Mortgage demand finally ticks up

Plus: Pending home sales inch up in July

September 01, 2023

Happy September! Today’s newsletter is 571 words, a 2-minute read.

Disclaimer: Average mortgage rates as of Aug 31, 2023. © MND's Daily Rate Index.

1. Mortgage demand finally ticks up

Mortgage applications saw a 2.3% increase for the week ending Aug. 25, 2023, according to the MBA Weekly Mortgage Applications Survey.

  • This is the first increase in application activity in five weeks, though numbers remain significantly lower than last year.

The Market Composite Index, a comprehensive gauge for mortgage loan application volume, increased 2.3% on a seasonally adjusted basis and 1% on an unadjusted basis compared to the previous week.

Meanwhile, the Refinance Index rose by 3% from the last week, albeit 28% lower than the same last year.

2. Freddie Mac: Mortgage rates see first drop in six weeks

Mortgage rates decreased modestly following the release of July's job openings data yesterday, but they remain near a two-decade high.

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 7.18% as of Aug. 31, down from last week’s 7.23%. By contrast, the 30-year fixed-rate mortgage was at 5.66% a year ago at this time.

“Mortgage rates leveled off this week but remain elevated. Despite continued high rates, low inventory is keeping house prices steady,” Freddie Mac Chief Economist Sam Khater said. “Recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes.”

3. Catch up quick

⚒️ Builders’ answer for deteriorated housing affordability? Smaller homes. (Fortune)

💸 Encompass Lending Group, a subsidiary of real-estate services platform Fathom Holdings, has acquired Texas-based Elite Financing Group. (Bloomberg)

🔗 Logan Mohtashami on CNBC: How rates are impacting supply. (CNBC)

4. Pending home sales inch up in July

Pending purchases of previously owned homes unexpectedly rose in July, a respite in an otherwise lackluster resale market bogged down by high financing costs and prices.

The National Association of Realtors’ index of contract signings to purchase previously owned homes edged up 0.9% to 77.6, the highest in three months, the group reported Wednesday.

“The small gain in contract signings shows the potential for further increases,” Lawrence Yun, NAR’s chief economist, said in a statement. “However, rising mortgage rates and limited inventory have temporarily hindered the possibility of buying for many.”

5. 21% Q2 surge in residential mortgages: ATTOM

In Q2 2023, residential mortgage activity experienced a significant 21% quarterly surge, marking the first increase after two years of decline, according to an ATTOM report.

Lenders issued $494 billion in mortgages, with purchase loans accounting for half, refinance deals one-third, and home equity loans under 20%.

"Home buyers and owners alike lined back up again at the doors of mortgage lenders this Spring seeking loans of all kinds," said Rob Barber, CEO at ATTOM. "It looks like owners took advantage of the small rate drop to refinance existing loans, while a jump in mortgages for purchasers was likely fueled by a number of forces that pushed the overall housing market to heat back up during the Spring buying season."

6. Charted: Home price spike slows

Year-over-year percentage change; Monthly; June 2007 to June 2023

☀️ See you on Monday!

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