sales taxes will also feel the pressure of significantly reduced tax revenues due to social mitigation polices, shuttered businesses, and reduced consumer spending. In the second quarter, real consumer spending fell over 34 percent on an annualized basis and business fixed investment dropped 27 percent. Spending on residential construction saw a 39 percent decline during the quarter though the most recent new home sales report suggests that may be heading in a positive direction. New unemployment claims increased for the second straight week and were at 1.43 million for the week ending July 25 with continuing claims at 17.02 million. Mortgage rates continue to benefit from the economic uncertainty and the average 30-yr fixed rate dipped back below 3 percent.

Let’s shift to geopolitical tensions. The big news to open the week was President Trump giving TikTok a September 15 deadline to sell, or else it’ll need to shut down its U.S. operations. MBS and U.S. Treasuries pulled back to close the opening day of trading in August as better-than-expected ISM Manufacturing data for July, and news that banks tightened lending standards for most loan products in July (per the Federal Reserve Loan Officer Survey) pushed the move. Separately, Fitch affirmed its AAA rating for the U.S. but downgraded the outlook to negative from stable, citing “the ongoing deterioration in U.S. public finances and the absence of a credible fiscal consolidation plan.” In Washington, reports suggest Democrats and Republicans remain far apart with their respective views, which may push President Trump to bypass Congress and impose a temporary payroll tax cut via executive order.

Economic data on the day showed the ISM Manufacturing Index for July increasing beyond expectations, making July the second straight month the index has been in expansionary territory. April was by far the worst month for manufacturing conditions, and manufacturing conditions were better in July than they were in prior months, but it is still a stretch to say that manufacturing activity is robust since uncertainty about the demand outlook remains high. Separately, total construction spending declined in June when it was expected to increase. Total private construction spending was down and total public construction spending was also down. For those looking for silver linings, total construction spending was up 0.1 percent year over year despite the adverse effects of the pandemic, largely due to strength of nonresidential public construction spending.

For good news, the Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 7 bps from the previous week to 7.67 percent as of July 26. The forbearance share is decreasing for GSE loans but has slightly increased for Ginnie Mae loans.

Today’s economic calendar contains just the sole release of June Factory orders, due out later today. We wrap up another full moon and begin Tuesday with Agency MBS prices up/better nearly .125 and the 10-year yielding .54 after closing yesterday at 0.56 percent.

Careers and Transitions

theLender is launching a new wholesale brand “meMortgage” that will be 100 percent autonomous from its current operation. EVP Cory Tona said, “Being a P&L owner is a great steppingstone to help those that want to eventually own their own mortgage operation. I had firsthand experience founding Motive Lending and understand how tough it is to get to where we are today. We are fully prepared to help a few lucky individuals stand up and run a profitable wholesale channel. meMortgage, which will be quickly licensed in 30+ states, is searching for its President and Executive Vice President to kick things off ASAP.” If you have any interest in building your own autonomous wholesale channel from the ground up, reach out confidentially to Cory Tona or visit www.meMortgage.com to apply.

Brokers should know that Orion Lending is expanding in East Coast Markets, and is opening up a second corporate headquarters and fulfillment center in Charlotte, North Carolina. The newest location will open with over 45 team members, ready to serve East Coast Broker Partners. This second fulfillment center will not only provide further support to their $5 billion-dollar 2020 pace, but will also bring new onsite and remote career opportunities to those in the area. Anyone interested in being a part of this epic journey, please call 844.306.7466 or email Executives@orionlending.com.

Synergy One Lending welcomes its new SVP, Strategic Growth, Ben Green, to the growing Synergy One Lending team. Ben most recently served in a similar role at Movement Mortgage. “I simply could not pass up such a unique opportunity to join a company with this much talent at this stage of Synergy One Lending’s growth,” said Green. Synergy One President, Aaron Nemec added, “Ben has truly distinguished himself as a leader and a rising star in the national home lending space. I couldn’t be more excited to have Ben lead our expansion strategy along with our sales leaders.” Synergy One Lending is based in San Diego, CA, is currently licensed in 30 states and has Operational HUBS in Roseville, CA, Boise, ID, Denver, CO and Dallas, TX. If you’re looking for high growth opportunities contact Aaron Nemec or Ben Green.

