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Vaultedge Newsletter - Multifamily Mortgage Debt Jumps to Record High in Q4

April 30, 2022

MBA got back with its recent survey on how multifamily mortgage debt grew by $42.1 billion, the highest ever to be recorded in Q 4. The level of commercial/multifamily mortgage debt outstanding during the final three months of 2021 was $287 billion (7.4 percent) higher than at the end of 2020. Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research feels that strong borrowing and lending supported by commercial and multifamily properties were the reasons for the surge in such astronomical mortgage debt numbers. This year, the multifamily lending landscape looks solid owing to the last three months of 2021.

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Monday started with a bang! The Texas Mortgage Bankers Association’s 106th Annual Convention ended this week. Along with the mortgage industry stalwarts, the presence of Peyton Manning, the two-time Superbowl-winning Quarterback made the convention even more spectacular. The DEI panel on social and corporate responsibility on closing the minority gap for homeownership was inspiring. The mortgage industry has a social responsibility to promote minority homeownership by working with the primary stakeholders to eradicate barriers and close the racial homeownership gap. The two-day event was focused on technology, operational efficiencies, and profitability. Although the halls didn’t resonate with musical notes, given that it was in Austin, it was filled with bright, enthusiastic minds keen to share their experiences and ideas.

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This year a significant number of mortgage indicators declined to hit the lowest level since 2018. A gauge of refinancing decreased 9% to the lowest level since December 2018, while purchase applications fell 7.6% to the weakest reading in nearly two years. Not a very inspiring time but one can only hope before numbers plummet again.

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A strong relationship between sales and marketing, for any product or service is important for business growth. In 1975, French psychoanalyst, Clotaire Rapaille, was invited to Japan by Nestle. He was well known for his research on the emotional ties humans form with objects in their culture. Nestle was trying to sell coffee in an essentially tea-drinking nation. After a series of ‘stimulus experiments,’ he concluded that the Japanese people had no memory associated with coffee. Rapaille hypothesized that what needed was to get the children to love Nestle's coffee flavor from an early age. Nestle Japan flooded the markets with its coffee-flavored candies which become immensely popular. A decade later, Nestle re-entered the market with a new wave of coffee offerings with astounding results. Interestingly this became one of the most profound case studies of modern marketing, the bond between consumer psychoanalysis and its manifestation in visible behavior patterns.

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Have a fantastic weekend.

Happy reading!

The Mortgage Bankers Association's Purchase Applications Payment Index reached a high in March, a consequence of rising prices and interest rates.

During the fourth quarter of 2021, mortgage debt outstanding was $287 billion (7.4 percent) higher than at the end of 2020, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report.

The Mortgage Bankers Association on Monday sent a letter to the Federal Housing Finance Agency, offering detailed recommendations on the agency’s re-proposal of eligibility requirements for seller/servicers of single-family loans backed by Fannie Mae and Freddie Mac. The proposal features an increase in base liquidity requirements for servicers.

A gauge of U.S. mortgage applications tumbled last week to the lowest level since late 2018, illustrating the hit to the housing market from mortgage rates that are now approaching a 13-year high.

In the first quarter, nonbanks once again increased their grip on the Fannie Mae/Freddie Mac servicing market, according to a new ranking and analysis by Inside The GSEs. Some $6.28 trillion of loans were outstanding in Fannie/Freddie MBS at March 31, a 2.9% increase from yearend. Much of the increase in servicing was driven by nonbanks, which have steadily boosted their market share in the eight quarters since the start of the pandemic.