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Wednesday, October 13, 2021

MBA: Mortgage Applications Increase in Latest Weekly Survey

by Calculated Risk on 10/13/2021 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 0.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 8, 2021.

... The Refinance Index decreased 1 percent from the previous week and was 16 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 10 percent lower than the same week one year ago.

“Mortgage rates reached their highest level since June 2021, but application activity changed little this week. An increase in home purchase applications offset a slight decline in refinances,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The increase in purchase applications was welcome news, but was primarily driven by a 2 percent gain in conventional purchase applications, which kept the average loan size elevated.”

Added Kan, “The 30-year fixed rate reached 3.18 percent last week and has risen 15 basis points over the past month, resulting in an 11 percent drop in refinance applications during this time. Government refinance applications fell over 3 percent last week, driven by a decline in FHA refinances and an 8-basis point increase in the average FHA mortgage rate. We continue to expect weakening refinance activity as rates move higher and borrowers see less of a rate incentive.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.18 percent from 3.14 percent, with points increasing to 0.37 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added
Mortgage Refinance IndexClick on graph for larger image.

The first graph shows the refinance index since 1990.

With low rates, the index remains elevated - but the recent bump in rates has slowed activity.

The second graph shows the MBA mortgage purchase index

Mortgage Purchase Index According to the MBA, purchase activity is down 10% year-over-year unadjusted.

Note: The year ago comparisons for the unadjusted purchase index are now difficult since purchase activity was strong in the second half of 2020.

Note: Red is a four-week average (blue is weekly).

Tuesday, October 12, 2021

Wednesday: CPI, FOMC Minutes

by Calculated Risk on 10/12/2021 08:00:00 PM

From Matthew Graham at Mortgage News Daily: MBS RECAP: Bonds Improve After Treasury Auction; Why MBS Are Lagging

Bonds began the day weaker, but improved steadily after the 10yr Treasury auction. MBS underperformed--partly because the Treasury auction brings more direct benefit for Treasuries, but for a few other reasons as well. [30 year fixed 3.20%]
emphasis added
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, The Consumer Price Index for September from the BLS. The consensus is for a 0.3% increase in CPI, and a 0.3% increase in core CPI.

• At 2:00 PM, FOMC Minutes, Meeting of September 21-22, 2021

October 12th COVID-19: 7-Day Average Cases Down Almost 50% from Recent Peak

by Calculated Risk on 10/12/2021 03:57:00 PM

Data released on the day following a holiday is always low and will be revised up.

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 403,576,826, as of a week ago 397,718,055, or 0.84 million doses per day.

COVID Metrics
Percent fully Vaccinated56.5%56.0%≥70.0%1
Fully Vaccinated (millions)187.7186.1≥2321
New Cases per Day385,19699,238≤5,0002
Deaths per Day31,2931,453≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%).
2my goals to stop daily posts,
37 day average for Cases, Currently Hospitalized, and Deaths
🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths
✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  

KUDOS to the residents of Vermont that have achieved 70% of total population fully vaccinated: Vermont at 70.3%.

KUDOS also to the residents of the 13 states and D.C. that have achieved 60% of total population fully vaccinated: Connecticut at 69.6%, Maine, Rhode Island, Massachusetts, New Jersey, Maryland, New York, New Mexico, New Hampshire, Washington, Oregon, Virginia, District of Columbia and Colorado at 60.3%.

The following 21 states have between 50% and 59.9% fully vaccinated: California at 59.9%, Minnesota, Hawaii, Pennsylvania, Delaware, Florida, Wisconsin, Texas, Nebraska, Iowa, Illinois, Michigan, Kentucky, South Dakota, Arizona, Kansas, Nevada, Alaska, Utah, North Carolina and Ohio at 50.9%.

Next up (total population, fully vaccinated according to CDC) are Montana at 49.1%, Indiana at 49.0%, Missouri at 48.7%, Oklahoma at 48.6% and South Carolina at 48.5%.

COVID-19 Positive Tests per DayClick on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

Second Home Market: South Lake Tahoe in September

by Calculated Risk on 10/12/2021 02:31:00 PM

Early this year, from Jann Swanson at MortgageNewsDaily: Fannie Warns Lenders on Investment Properties and 2nd Homes

I'm looking at data for some second home markets - and will track those markets to see if there is an impact from the lending changes.

This graph is for South Lake Tahoe since 2004 through September 2021, and shows inventory (blue), and the year-over-year (YoY) change in the median price (12 month average).

Note: The median price is distorted by the mix, but this is the available data.

South Lake Tahoe Click on graph for larger image.

Following the housing bubble, prices declined for several years in South Lake Tahoe, with the median price falling about 50% from the bubble peak.

Currently inventory is still very low, but solidly above the record low set six months ago, and prices are up sharply YoY.   

This will be interesting to watch, but so far there isn't any evidence of a 2nd home slowdown in these numbers (The fires don't seem to have impacted these numbers either).