Plaza Home Mortgage, a leading national wholesale and correspondent mortgage lender, is looking for a Senior Vice President, Chief Underwriter to join its team. Key responsibilities include maintaining and communicating changes to agency and investor guidelines and processes; identifying best practices; recommending changes and monitoring adherence by developing and maintaining strategic risk policy that support the company’s risk management goals. In addition, the role acts as a liaison between credit policy and divisional sales management. Essential qualities include strong talent recruiting and management skills, as well as superior analytical and communication skills. The successful individual will need to balance production growth goals with strong credit risk management practices. The company offers competitive compensation, outstanding benefits, and with corporate headquarters in San Diego, balanced with remote work options. Candidates who reside outside of California may apply. Please send all resumes to Alicia Wadsworth, VP of Human Resources. Equal Opportunity Employer; Plaza NMLS 2113. Equal Housing Lender.

Mountain West Financial, who has won the Top Workplace Award for 5 consecutive years, is proudly celebrating making homeownership a reality for over 30 years. “Mountain West is adding to our family: we’re hiring Underwriters, Processors and Closers. We offer competitive salaries, excellent benefits, matching 401K, an Employee Assistance Program, and the opportunity to work remote. We are passionate about service and have invested in the tools that will help make you successful. Our Core Values, and commitment for serving our team members and clients. are the foundation of everything we do and our moral compass that drives our vision and goals. Come be a part of our story and join the MWF Family!”

Sierra Pacific Mortgage has grown from a single California branch to an award-winning national lender, and is actively hiring. The One Sierra culture supports customers and staff equally, and has been essential to Sierra Pacific’s 30+ years of success. Successful candidates will share Sierra Pacific’s belief in Doing The Right Thing – Always, which includes making responsible, honest choices within your relationships with team members, customers, and partners. Company President and CEO Jim Coffrini describes how Sierra Pacific supports your career from Day One: “As part of our team, you’ll discover that we’re fully committed to delivering superior value by providing our employees with the tools and support they need to excel.” Visit Sierra Pacific’s new Careers website at JoinSierraPacific.com to learn more about the opportunities, benefits, and support you’ll receive.

“Mr. Cooper is extremely happy to announce that Andy Peach is our newest Cooper joining us as Correspondent National Sales Manager. Andy brings over 30 years of executive mortgage experience to the team having served at premier lending institutions. He will oversee sales strategy and execution for our dedicated, nationwide sales team as we continue to innovate and deliver even more effective solutions for our Seller clients. Most recently, we announced the enhancement to our eNotes program with the offering of Remote Online Notarizations and enhancements to our FHA lending program. We provide industry-leading turn times, access to capital and a client-focused team. If you’d like to be part of our dynamic Delegated and Non-Delegated Operations teams, we’re hiring!Contact Pamela Peak. Mr. Cooper is a Top Correspondent Lender, proud to be certified as a Greatest Place to Work and the largest non-bank servicer with a portfolio of $600B+.”

MBS RECAP: Bonds Defend New Territory

August 2,2020
by admin

Now that bonds have broken through previous resistance levels (.58 in 10yr yields and 103.00 in 2.0 UMBS), what comes next? Rather than look for fast-paced follow-through, it would be enough of a victory to merely see bonds maintain these newly acquired levels. Today we’ll discuss what those levels might look like and what we’d need to see for them to persist.

The EDGE: Week Of August 3, 2020

August 2,2020
by admin

In This Week’s “The EDGE”

  • A FRESH Look at Houston Housing
  • New Technologies for Your Business
  • Don’t Miss 2020 Virtual Engage
  • The Blend Webseries
  • Webinar Wednesday
  • Earn a New Credential

Click on the icon to download the presentation in .pdf (Acrobat)

PDF Download

Source: Houston Association of REALTORS®

Construction Spending Largely Unchanged as Shutdowns End

August 2,2020
by admin

Construction spending held firm in June, inching down fractionally from the May level and increasing a bit compared to June 2019. The U.S. Census Bureau said total spending during the month was at a seasonally adjusted annual rate of $1.355 trillion, down 0.7 percent from the $1.365 trillion spending rate in May. On an annual basis the rate was up 0.1 percent.

