by koredesign | Apr 20, 2017 | LLT, News
Purchase market heats up
The average closing time on a loan in 2016 fluctuated around the high 40s, but this is no longer the case, according to the latest Origination Insight Report from Ellie Mae.
The survey found that the average time now sits at the lowest level in two years, coming in at 43 days in March, down from 46 days in February. This is the shortest time to close since February of 2015.
After the implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure rule last year, the industry became hyper focused on the average time to close a loan. The time eventually started to level out around the high 40s, as the chart below shows.
(Source: Ellie Mae)
Similarly, the time to close a refinance dipped to 43 days from 47 days in February, and time to close a purchase dropped to 43 days, down from 45 days in February.
The Origination Insight Report uses data from a sampling of approximately 80% of all mortgage applications that were initiated on Ellie Mae’s loan origination system, Encompass.
In addition, home loans for purchases increased to 63% in March, up from 57% the month prior. This doesn’t come as a surprise since refinance applications have been on a downward trend.
Jonathan Corr, president and CEO of Ellie Mae, commented on the report stating, “The purchase market continued to heat up in March, representing 63% of total closed loans.”
“We also saw the time to close shrink to the shortest duration since February of 2015 at 43 days across all closed loans, purchases and refinances, as Ellie Mae lenders automate more mortgage processes to improve efficiency, quality and compliance,” he continued.
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by koredesign | Apr 19, 2017 | LLT, News
They’re either a valuable financial tool for homeowners or a harbinger of trouble on the horizon: Cash-out refinancings, which were wildly popular during the housing boom years and contributed to the severity of the crash, are on the rise again.
National mortgage investor Freddie Mac reports that 45 percent of all home loan refinancings in the final three months of last year involved cash-outs. That was the highest percentage since the end of 2008. Black Knight Financial Services, a mortgage technology and analytics firm, says homeowners pulled $31 billion from their equity holdings in the fourth quarter of 2016, a jump of 50 percent over the same period the year before.
In a cash-out transaction, borrowers come away with a new mortgage that is larger than the one being replaced. The borrowers pocket the difference between the old balance and the new mortgage amount and can spend it on anything they choose. In a simplified example, you could refinance a loan with a $250,000 balance, replace it with a $300,000 mortgage and walk away with $50,000, not counting transaction costs.
Much of the current cash-out surge is the result of steadily rising home prices and equity holdings since 2012. According to the Federal Reserve, American homeowners had more than $13.3 trillion in equity as of the end of last December, a $1.3 trillion jump over the same period in 2015. With more equity, rising numbers of owners have been attracted to the idea of using a cash-out refi to pay for remodeling their homes or consolidating high-interest credit card balances and other debts. Lenders don’t audit what borrowers do with the cash they pull out, so some of the money could well be spent on cars, overseas vacations or ongoing household expenses.
But when cash-out refis begin to soar, is that a positive or negative indicator for the housing market’s health? Critics such as Connecticut-based real estate analyst Keith Jurow say the trend today is reminiscent of the tail end of the boom years, and a little worrisome. Though banks and other lenders may have more rigorous underwriting standards than they did during 2003-2008, he says, they may be overconfident about how long housing price inflation will continue and how much of an equity cushion borrowers should be required to maintain. If too many owners get overleveraged, as millions did during the housing boom, any significant market downturn could spell trouble.
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by koredesign | Apr 18, 2017 | LLT, News
As mortgage applications increase, mortgage rates have begun to drop, according to data from the Mortgage Bankers Association (MBA) and Freddie Mac. The MBA’s Market Composite Index, a measure of mortgage loan application volume, rose 1.5 percent from a week earlier, while the 30-year fixed-rate mortgage dropped from 4.10 to 4.08 percent. The average loan size for purchase applications was at $318,700, a survey high.
The declining 30-year fixed-rate mortgage is at a 2017 low, according to Freddie Mac, but still higher than this time last year. During this week a year ago, the 30-year fixed-rate mortgage average 3.58 percent. Still, mortgage rates are declining, and may keep declining as applications increase.
Freddie Mac reports that mortgage rates are declining week-over-week, a trend that has continued over several weeks. Though early March saw a week-over-week jump, rates have declined since then, especially 30-year fixed-rate mortgages.
Other mortgages, such as 15-year fixed-rate mortgages, have seen week-over-week declines as well, though not as drastic. The average rate for a 15-year fixed-rate mortgage dropped from 3.36 percent to 3.34 percent week-over-week.
Additionally, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.28 percent from 4.34 percent, with points increasing to 0.38 from 0.31 for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.
As rates decline, refinances have declined with them. The refinance share of mortgage activity saw a decrease to 41.6 percent of total applications from the previous weeks 42.6 percent, according to the MBA. This is the lowest level since September 2008.
While 15-year and 30-year fixed rate mortgage application volume has declined, the MBA reports that adjustable-rate mortgages remained unchanged.
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by koredesign | Apr 17, 2017 | LLT, News
Median sale price increases 7.5% in the fastest market on record
Redfin reports that U.S. home prices rose 7.5% to a median sale price of $273,000 in March as home sales made a strong showing, gaining 8.9% over last year. However, the number of homes for sale declined 13% compared to March 2016, marking the 18th consecutive month of declines in supply.
The report indicated that 2017 remains on track to be the fastest housing market on record and the typical home that sold last month went under contract in 49 days, shaving 11 days from last year’s median time on market of 60 days. Nearly one in five, or 19.1%, homes that sold in March went under contract within two weeks and 21.7% of homes sold for more than their list price.
Four East coast cities saw inventory decline more than 30%. Rochester, New York, saw the largest inventory decline, dropping 39% since March last year. Buffalo, New York, saw a 34.5% decline, Rochester, New Hampshire, dropped 33.2%, and Portsmouth, New Hampshire dipped 31.4%. However, these areas also had fewer homes available on the market than last year.
A handful of cities did see modest inventory growth. Fort Myers, Florida, saw the highest increase in the number of homes for sale, up 32.4% from last year, followed by Knoxville, Tennessee, with 22.3% growth and Austin, Texas, which saw 10.3% growth.
“In addition to the laws of supply and demand, today’s open and immediate access to home listing information is really driving the velocity of home sales,” said Alec Traub, a Redfin Los Angeles agent. “In the past, buyers had to wait for their agent to tell them which homes were for sale. Now, when I meet a client for the first time, they already have a home in mind and I can jump in to guide them on what it will take to win it.”
Various Redfin agents recommend buyers provide assurances to both the seller and listing agent by working with a local, reputable lender and catering to the seller’s needs. This can ensure they don’t miss out on a home once they’re ready to make an offer.
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by koredesign | Apr 14, 2017 | LLT, News
Rates dip to new 2017 lows
Mortgage rates continued to steadily decline, maintaining a recent downward trend in rates, according to Freddie Mac’s latest Primary Mortgage Market Survey.
In fact, Sean Becketti, chief economist with Freddie Mac, said, “Not only did the average 30-year fixed-rate mortgage decline for the fourth consecutive week in our survey, it also fell to a new 2017 low.”
The chart below gives an overview of how mortgage rates have moved since April 2016.
(Source: Freddie Mac)
The 30-year fixed-rate mortgage averaged 4.08% for the week ending April 13, 2017, down from last week’s average of 4.10%. A year ago at this time, the 30-year FRM averaged 3.58%.
Similarly, the 15-year FRM this week averaged 3.34%, falling from last week’s average of 3.36%. A year ago at this time, the 15-year FRM averaged 2.86%.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.18% this week, declining from an average of 3.19% last week. A year ago, the 5-year ARM averaged 2.84%.
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