Homeowners saw the first equity loss since 2012 last quarter

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1. Homeowners saw the first equity loss since 2012 last quarter

The cooling housing market is making a dent in the equity wealth homeowners accumulated during the pandemic. According to property data provider CoreLogic, owners with a mortgage saw a small decline in their equity last quarter — down 0.7% from a year earlier — marking the first annual decline since 2012. The drop amounted to an average of $5,400 per borrower.

But home-equity changes varied widely across regions. Western states posted the biggest losses, led by Washington, California, and Utah. In the San Francisco area, the typical homeowner experienced equity loss of $174,000 year-over-year.

By contrast, owners in six states, including Florida, Connecticut, and New Jersey, increased their equity positions by $20,000 or more, on average. Among the 46 states and the District of Columbia for which data was available, only 15 recorded a loss from a year ago.

2. Brokers support proposal to roll back loan pricing changes

The National Association of Mortgage Brokers (NAMB) this week backed a Republican-led bill in the House aiming to reinstate the Loan Level Price Adjustment (LLPA) structure that was in place prior to May 1, 2023.

The bill seeks to restrict Federal Housing Finance Agency (FHFA) adjustments to the single-family pricing framework and prohibit LLPA changes based on debt-to-income ratio. It also calls on the Government Accountability Office to scrutinize FHFA's revisions under the Enterprise Regulatory Capital Framework.

“Borrowers who have demonstrated a propensity to manage credit in a responsible manner should not be penalized when obtaining financing,” said NAMB President Ernest Jones in the announcement.

3. More Nuggets

💸 Freddie Mac launched a new mortgage product on Wednesday to support members of Native American communities. Called HeritageOne, it will provide affordable financing options for single-family properties on tribal lands in rural areas, creating greater access to homeownership. LINK

🏛️ Five federal regulatory agencies yesterday jointly requested public comment on proposed guidance that advises financial institutions on policies they may implement to allow consumers to provide them with information that may not have been considered during an appraisal, or if deficiencies are identified in the original appraisal. LINK

🏘️ Freddie Mac‘s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 6.71% as of June 8, down from last week’s 6.79%. The same product was at 5.23% a year ago at this time, roughly two months into the start of the Fed’s hiking policy. LINK

📉 Total mortgage application volume declined 1.4% last week, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.81% from 6.91%. LINK

4. Most potential home buyers are waiting for rates to fall, BMO

Nearly two-thirds of Americans say they are waiting for mortgage rates to drop before entering the market, according to a survey released this week by BMO Financial Group, the eighth-largest bank in North America.

Among those who plan to purchase a home soon, only 6% expect to do so this summer, which is supposed to be the high season for real estate agents. Refinancing plans are also on hold: among those planning to refinance, 81% said they are waiting until rates drop.

The survey also found that 68% of Americans plan on using loans from their financial institution and/or lines of credit to help finance their home purchase. BMO said that 46% of Americans plan on using some of their personal savings to help pay for their home purchase, such as a down payment. Nearly a quarter of people surveyed said they expect financial help from family or friends when they purchase a home. Here is the link to the full survey.

☀️ See you on Monday! 1 funny tweet ↓

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