On an unadjusted basis there was $123.377 billion spent compared to $117.226 billion the prior month. Spending for the first six months of the year was up 5.0 percent from the same period in 2019 at $667.920 billion.

Privately funded construction expenditures were also down 0.7 percent month-over-month at a rate of $1.002 trillion compared to $1.009 trillion in May. The June rate was 1.9 percent lower on an annual basis.

Private residential spending declined 1.5 percent to $553.170 billion and was 0.8 percent below the rate in June 2019. Single-family construction fell 3.6 percent and 7.6 percent from the two earlier periods at a rate of $252.624 billion. Multi-family construction picked up some of the slack, rising 3.0 percent from May to $80.022 billion, but it was 2.1 percent lower than a year earlier.

Private spending is holding up well, however, on an unadjusted basis. There was a total of $89.383 billion spent in June compared to $86.889 billion in May and for the year-to-date (YTD), spending increased 4.5 percent to $507.046 billion.

The same is true of the unadjusted residential component. Spending there was up from $47.538 in May to $49.160. Single-family spending grew only slightly, from $22.483 billion to $22.539 billion while new multifamily construction consumed $6.971 billion, about $300 million more than the prior month. The census report does not break out expenditures on remodeling, but anecdotal reports indicate that sector has been unusually active due to retrofitting for working at home and may account for some of the $20 billion difference between new construction and total residential spending.

Spending YTD on residential construction is up 7.5 percent from the same period last year to $272.727 billion. New single-family construction spending rose 3.9 percent while multifamily spending was down 2.5 percent. Spending on the two components during the first six months totaled $134.076 billion and $39.748 billion, respectively.

Public spending in June also declined by 0.7 percent but was up 6.2 percent year-over-year at $353.300 billion. Residential spending rose 2.7 percent to $8.137 billion, putting it 34.1 percent higher than in June 2019. Public spending on all construction thus far in 2020 totals $160.874 billion, a 6.6 percent increase over 2019. Residential spending YTD is up 30.7 percent to $3.756 billion.

Housing Affordability Best in Four Years, Purchase Rate Locks Surge

August 2,2020
by admin

The last report from Freddie Mac put its 30-year fixed rate mortgage (FRM) at 2.99 percent, up 1 basis point from the all-time low. Black Knight, in its new Mortgage Monitor, says that has made home affordability the best in four years. As of mid-July, it required only 19.8 percent of the nation’s median monthly income to make the mortgage payment on an average priced home using that 30-year FRM and a 20 percent down payment. That is more than 5 percent below the average over the 1995-2003 period. The required monthly payment, $1,071, is 6 percent less than last July despite an average $12,000 increase in home prices over that same period.

After 97 consecutive months, these record-low mortgage rate have made homeownership the most affordable it has been since 2016, and, while many areas, especially those along the coasts, remain out of reach for many low and middle-income earners, each of the 25 markets are seeing their strongest affordability in more than 2 years. Black Knight says, within the 100 largest markets several, including Virginia Beach, Hartford, and Scranton, have the strongest affordability levels in a decade and a half and six states, Louisiana, Arkansas, Iowa, West Virginia, Kentucky and Maryland, payment-to-income ratios are the lowest in more than 25 years.

Those shopping for a home can afford 10 percent more home than they could have one year ago while keeping their monthly payment unchanged. This translates into nearly $32,000 more buying power.

As Black Knight Data & Analytics President Ben Graboske explained, “Falling rates and improved affordability have helped to spur home-buying demand, and therefore purchase origination volume, which has provided a much-needed backstop for home prices in the wake of the COVID-19 pandemic.”

And, if New York is an indication, any price impacts from the epidemic could be short lived. Black Knight says, as the initial peak of the virus cases emerged in April, New York City was the epicenter and single-family list prices, which had averaged 5 percent higher than sale prices, began to fall. During the peak, median list prices ran even with, and even below the median sales prices. As affordability improved, the list prices in the metro area began to recover and were back to pre-pandemic levels. Sales prices soon followed suit, rising to new calendar year highs by mid-July.

The company says daily home price data bears watching closely in coming months to measure the effects of the COVID-19 pandemic. Collateral Analytics looked at the price of homes per square foot of living area in 22 markets from January to June 1, 2020. It found that, despite price drops in April and May, prices have performed well and begun to improve in most markets. Each has now seen positive growth for the year to date. The strongest gains have been in Dallas and Seattle, both up more than 13 percent. The smallest gains were in Washington D.C. and New York at 1 percent and 1.8 percent, respectively.

