Vaultedge Newsletter - Third time's the charm? Fed raises the rates again!

September 26, 2022

Well, the unsettling news is the rates are up again. Freddie Mac’s weekly Primary Mortgage Market Survey report released last Thursday reveals that the housing market continues to face headwinds, as mortgage rates increased again this week to the highest level in nearly 14 years. 30-year fixed-rate mortgages averaged 6.29% with an average of 0.9 points as of Sept. 22, up from last week when it averaged 6.02%. A year ago at this time, the 30-year FRM averaged 3.41%. 15-year fixed-rate mortgages(FRM) averaged 5.44% with an average of 1.0 points, up from last week when it averaged 5.21%. Last year at this time, the 15-year FRM averaged 3.29%. Perhaps one of the aching points is that beyond high rates, mortgage volatility is freezing out some potential homebuyers by hurting their ability to plan for payments or even predictably qualify. In the immediate term, the Fed’s 75-basis-point rate increase will have a measurable impact on shorter-term borrowing costs. In the following weeks, consumers might witness the growth rates on adjustable-rate mortgages, credit cards, automotive, and personal loans. 

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The CFPB is on its way to improving mortgage refinances for homeowners who would benefit from refinancing, especially for borrowers with smaller loan balances. The agency is asking for public input on ways to support automatic short-term and long-term loss mitigation assistance for homeowners who experience financial disruptions. The CFPB will use this information as it considers steps to support household financial stability and address refinance market gaps. This recent initiative is part of a broader CFPB effort to promote competition and innovation in consumer finance markets.

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Ruoff Mortgage Co. and its affiliated companies, based in Fort Wayne, Ind., reduced the size of its workforce earlier this week by approximately 4.6%, according to a company statement released Sept. 16. Ruoff said the contraction has been directly related to the Federal Reserve’s moves to get inflation under control. The Fed has increased its federal funds' rate four times this year. The company didn’t reveal the exact number of people that got laid off.

Rocket Mortgage, the nation’s largest mortgage lender and a part of Rocket Companies, has launched its “Inflation Buster” program aimed at providing homeowners with a mild reprieve from higher prices by reducing their monthly mortgage payment by one percentage point for the first year of their loan.

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Contrary to their portrayal as indiscriminate buyers of properties far and wide, providers of single-family rental homes are working diligently to respond to the demand for quality, affordable rental housing in safe, well-located neighborhoods. Single-family rental home companies — large and small — are committed to the communities in which they invest and build by providing families with more options for housing to meet the needs of local residents. In terms of the impact on young and first-time homebuyers, the National Association of Realtors (NAR) found in a 2022 report, “millennials now make up 43% of homebuyers – the most of any generation – an increase from 37% over the previous year.”

Single-family rental home companies are investing in local staff, hiring local contractors and business partners, and bringing property management expertise to local housing markets all to ensure a positive experience for residents and families who choose a single-family rental home lifestyle. As a testament to the critical role of single-family rental homes in neighborhoods and communities, a report by Harvard’s Joint Center for Housing Studies and AARP in 2021 found, “the most livable neighborhoods offer the most diverse set of housing options, including multifamily and rental opportunities as well as single-family and owner-occupied homes.”

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 “When people talk, listen completely. Most people never listen.”

― Ernest Hemingway

How true are these wise words of the famous American novelist? How often do we actually listen to what others have to say? We only listen to respond. For the past few years, I have learned to cultivate the habit of listening. Don’t get me wrong I was and still am a good listener. But I changed the way I used to respond. A few weeks back, one of my clients spoke about the hurdles that she has to overcome as an entrepreneur in the mortgage industry, and with the given climate, the situation has been a bit more unpredictable. She said, ‘How I wish, someone could just tell me what I can do?” We listened. Of course, we don't have all the answers, but we have found a few mortgage industry legends who together can offer a lot of answers and insights. Our podcast, Mortgage Vault, Season 2 launches soon with a tremendous cast of mortgage industry experts. Stay tuned!

Happy Monday!

The Federal Reserve announced a third-consecutive 75-basis-point increase in the Federal Funds rate Wednesday afternoon, but that’s not what caught the most attention.

Soaring mortgage rates have led to the worst affordability in almost four decades, while sellers are also trapped in place.

The Consumer Financial Protection Bureau (CFPB) is asking for public input on ways to spur new mortgage products that help households.

As interest rates continue to rise and originations wane, mortgage lenders across the land are grappling with an existential dilemma: How many more quarters of cost cutting will they need to reach a break-even, or profit, point on production.

States vulnerable to foreclosures, affordability and plunging home sales named

Ruoff Mortgage Co. and its affiliated companies, based in Fort Wayne, Ind., reduced the size of its workforce earlier this week by approximately 4.6%, according to a company statement released Sept. 16.

Monthly mortgage payments reduced by one percentage point amid higher prices

With all the talk of a housing market crash, there’s not a lot of data to support it. Sure, home price gains have moderated significantly after recording

The age-old laws of supply and demand are driving home-price growth, not the purchase activities of large SFR companies.

Today, Loan Mohtashami talks about the Federal Reserve’s latest rate hike and what it means for U.S. housing and the global economy.