Borrowers' monthly income rises

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1. Better lays off its real estate agents

Better.com abruptly discontinued its Real Estate division on Wednesday, leading to an unspecified number of layoffs among its in-house real estate agents.

This move comes amid a challenging period for the company, including an $889 million loss reported for 2022, and ahead of a pending merger with special purpose acquisition company, Aurora Acquisition Corp.

Better offered impacted workers an opportunity to continue working as partner agents, with Better collecting referral fees equal to 20% of their commissions, according to reports and former employees. Agents get to keep their client lists and listings but had a Monday deadline to agree.

2. Borrowers' monthly payments, income rises

With mortgage rates still in the upper-mid 6% range, borrowers who received mortgages in May 2023 paid an average of $2,331 a month, up 20% from a year prior, according to data from mortgage tech firm Candor Technology.

Per data from Candor’s underwriting engine, the average buyer in May 2023 received a loan worth about $364,094 at an average APR of 6.48%. A year ago, the average buyer would have paid $1,938 a month on a $347,093 mortgage at an interest rate of 5.13%.

The average income for a borrower in May 2022 was $7,617 a month, according to Candor. In May 2023, the average borrower’s income had shot up to $8,888 a month. Still, the average monthly payment to income was 26.2% in May 2023, up from 25.5% a year ago.

“Our monthly results show some relief for homebuyers, with a slight dip in interest rates and average monthly cost,” said Sara Knochel, CEO of data and analytics at Candor. “We expect this trend to continue throughout the year; prices to fluctuate gently in either direction as mortgage rates remain stubbornly high. Homebuyers who purchase in this market should anticipate a decent refinancing environment as soon as early next year.”

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3. MBA: Mortgage rates to fall

During the National Association of Real Estate Editors' annual conference, Joel Kan, the deputy chief economist of the Mortgage Bankers Association (MBA), shared that the MBA expects loan rates to average 5.6% by year-end, and overall lending volume is expected to reach $1.8 trillion.

The MBA hopes for the Federal Reserve Board to take a cautious approach, pausing its efforts to combat inflation by raising the federal funds rate.

For 2024, the MBA forecasts rates in the 5.5% range and a 25% increase in originations, primarily driven by purchase mortgages. While there may be some cash-out refinance activity, the market will predominantly be influenced by home purchases.

4. More Nuggets

💳 2023's Cities with the Highest & Lowest Credit Scores. (WalletHub)

🏠 US Housing Market Is Missing 320,000 Affordable Homes. (Bloomberg)

5. Foreclosure activity spiked in May

According to real estate data firm Attom, distressed mortgage indicators registered increased activity last month, indicating a slow return to pre-pandemic levels.

The total count of default notices, scheduled auctions, or bank repossessions increased by 7% month-over-month and 14% year-over-year to 35,196. Foreclosure starts also increased by 4% from April and 5% from last year, reaching 23,245 in May.

Notably, Real-Estate-Owned (REO) numbers spiked as 4,020 properties were repossessed through completed foreclosures, representing an increase of 38% from April and 41% from a year ago.

While the jump in completions was significant, it was somewhat in line with the drop seen the previous month and therefore "could just be REOs making their way through the pipeline in May and leveling," said an Attom spokesperson.

Despite these increases, foreclosure activity remains below pre-COVID-19 levels in part because of the slow removal of pandemic relief and the addition of new forms of loss mitigation like the FHA payment supplement partial claim.

☀️ See you on Wednesday!

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