Mortgage Rates Reach Highest Level in Over 20 Years, Applications Down  

On Thursday, September 28, 2023, Freddie Mac released the results of its Primary Mortgage Market Survey^® (PMMS^®), showing the 30-year fixed-rate mortgage (FRM) averaged 7.31 percent, up from last week when it averaged 7.19 percent. A year ago at this time, the 30-year FRM averaged 6.70 percent.

The 15-year fixed-rate mortgage averaged 6.72 percent, up from last week when it averaged 6.54 percent. A year ago at this time, the 15-year FRM averaged 5.96 percent.

“The 30-year fixed-rate mortgage has hit the highest level since the year 2000,” said Sam Khater, Freddie Mac’s Chief Economist. “However, unlike the turn of the millennium, house prices today are rising alongside mortgage rates, primarily due to low inventory. These headwinds are causing both buyers and sellers to hold out for better circumstances.”

According to the Mortgage Bankers Association (MBA), mortgage applications decreased 1.3 percent from one week earlier. The Refinance Index decreased 1 percent from the previous week and was 21 percent lower than the same week one year ago. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 27 percent lower than the same week one year ago.

“Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week. The 30-year fixed mortgage rate increased to 7.41 percent, the highest rate since December 2000, and the 30-year fixed Jumbo mortgage rate increased to 7.34 percent, the highest rate in the history of the Jumbo rate series dating back to 2011,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Based on the FOMC’s most recent projections, rates are expected to be higher for longer, which drove the increase in Treasury yields. Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates. The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27 percent behind last year’s pace. Refinance activity was down over 20 percent from last year and accounted for approximately one third of applications. Many homeowners have little incentive to refinance.”

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According to MBA’s Purchase Applications Payment Index (PAPI), homebuyer affordability declined in August, with the national median payment applied for by purchase applicants increasing to $2,170 from $2,162 in July.

“Prospective homebuyers’ budgets continue to be impacted by the combination of high home prices and mortgage rates that remain higher than 7 percent,“ said Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America. “If mortgage rates shift lower in 2024 as we anticipate, the combination of rising inventory levels and lower rates should lead to stronger demand for buying a home.”

The Freddie Mac Multifamily Apartment Investment Market (AIMI) Index rose by 5.1% in the second quarter of 2023. “This quarter’s results show that AIMI is rebounding,” said Sara Hoffmann, director of Multifamily Research at Freddie Mac. “The index experienced a sharp annual decline in each of the prior four quarters, but a pullback in property prices and moderating mortgage rates are helping AIMI regain its footing. Over the past quarter, the index increased due to the confluence of net operating income growth, property price depreciation, and lower mortgage rates relative to recent trends.”

Additional mortgage activity  

• The refinance share of mortgage activity increased to 31.9 percent of total applications from 31.6 percent the previous week.
• The adjustable-rate mortgage (ARM) share of activity increased to 7.5 percent of total applications.
• The FHA share of total applications decreased to 14.1 percent from 14.2 percent the week prior.
• The VA share of total applications decreased to 10.9 percent from 11.0 percent the week prior.
• The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

This week in mortgage rates

Rates reach new heights. Here’s how average fixed rates broke down:

• 30-year fixed-rate loans: 7.31% (up from 7.19%)
• 15-year fixed-rate loans: 6.72% (up from 6.54%)

Check back next week for the most up-to-date mortgage and housing news.

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Sept 21 – Mortgage Rates Increase Slightly, Applications Rise 

On Thursday, September 21, 2023, Freddie Mac released the results of its Primary Mortgage Market Survey^® (PMMS^®), showing the 30-year fixed-rate mortgage (FRM) averaged 7.19 percent, up from last week when it averaged 7.18 percent. A year ago at this time, the 30-year FRM averaged 6.29 percent.

The 15-year fixed-rate mortgage averaged 6.54 percent, up from last week when it averaged 6.51 percent. A year ago at this time, the 15-year FRM averaged 5.44 percent.

