Guardian Residential Lending Industry News, March 4-11, 2021

Guardian Residential Lending Industry News, February 25-March 4, 2021
March 4, 2021
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In the Know: A Roundup of This Week’s Local and National Real Estate Stories

Spring housing market forecast: record purchase volume (HW, March 8)

MBA says a meaningful jump in the supply of newly built homes will be key

…our industry is gearing up for a strong spring housing market – and the first step in what MBA is forecasting will be a record-breaking year of purchase origination volume.

Demand for homes will be bolstered by an improving job market, favorable demographic trends, and mortgage rates that, while rising, are still low from a historical perspective. The unemployment rate, which was at 6.2% in February, is expected to drop to 4.7% by the end of the year, with hiring accelerated by a surge of consumer spending as pandemic restrictions are lifted.

Another positive sign impacting MBA’s housing market forecast: more than 15% of the U.S. population has received at least one vaccine dose at this point, and recent announcements from the Biden administration indicate that the pace will only increase from here.

The improving economic picture is putting upward pressure on mortgage rates, which have moved above 3% in recent weeks for 30-year fixed-rate loans. MBA is forecasting that the Freddie Mac survey rate will reach about 3.5% by the end of 2021.


Home Asking and Selling Prices Hit New High (M Report, March 10)

Redfin’s breakdown of 400-plus U.S. metro areas during the four-week period ending February 28 found that the median home-sale price increased 16% year-over-year to $323,600, an all-time high, and largest increase on record in this data set.

And while the median home-sale price hit an all-time benchmark, asking prices of newly listed homes hit a new all-time high as well at $347,475, up 10% from the same time in 2020.

The average sale-to-list price ratio, which measures how close homes are selling compared to their asking prices, increased to 99.6%—1.6 percentage points higher than a year earlier and an all-time high. During the seven-day period ending February 28, the ratio shot up to 99.9%, also an all-time high.


Single Women Homeowners Outpace Males (M Report, March 10)

LendingTree has found that when it comes to gender and homeownership, single women are more likely than single men to own a home in each of the nation’s 50 largest metros.

In the nation’s 50 largest metros, single women own nearly 1.6 million more homes than single men, as nationwide, single women own about 5.2 million homes, while single men own approximately 3.6 million homes.

According to LendingTree, there isn’t a single metro among the largest 50 in the U.S. where single men own more homes than single women. The average difference between the share of homes owned by single women compared to single men is 3.7%.


Fannie Mae tightens standards on investment properties (HW, March 10)

Treasury amendment means it has a 7% limit on acquisition of single-family mortgage loans secured by second home and investment properties

Fannie Mae is tightening the underwriting criteria for second homes and investment properties, the government sponsored entity said in a letter to sellers on Wednesday.

“Recent amendments to our senior preferred stock purchase agreement with Treasury impose additional risk criteria on the loans we acquire,” the GSE said in a letter. “One of those restrictions is a 7% limit on our acquisition of single-family mortgage loans secured by second home and investment properties.”

The policies will take effect for loans submitted to Fannie’s loan delivery system on or after April 1, and for loans delivered into MBS pools with issue dates on or after April 1.


Mortgage credit, and the coming purchase storm (HW, March 9)

A rebounding economy and wave of first-time homebuyers are poised to push open the credit gates

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, despite a virtually unaltered February, the housing market is in strong shape heading into the spring, with robust growth in purchase applications, home sales and new residential construction.

“Expected home sales growth this year is still likely to be driven by first-time buyers, spurred by millennials reaching peak first-time homebuyer age,” Kan said. “Many of these potential buyers will likely utilize FHA and other low down payment loans to purchase a home.”


Is Q1 the last quarter to ride the mortgage refinance wave? (HW, March 8)

Black Knight estimates estimates 12.9 million high quality refi candidates remain – the lowest such volume since May 2020 and down 30% in just three weeks.

Lenders may have one last quarter to ride the market’s massive mortgage refinance wave after Monday data from Black Knight’s Mortgage Monitor Report revealed that despite rising interest rates, Q1 2021 refinance lending volumes are poised to remain near last quarter’s meteoric high.

“Roughly 2.8 million homeowners refinanced their mortgages in the last quarter of 2020, which saw a record-breaking $869 billion in refinance lending,” said Ben Graboske, Black Knight’s president of data and analytics.

A whopping $4.3 trillion in mortgages were originated in 2020, with $2.8 trillion in refinances, and Black Knight is confident lenders should still be able to cash in on that steady refi volume given that daily rate locks through mid-February were elevated.

That rise in refi locks suggests that increases in 30-year rates over the first 45 days of the year may have spurred formerly procrastinating borrowers to act while rates were still near historic lows.

But companies need to act fast, as Graboske noted that activity is already beginning to curtail. As of Feb. 11, there were still some 18.1 million high-quality mortgage refinance candidates, but with news of interest rates breaking 3% starting March 4, Black Knight estimates 12.9 million remain – the lowest such volume since May 2020 and down 30% in just three weeks.


Mike Cagney eyes Walmart’s potential move into mortgage (HW, March 5)

HousingWire Spring Summit guests discuss how “speed is the name of the game”

Figure Technologies CEO and co-founder Mike Cagney said that when it comes to watching out for non-endemic players impacting the real estate market, he has his eye on Walmart.

“Everyone should be taking notice of the moves that Walmart’s making, because they’re absolutely going to come into the mortgage space,” Cagney said at HousingWire’s 2021 Spring Summit event on Thursday.


This Is Unprecedented’: Why America’s Housing Market Has Never Been Weirder (The Atlantic, March 5)

If you think the U.S. housing market is behaving very, very strangely these days, that probably means you’re paying attention.

In almost any other year, a weak economy would cripple housing. But the flash-freeze recession of 2020 corresponded with a real-estate boom, led by high-end purchases in suburbs and small towns. Even stranger, in America’s big metros, home prices and rents are going in opposite directions. Home values increased in all of the 100 largest metros in the U.S., according to Zillow data. But in some of the richest cities—San Jose; Seattle; New York; Boston; Austin; San Francisco; Washington, D.C.; Los Angeles; and Chicago—rent prices fell, many by double-digit percentages. In many cases, the gap was absurdly large. In San Jose last year, home prices rose by 14 percent (the sixth-largest increase in the country) but the area’s rents fell 7 percent (the sixth-largest decline).

In America’s largest, richest cities, home prices and rents are going in opposite directions.

This strange moment for American housing isn’t all bad, though—and, in a few years, some very good things could come from it. A historic imbalance between rents and home prices could set the stage for an urban renaissance led by younger and more middle-class residents. The big drop in Manhattan rental prices is already luring back younger residents.


Thanks for reading.