Mortgage rate races toward 8%

Plus: Some relief for prospective homebuyers, Rocket raises conforming loan limits

October 04, 2023

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Disclaimer: Average mortgage rates as of Oct 3, 2023. © MND's Daily Rate Index.

1. Mortgage rate races toward 8%

The average rate on the 30-year fixed mortgage rose to 7.72% on Tuesday, according to Mortgage News Daily.

Mortgage rates follow loosely the yield on the 10-year Treasury, which has been climbing this week following strong economic data. Rates have not been this high since the end of 2000.

“It is now the first week of October, and data has been stronger,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “This morning’s JOLTS (job openings and labor turnover survey) is the biggest, baddest confirmation so far this week, and it’s pushing yields to fresh long-term highs. Pretty simple stuff, actually, even if unpleasant and unfortunate for fans of low rates.”

Higher rates have crushed affordability, hitting both the new and existing home sales markets. While builders had been benefiting from the tight supply of existing homes for sale, higher mortgage rates are a major concern now. Builder sentiment slipped into negative territory in September for the first time in five months.

2. One more hike?

Cleveland Fed President Loretta Mester said policymakers will likely need to raise rates once more this year and then hold them at higher levels for some time to get inflation back to its 2% target.

The final decision will depend on how the economy evolves, amid risks including a slowdown in China and the possibility of an extended strike by auto workers, she said.

Mester, who doesn’t vote on policy this year, added that the inflation rate remains too high and the rising cost of gas resonate strongly with consumers, who could expect price pressures to start accelerating again. LINK

3. Catch up quick

🤔 Techies are resorting to paying $700 a month for tiny bed 'pods' in downtown San Francisco. (SFGate)

⚖️ A jury has determined that Zillow did not make deceptive changes to the way it displays non-MLS listings, a significant victory for the company. (GeekWire)

🍕 Dave Portnoy, founder of Barstool Sports, reportedly buys Nantucket home for record $42 million. (CBS News)

In other news: Austin company tapped by NASA to build houses on the moon by 2040. (FT)

4. Some relief for prospective homebuyers

The US housing market is starting to flash a few small rays of sunshine for prospective homebuyers. Here’s what Business Insider reports in its outlook for the fall/winter housing market.

  • Inventory is growing at a time of year that usually sees declines. Inventory rose 1.8% in the last week of September WoW.

  • Competition in the housing market is cooling off fast, even for this time of year.

  • The weekly share of listings with a price cut climbed to 9.2% in the week ending September 16th, the highest share since November of last year.

  • The share of homes that sold for more than their final list price has been gradually declining, from a peak of 41.9% of closed sales in the week ending June 24th, to 38.3% in the week ending August 12th

5. Rocket Pro TPO raises conforming loan limits to $750,000

Rocket Pro TPO is increasing its conventional loan limit to $750,000, and has begun taking loans at the new amount. This move, says Rocket, makes its wholesale arm the first to raise the conforming loan limit, ahead of FHFA’s expected move in 2024.

“We are estimating it’ll be $750,000, and we’re willing to take the risk on that,” said Mike Fawaz, executive vice president of the business. “We did it last year and it was a big hit with the broker community. It felt good to be the first company to do it.”

The current conforming loan limit is $726,200.

☀️ See you on Friday!

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