“Mortgage rates continue to linger above seven percent as the Federal Reserve paused their interest rate hikes,” said Sam Khater, Freddie Mac’s Chief Economist. “Given these high rates, housing demand is cooling off and now homebuilders are feeling the effect. Builder sentiment declined for the first time in several months and construction levels have dipped to a three-year low, which could have an impact on the already low housing supply.”

According to the Mortgage Bankers Association (MBA), mortgage applications increased 5.4 percent from one week earlier. The Refinance Index increased13 percent from the previous week and was 29 percent lower than the same week one year ago. The unadjusted Purchase Index increased 12 percent compared with the previous week and was 26 percent lower than the same week one year ago.

“Mortgage applications increased last week, despite the 30-year fixed mortgage rate edging back up to 7.31 percent — its highest level in four weeks,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications increased for Conventional and FHA loans over the week but remained 26 percent lower than the same week a year ago, as homebuyers continue to face higher rates and limited for-sale inventory, which have made purchase conditions more challenging. Refinance applications also increased last week but are still almost 30 percent lower than the same week last year.”

Added Kan, “The average loan size on a purchase application was $416,800, the highest level in six weeks. Home prices in many markets have been supported by low inventory and resilient housing demand for available homes.”

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Following the Federal Reserve’s FOMC statement, MBA SVP and Chief Economist Mike Fratantoni commented, “We expect that inflation will continue to drop closer to the Fed’s target, the job market will continue to slow, and that mortgage rates should begin to reflect that the Fed’s moves in 2024 will be cuts — not further increases. This should provide some relief in terms of better affordability for potential homebuyers.”

He added, “The lack of housing inventory continues to be the biggest challenge for many potential buyers.  While homebuilder sentiment is clearly impacted by the recent surge in mortgage rates, permits for single-family homes provide a positive outlook for the pace of construction in the year ahead. If mortgage rates trend down in 2024 as we anticipate, the combination of more homes for sale and somewhat lower rates should support stronger purchase volume.”

According to MBA, the level of commercial/multifamily mortgage debt outstanding increased by $37.7 billion (0.8 percent) in the second quarter of 2023. Multifamily mortgage debt alone increased $26.4 billion (1.3 percent) to $2.03 trillion from the first quarter of 2023.

The MBA Opens Doors Foundation announced it received $2,684,526 in corporate and individual donations during its Annual Appeal fundraising campaign to kick off fiscal year 2024. The proceeds will support the Foundation’s mission of helping vulnerable families with critically ill or injured children stay in their homes while their child is in treatment.

The share of mortgage loans in forbearance decreased to 0.33% in August from 0.39% the prior month.

Additional mortgage activity  

• The refinance share of mortgage activity increased to 31.6 percent of total applications from 29.1 percent the previous week.
• The adjustable-rate mortgage (ARM) share of activity decreased to 7.2 percent of total applications.
• The FHA share of total applications remained unchanged at 14.2 percent from the week prior.
• The VA share of total applications decreased to 11 percent from 11.3 percent the week prior.
• The USDA share of total applications remained unchanged at 0.4 percent from the week prior.

This week in mortgage rates

Rates increase slightly. Here’s how average fixed rates broke down:

• 30-year fixed-rate loans: 7.19% (up from 7.18%)
• 15-year fixed-rate loans: 6.54% (up from 6.51%)

Check back next week for the most up-to-date mortgage and housing news.

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Sept 14 – 30-Year Mortgage Rates Inch Up, Applications Inch Down

On Thursday, September 14, 2023, Freddie Mac released the results of its Primary Mortgage Market Survey^® (PMMS^®), showing the 30-year fixed-rate mortgage (FRM) averaged 7.18 percent, up from last week when it averaged 7.12 percent. A year ago at this time, the 30-year FRM averaged 6.02 percent.

The 15-year fixed-rate mortgage averaged 6.51 percent, down from last week when it averaged 6.52 percent. A year ago at this time, the 15-year FRM averaged 5.21 percent.

