ARM applications reach another high

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1. ARM applications reach another high

The share of ARMs among all mortgage applications rose again this week, reaching 9.5%, the highest reading in the MBA Weekly Mortgage Application survey since November 2022.

Interest in ARMs has been increasing as mortgage rates hover near their highest levels in 23 years— topping 8% in some cases—forcing homebuyers to look for more affordable monthly payment options.

The adjustable-rate loans were associated with the run-up to the 2008 financial crisis, when homebuyers couldn’t afford to pay their mortgages once rates adjusted higher. However, this time around, ARMs are being seen in a different light due to stricter underwriting guidelines that have been put in place post-crisis.

2. New home sales surge by 12%

Sales of new houses rose in September to the fastest pace since early 2022, suggesting there’s still some appetite for homes despite soaring mortgage rates. Purchases of new single-family homes increased 12.3% to a 759,000 annualized pace last month, government data showed.

The median sales price of a new home dropped to $418,800, according to the report from the Census Bureau and the Department of Housing and Urban Development. Despite the decline, that’s still well above pre-pandemic levels.

3. More Nuggets

🚀 The US economy doesn’t seem to care that interest rates are at a 22-year peak, because it expanded 4.9% in Q3. For context, the economy grew 2.1% in Q2. (CNBC)

🏛️ Morgan Stanley named Ted Pick as its next CEO, ending a years-long, three-way race to succeed James Gorman atop the bank. (Banking Dive)

👨‍⚖️ The judge overseeing the bombshell commission trial refused to grant a mistrial on Wednesday, rejecting claims from HomeServices of America, the NAR, and Keller Williams that they were treated unfairly in court. (RE News)

⚖️ Hometown Lenders halted in Washington and faces a near $1 million tax lien due to unpaid taxes and mishandled FHA loans. (WA Gov)

4. Pending home sales grew 1.1% in September

A gauge of pending previously owned home sales unexpectedly rose in September but remained near the lowest level on record with affordability constraints and high borrowing costs keeping demand limited.

The National Association of Realtors’ index of contract signings increased 1.1% from a month earlier to 72.6, the group reported Thursday. Despite the slight gain, pending contracts remain at historically low levels due to the highest mortgage rates in 20 years.

5. Freddie Mac: Weekly mortgage rates soar closer to 8%

Mortgage rates rose for the seventh week in a row, climbing closer to 8%. The average for a 30-year, fixed loan was 7.79%, up from 7.63% last week, Freddie Mac said in a statement yesterday.

Borrowing costs followed along with 10-year Treasury yields, which early this week crossed 5% for the first time in 16 years. Mortgage rates are now up more than a full percentage point since July, a surge that has scared off many would-be homebuyers.

ℹ︎ how bonds affect mortgage rates

6. Charted: Home price shift

Up the most: Philadelphia, PA (+6.1%), Boston, MA (+6.1%), Miami, FL (+5.7%), Cincinnati, OH (+5.5%), and St. Louis, MO (+5.2%).

Down the most: Austin, TX (-10%), Las Vegas, NV (-4.4%), Phoenix, AZ (-4.2%), San Antonio, TX (-2.5%), and Sacramento, CA (-2.3%).

☀️ See you on Monday!

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