Low interest rates are driving more than affordability. Both the pool of homeowners who could benefit from refinancing and prepayment rates (partially a product of refinancing) have been increasing.

That pool, homeowners who can qualify for to refinance and could erase a minimum of 75 basis points from their current mortgage by doing so, increased to 18.1 million when rates dropped below 3.0 percent in mid-July. A slight uptick in rates had reduced that number to 15.6 million at the time the Mortgage Monitor was written, but rates have again fallen below 3.0 percent. At present 52 percent of mortgage holders are “in the money” from a purely rate perspective.

Black Knight says those candidates could save an average of $289 per month with a refinance. That would be an aggregate savings (and economic stimulus) of $5.1 billion a month if all 17.8 million homeowners in the pool, (today’s estimate of a constantly moving target) were to refi. If rates were to decline to 2.875, the pool would expand to 19.5 refinance candidates and another 10-basis points decline would bring it to 20.9 million.

Refinance activity, measured via rate locks, grew modestly in July, rising only 2 percent from June and falling 10 percent from May. However, during the last three weeks of the month refinance rate locks were up 60 percent compared to the first week. In the meantime, purchase lending has surged. Purchase volumes fell by a third from March to April then stabilized at March levels the following month. However, in July, purchase locks are up 12 percent month-over-month and are 71 percent higher than the pre-pandemic level in March.

The single month mortality rate, a measure of mortgage pre-payments, now stands at nearly 3.0 percent and is up 111 percent since January. Prepayment of GSE loans (Fannie Mae and Freddie Mac) has risen 136 percent over that same period. The largest increase in June was among Ginnie Mae (FHA and VA) securitized loans which increased by 21 percent. Rates for both GSE and portfolio held mortgages are at their highest levels since 2004 while Ginnie Mae prepays are the highest since 2009.

Each of the past eight mortgage vintages have seen prepayment speeds more than double over the last five months and each of the most recent 11 vintages have seen at least a 65 percent increase. The 2019 vintage loan SMM rate is up 214 percent over that time frame. The highest speed, 5.1 percent, is among those loans originated in June 2018. That is the highest single month rate of any vintage since the Great Recession.

More Home Buyers are in the Market, but Shopping Takes Longer

August 2,2020
by admin

In the second quarter of 2020, 11 percent of American adults were planning on purchasing a home over the next 12 months, and of those, almost half were actively engaged in doing so. Rose Quint, writing in the National Association of Home Builders’ (NAHB’s) Eye on Housing blog says that the 49 percent who were actively shopping was significantly higher than a year ago when 41 percent were in the game but was identical to the share in Q1. Quint says this suggests that the COVID-19 crisis and its accompanying record-low mortgage rates have converted some prospective buyers into active buyers.

The share of buyers who were actively looking versus thinking about it differs significantly by age group. Of Millennials planning a home purchase in the next year, 57 percent are already actively looking but among Boomers, that share is only 37 percent. Among Gen Z and Gen X buyers the share who were active was 40 percent and 47 percent, respectively. Regionally those in the Northeast are the most likely to be actively engaged in the purchase process (57 percent), compared to 44 percent in the Midwest, 45 percent in the West, and 50 percent in the South.

The data for NAHB’s latest Housing Trends Report was collected between June 16 and June 28, and Quint says those dates are important. In June, the labor market showed signs of recovery, gaining 4.8 million jobs and a posting a lower unemployment rate. The 30-year fixed mortgage rate continued to fall, reaching 3.13 percent by the end of the month. The number of COVID cases had been stable nationally, only beginning to climb around June 15. For these reasons, NAHB assesses that consumer responses reflect a period when workers were returning to their jobs, mortgage rates looked increasingly attractive, and the pace of new cases had only recently started to regain speed.

The report also shows that the length of time spent searching for a home is growing. In the second quarter 59 percent of buyers actively engaged in the purchase process had spent three months or longer looking. A year earlier only 55 percent had spent that much time. It was the sixth consecutive year-over-year gain in the share of active buyers for whom the home-buying search took three months or more.