“Mortgage rates inched back up this week and remain anchored north of seven percent,” said Sam Khater, Freddie Mac’s Chief Economist. “The reacceleration of inflation and strength in the economy is keeping mortgage rates elevated. However, potential homebuyers can still benefit during these times of high mortgage rates by shopping around for the best rate quote. Freddie Mac research suggests homebuyers can potentially save $600-$1,200 annually by applying for mortgages from multiple lenders.”

According to the Mortgage Bankers Association (MBA), mortgage applications decreased 0.8 percent from one week earlier. The Refinance Index decreased 5 percent from the previous week and was 31 percent lower than the same week one year ago. The unadjusted Purchase Index decreased 11 percent compared with the previous week and was 27 percent lower than the same week one year ago.

“Mortgage applications decreased for the seventh time in eight weeks, reaching the lowest level since 1996. Last week’s decline was driven by a 5 percent drop in refinance applications to the weakest reading since January 2023,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed mortgage rate increased to 7.27 percent last week and was 40 basis points higher than where it was in late July. Purchase applications increased over the week despite the increase in rates, pushed higher by a 2 percent gain in Conventional loans. Given how high rates are right now, there continues to be minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate.”

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Mortgage applications for new home purchases increased 20.6 percent from a year ago. Compared with July 2023, applications increased by 4 percent.

“There was strong purchase demand in August for newly constructed homes, as existing for-sale inventory remains low, with most homeowners locked into lower mortgage rates and unwilling to give those rates up in this higher rate market,” said MBA’s Kan. “Despite the 30-year fixed rate averaging over 7 percent in August, applications for new home purchase loans increased over the month and from a year ago.”

According to the MBA, commercial and multifamily mortgage delinquencies increased in the second quarter of 2023. “Delinquency rates on loans backed by commercial real estate properties rose during the second quarter for most capital sources,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Although the uptick in delinquency rates was expected, they remain at the lower end of historical ranges. Higher and volatile interest rates, uncertainty about property values, and stresses in some property markets have increased pressure on some loans and properties.”  

Added Woodwell, “Not all commercial mortgage loans are facing the same pressures. Loans backed by properties and property types with stable cash flows are experiencing different prospects than those that may have seen declines in incomes. Additionally, long-term loans are experiencing less of a change in interest rates than those with shorter terms or adjustable rates. We expect these differences to continue to play out in coming quarters.”

According to the MBA’s Mortgage Credit Availability Index (MCAI), mortgage credit availability increased 0.3 percent to 96.6 in August. “Credit availability in August increased slightly but remained close to the very low levels last seen in January 2013,” said MBA’s Kan. “The overall increase was driven by an increased number of loan programs that included parameters such as cash-out refinances and mid-range credit scores. The conforming index dropped to its lowest level since 2011, while the Jumbo index increased after three monthly declines.” 

Added Kan, “Industry capacity continues to decline as lenders reduce staffing and simplify their product offerings to reduce costs and raise profitability. While this dynamic has led to lower credit availability, it has also provided some lenders with new opportunities to expand some of their product offerings, and we saw some of that growth in the Jumbo space last month.”   

Michael J. DeVito announced that he will retire from his position as CEO at Freddie Mac in the first quarter of 2024. The Board of Directors will begin a search for his successor.

On September 12, Freddie Mac published the company’s first Sustainability Report, which provides details about the company’s 2022 sustainability strategy, activities, and performance. 

Additional mortgage activity  

• The refinance share of mortgage activity decreased to 29.1 percent of total applications from 30.0 percent the previous week.
• The adjustable-rate mortgage (ARM) share of activity increased to 7.5 percent of total applications.
• The FHA share of total applications increased to 14.2 percent from 13.7 percent the week prior.
• The VA share of total applications remained unchanged at 11.3 percent from the week prior.
• The USDA share of total applications decreased to 0.4 percent from 0.6 percent the week prior.

This week in mortgage rates

Rates inch up and down. Here’s how average fixed rates broke down:

• 30-year fixed-rate loans: 7.18% (up from 7.12%)
• 15-year fixed-rate loans: 6.51% (down from 6.52%)

Check back next week for the most up-to-date mortgage and housing news.

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