FTC drops antitrust lawsuit against ICE-Black Knight merger

👋 Good morning. Today we look at mortgage credit availability, nonbank liquidity concerns, the ICE-Black Knight merger, and Fannie Mae’s consumer confidence report. Let’s dive in.

1. Fannie Mae: Consumer confidence rises, but home buying sentiment hits record low

According to Fannie Mae’s Home Purchase Sentiment Index for July, consumers are gaining confidence regarding their personal financial situations but are still pessimistic about homebuying conditions.

The HPSI increased by 0.8 points to 66.8, marking a 4-point gain year-over-year. However, a record 82% of consumers reported that it's a "bad time to buy" a home, a survey high and a significant increase from 78% in June.

"While consumers are reporting confidence in the components related to their personal financial situations, it’s unlikely we’ll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability,” Fannie Mae Chief Economist Doug Duncan said.

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2. Mortgage credit availability tightens

Mortgage credit availability dropped to its lowest level since 2013 in July as receding origination volumes led to lower profitability for many lenders.

Additionally, liquidity concerns persisted for some lenders. As a result, many companies tried to reduce their operational costs by narrowing their loan product offerings, according to Joel Kan, MBA Vice President.

• The trade group’s monthly Mortgage Credit Availability Index fell by 0.3% to 96.3 last month. A decline in the index indicates that lending standards are tightening while an increase suggests loosening credit.

The Conventional MCAI, which does not include government-backed loans, decreased by 0.5%. Meanwhile, the Government MCAI, which covers FHA, VA, and USDA loan programs, decreased by 0.1%.

Of the two component indices of the conventional index, the Jumbo MCAI decreased by 0.8%, and the Conforming MCAI rose by 0.2%.

3. Addressing nonbank liquidity concerns

Ginnie Mae president Alanna McCargo said on Tuesday that the liquidity challenges faced by nonbanks are a critical issue facing the mortgage system, considering the increasingly important role of nonbanks, and that supporting them with additional credit facilities will be a priority for the future.

“We’re thinking about and focused on this every single day working with our partners at the Treasury and elsewhere, to figure out what ways the government could support, in the future, a more robust facility for the nonbanking sector.”

McCargo discussed the matter during a live conversation with Dennis Shea, the executive director of the J. Ronald Terwilliger Center for Housing Policy at BPC.

4. More Nuggets

🏛️ The FTC has withdrawn an antitrust lawsuit that sought to block Intercontinental Exchange from buying home mortgage software provider Black Knight. (Axios)

📉 LoanDepot posts loss, but origination volume is up 27% from Q1. (Pymnts)

🏠 The housing market’s seller strike is so ruthless that only 7 of the nation’s 200 largest markets are back to pre-pandemic inventory levels. (Fortune)

5. MCT: Mortgage rate locks mostly flat in July

Mortgage Capital Trading, a San Diego-based mortgage hedge advisory firm, saw a marginal 0.44% increase in mortgage lock volume between June and July. This essentially flat change is believed to be due to seasonal momentum throughout the summer.

"While July’s mortgage lock volume remained relatively flat, mortgage rates continued to climb through July," said MCT’s Chief Operations Officer Phil Rasori. He also warned that we can expect a drop in volume if rates hold or continue to rise from the levels set in the first week of August.

Year-over-year, the MCT Indices revealed a significant 13% decrease in total lock volume.

☀️ See you on Friday!

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