The average IMB lost $1,972 per loan in Q1

Good morning! This is Mortgage Nuggets, the newsletter that keeps you up-to-date on the latest mortgage news—every Mon, Wed, and Fri morning. Let’s dive in.

1. The average IMB lost $1,972 per loan in Q1

Despite an improvement from Q4 2022, independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported significant losses in Q1 2023. The average net loss per loan was $1,972, a 35% improvement from the previous quarter's loss of $2,812 per loan, according to the MBA.

The industry has experienced losses for four consecutive quarters, with nine consecutive quarters of volume declines. Loan production expenses also reached a record high ($13,171 per loan), despite substantial personnel reductions.

However, there are signs of recovery: the number of profitable companies increased to 32%, up from 25% in the previous quarter, and the MBA forecasts a rise in mortgage origination volume for Q2, with a decline in the 30-year fixed mortgage rate.

2. Existing-home sales fall to three-month low

Sales of previously owned US homes fell to a three-month low in April, restrained by limited inventory and ongoing affordability concerns. Contract closings decreased 3.4% last month to an annualized pace of 4.28 million, according to data released yesterday by the NAR.

While inventory picked up amid the spring selling season, elevated borrowing costs paired with limited listings are restraining sales. With mortgage rates about twice as high as they were at the end of 2021, many sellers are still reluctant to list their houses, leaving some buyers sidelined.

The number of homes for sale rose to 1.04 million, up 1% from a year ago. Still, inventory was nearly double that in April 2019. At the current sales pace, it would take 2.9 months to sell all the properties on the market. Realtors see anything below five months of supply as indicative of a tight market.

3. More Nuggets

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👷‍♀️ Homebuilder stocks soar to new highs on insatiable demand for housing (Bloomberg)

🤖 OpenAI launches an official ChatGPT app for iOS. (OpenAI)

4. Mortgage rates resume climb after falling for two weeks

Mortgage rates increased for the first time this month. The average for a 30-year, fixed loan was 6.39%, up from 6.35% last week, Freddie Mac said in a statement Thursday. The average 15-year fixed loan rate remained the same.

Mortgage rates are expected to stay in the 6% to 7% range until economic data provides clarity on the economic trajectory. While buyer activity has increased, it hasn't been matched by increased seller activity, resulting in a competitive environment due to low inventory.

The prospect of higher interest rates and a potential US default could further complicate the housing market scenario.

5. Guaranteed Rate deploys Gateless’ Smart Underwrite solution

Gateless announced yesterday that Guaranteed Rate has implemented its Smart Underwrite solution, a groundbreaking technology that aims to transform the borrower experience.

Smart Underwrite enables lenders to digitally read and interpret all critical loan data and documentation the moment it is received. For example, when a borrower provides W2s and paycheck stubs, Smart Underwrite identifies the documents, links them to the right borrower income source, extracts all relevant information, calculates monthly income, and clears any related underwriting conditions.

Not only can it do this instantaneously, without human intervention, but it does while ensuring compliance with Freddie Mac and Fannie Mae guidelines. Smart Underwrite uses the same intelligent automation to evaluate other key credit, income, and asset documents, all the pieces needed to assess a borrower for real-time loan approval, eliminating days from the process.

Thanks for reading! See you on Monday.

1 other thing: 🍃 4.3% of Americans are high at work (WSJ)

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