Vaultedge Newsletter - Mortgage rates surpass 6 percent!

September 19, 2022

The market was spooked well before Halloween with the rates soaring at 6%. The 30-year fixed-rate mortgage — the most popular home loan product — soared to 6.02 percent this week, nearly double what it was nine months ago, according to data released Thursday by Freddie Mac. It has not been this high since November 2008. The rise came as inflation data released by the Bureau of Labor Statistics last week showed consumer prices accelerating in August, particularly for items such as housing and food. The Consumer Price Index showed a 0.1% month-over-month increase in August despite a drop in gas prices. Annually the CPI rose 8.3%. The Dow’s severe drop was the index’s worst day since June 2020 and put a damper on investors’ hope of a slightly less hawkish Federal Reserve.

Freddie Mac’s economists say that they see mortgage rates rising alongside scorching inflation numbers exceeding six percent for the first time since late 2008. Although the boost in rates will continue to douse demand and put downward pressure on home prices, inventory remains inadequate. This reveals that while home price declines will likely continue, they won’t be extensive.

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The Mortgage Bankers Association (MBA) united with several other trade organizations to submit a letter to the White House and the National Economic Council urging them to support reducing the Federal Housing Administration's mortgage insurance premium (MIP). MIPs are paid by homeowners with loans backed by the FHA. FHA-backed lenders use MIPs to protect themselves against higher-risk borrowers, who are more likely to default on loans. All FHA borrowers are required to have mortgage insurance. 

The letter mentions that lowering the MIP, with a focus on FHA’s recurring “annual” premium, will increase homebuyers’ purchasing power by decreasing monthly payments and putting money straight into their banks every month. This will help them with the opportunity to become homeowners and build generational wealth.

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Interestingly, a report from Redfin indicates nearly one-third (31.4%) of U.S. home purchases were paid with all cash in July. That’s edging near the eight-year record set in February 2022 and up from 27.5% a year earlier. Beginning in early 2021, when the pandemic homebuying fever took off, the share of all-cash purchases soared and has remained elevated ever since. 

All-cash purchases began to rise in popularity last year because it allowed buyers to stand out among the fierce competition. In early 2021, bidding-war rates reached record highs due to sub-3 % mortgage rates and remote work driving homebuyer demand. 

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A class action lawsuit filed in Washington state accuses Zillow of violating the privacy rights of visitors to its website. The lawsuit, filed Monday in U.S. District Court for the Western District of Washington in Seattle, was filed for plaintiffs Kenneth Hasson of Pennsylvania and Natalie Perkins of South Carolina on behalf of “themselves and all others similarly situated.” 

The lawsuit names Seattle-bathe defendants Seattle-based Zillow Group Inc. and Redmond, Wash.-based Microsoft Corp. as defendants. 

Rocket Mortgage and its wholesale arm Rocket Pro TPO will decrease homebuyers’ monthly mortgage payments by one full percentage point for the first year of their loan. Dubbed the “Inflation Buster” program, Rocket aims to give borrowers a reprieve to combat high inflation and affordability challenges, the company said in a statement Friday. Rocket Mortgage will be covering the difference in mortgage payments in the first 12 months through a special escrow account. 

Newfi Lending has expanded its presence in non-QM waters. The company has launched Pinnacles Step-Up Mortgage, a 30-year fixed-rate loan product designed for non-QM borrowers. The biggest advantage of the Pinnacles Step-Up Mortgage is lower initial mortgage payments for non-QM borrowers. This solution is a result of the company's feedback from homeowners who wanted the pressure of higher mortgage rates on their pockets to be eased.

This year, Wells Fargo has been at the center of controversy due to reports that they denied more than half of the Black homeowners' mortgage refinance requests during the housing bubble in comparison to just over half for their White neighbors and that they conducted sham interviews with Black and female candidates for positions at their wealth-management division. The firm urged shareholders to vote against a shareholder-proposed racial-equity audit earlier this year and last year, arguing that it was already committed to advancing diversity, equity, and inclusion. On both occasions, shareholders rejected the proposals.

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Property data analytics firm ATTOM has revealed that counties in New Jersey, Illinois, and California counties due to a potential housing downturn. A special housing risk report analyzed 575 US counties and identified those most at risk of declines.

Nine of the top 50 were in or around New York City, while six were in the Chicago metropolitan area. Another 13 – more than 25% of the 50 most vulnerable – were scattered throughout California.

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I am at the Five Star Conference here in Texas from Sep 18-20th. This conference not only provides forums that are focused on the mortgage industry’s pressing matters with notable industry leaders sharing their perspectives and sage advice, but it also gives tremendous scope for networking to augment the size of personal contacts and sphere of influence. Extremely elated that Vaultedge is a part of this convention.

Happy reading!

Mortgage rates shot above 6 percent this week for the first time in 14 years as inflation has remained resistant to the Federal Reserve’s efforts to tamp it down. 

The Mortgage Bankers Association (MBA) joined with several other trade organizations to submit a letter to the White House and the National Economic Council urging them to support reducing the Federal Housing Administration's mortgage insurance premium (MIP). 

The deal represents Fannie Mae’s fourth reperforming-loan sale this year and involves a total of some 6,060 loans valued at $986.4 million.

A new report from Redfin shows nearly one third (31.4%) of U.S. home purchases were paid with all cash in July. That’s edging near the eight-year record set in February this year and up from 27.5% a year earlier.

As refinancing mortgages and cash-out refis continue to dwindle amid rising mortgage rates, homeowners with mortgages are turning to another source for cash: Home equity lines of credit (HELOCs).

Despite the negativity surrounding the housing space, mortgage lenders can lead the way, as Abby Waltz of Homes for Heroes explains how to show clients ways to uncover opportunities in today’s marketplace.

A class action lawsuit filed in Washington state accuses Zillow of violating the privacy rights of visitors to its website.  The lawsuit, filed Monday in U.S. District Court for the Western District of Washington in Seattle, was filed for plaintiffs Kenneth Hasson of Pennsylvania and Natalie Perkins of South Carolina on behalf of “themselves and all others similarly situated.” 

Rocket Mortgage and its wholesale arm Rocket Pro TPO will lower homebuyers' interest rates for the first year of their mortgage.

Newfi Lending has expanded its presence in non-QM waters. The company has launched Pinnacles Step-Up Mortgage, a 30-year fixed-rate loan product designed for non-QM borrowers.

Wells Fargo & Co. will commission a third-party racial-equity audit after years of advising shareholders to vote against one, as chief executive officer Charlie Scharf prepares to appear at a pair of congressional hearings.

Property data analytics firm ATTOM has revealed that counties in New Jersey, Illinois, and California are the most vulnerable to a potential housing downturn. A special housing risk report analyzed 575 US counties and identified those most at risk of declines.