Will House Prices Increase "a further 16% by the end of 2022"?

by Calculated Risk on 10/12/2021 12:27:00 PM

Today, in the Newsletter: Will House Prices Increase "a further 16% by the end of 2022"?


Yesterday, Goldman Sachs economist Ronnie Walker wrote a research note forecasting US house prices would increase a further 16% by the end of 2022: The Housing Shortage: Prices, Rents, and Deregulation. This caused quite a stir on twitter.
First, this is a projection for the end of next year. The most recent Case-Shiller report was for July, so this projection is for 17 months. This forecast is for an average of about 0.9% per month, well below the 1.5% per month average over the last year.

Here is what the forecast would look like:
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BLS: Job Openings Decrease to 10.4 Million in August

by Calculated Risk on 10/12/2021 10:07:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings declined to 10.4 million on the last business day of August following a series high in July, the U.S. Bureau of Labor Statistics reported today. Hires decreased to 6.3 million while total separations were little changed at 6.0 million. Within separations, the quits rate increased to a series high of 2.9 percent while the layoffs and discharges rate was little changed at 0.9 percent.
emphasis added
The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for August, the most recent employment report was for September.

Job Openings and Labor Turnover Survey Click on graph for larger image.

Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

The huge spike in layoffs and discharges in March  2020 are labeled, but off the chart to better show the usual data.

Jobs openings decreased in August to 10.439 million from 11.098 million in July.

The number of job openings (yellow) were up 62% year-over-year. 

Quits were up 43% year-over-year to a new record high. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Monday, October 11, 2021

Tuesday: Job Openings

by Calculated Risk on 10/11/2021 06:52:00 PM

• At 6:00 AM ET, NFIB Small Business Optimism Index for September.

• At 10:00 AM, Job Openings and Labor Turnover Survey for August from the BLS.

MBA Survey: "Share of Mortgage Loans in Forbearance Decreases to 2.62%"

by Calculated Risk on 10/11/2021 04:05:00 PM

Note: This is as of October 3rd.

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 2.62%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 27 basis points from 2.89% of servicers’ portfolio volume in the prior week to 2.62% as of October 3, 2021. According to MBA’s estimate, 1.3 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 17 basis points to 1.21%. Ginnie Mae loans in forbearance decreased 41 basis points to 2.94%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 35 basis points to 6.42%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 37 basis points relative to the prior week to 2.82%, and the percentage of loans in forbearance for depository servicers decreased 24 basis points to 2.69%.

Many borrowers reached the expiration of their forbearance term as we entered October. The pace of exits climbed to the fastest pace in over a year, and the share of loans in forbearance declined at the fastest rate since last October, dropping by 27 basis points. The decline was the largest for Ginnie Mae and portfolio/PLS loans,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Payment performance has remained steady for those who have exited forbearance and into a workout since 2020, with more than 85% of those borrowers current as of October. It also continues to be striking that so many homeowners in forbearance have continued to make their payments. Almost 16 percent of borrowers in forbearance as of October 3rd were current.”

Added Fratantoni, “Job growth was weaker than expected in September, reflecting the challenges from the Delta variant, ongoing supply-chain issues, and the resulting slowdowns in workplace and school reopenings. However, the drop in the unemployment rate, rising wages, and abundant job openings will continue to help support the housing market, including helping borrowers exit forbearance successfully in the weeks ahead.”
emphasis added
MBA Forbearance Survey Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April 2020, and has trended down since then.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) increased relative to the prior week: from 0.04% to 0.05%."

Goldman on Housing: "Multi-year boom in home prices"

by Calculated Risk on 10/11/2021 01:44:00 PM

A few excerpts from a Goldman Sachs research note: The Housing Shortage: Prices, Rents, and Deregulation

Of all the shortages afflicting the US economy, the housing shortage might last the longest. Earlier this year, we argued that constrained supply and sustainably robust demand would keep the US housing market very tight, pushing up home prices and rents sharply. The boom since then has surpassed even our lofty expectations, with home prices now up 20% over the last year. ...

The supply-demand picture that has been the basis for our call for a multi-year boom in home prices remains intact. Housing inventories remain historically tight, while homes remain relatively affordable despite the recent price increases, and surveys of home buying intentions remain at healthy levels. Our model now projects that home prices will grow a further 16% by the end of 2022.
emphasis added

Mortgage Rates Highest in 6 Months; Refinance Activity Will Slow

by Calculated Risk on 10/11/2021 12:01:00 PM

Today, in the Newsletter: Mortgage Rates Highest in 6 Months


The general rule of thumb is refinance activity will be strong if current mortgage rates are 50bps lower than the maximum of the previous year (this is just a general rule - but it works pretty well).

The following graph shows the MBA Refinance Index (Blue) and the change in mortgage rates (Red). The change is calculated as Maximum in Previous Year minus the current rate). When the red line is above 0.5% (more than 50bps decline in mortgage rates), then refinance activity generally picks up.
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