Mortgage rates rise to highest point this year

TGIF, everyone. Welcome back to Mortgage Nuggets. Today’s newsletter is a 3-minute read.

• Later today… US June Jobs Report at 8:30 a.m

1. Mortgage rates rise to highest point this year

Mortgage rates jumped this week as investors grapple with persistent positive economic data and a hawkish Fed.

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 6.81% as of July 6, up significantly from last week’s 6.71%. By contrast, the 30-year was at 5.30% this time last year.

“Mortgage rates continued their upward trajectory again this week, rising to the highest rate this year so far,” said Sam Khater, Freddie Mac’s chief economist. “This upward trend is being driven by a resilient economy, persistent inflation, and a more hawkish tone from the Federal Reserve.”

2. Mortgage applications fall as rates rise

Last week, mortgage applications dropped to their lowest level in a month amid rising rates for most loan types. Applications fell 4.4% from the prior week, according to data from the Mortgage Bankers Association.

“As mortgage-Treasury spreads remained wide, the 30-year fixed rate increased to 6.85%, the highest rate since the end of May,” said Joel Kan, MBA’s vice president. “Purchase applications decreased for the first time in a month, as homebuyers remained sensitive to rate changes. Rates are still over a percentage point higher than a year ago, and housing affordability is still a challenge in many parts of the country.”

Refinancing applications decreased 4% last week compared to the previous week and were 30% lower than the same week one year ago. However, the refinance share of mortgage activity increased to 27.4% of total applications from 27.2% the prior week.

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3. Fannie Mae, Freddie Mac update condo and co-op unit policies

Fannie Mae and Freddie Mac released updates on Wednesday related to condominium and cooperative project standards policies for properties in need of critical repairs and special assessments.

“At the direction of the FHFA, Fannie Mae and Freddie Mac have worked together to update project review requirements to assist lenders in identifying projects that may have issues that result in unsafe conditions, and to promote sustainable homeownership,” the update states. “Fannie Mae is updating its project standards policies to address projects in need of critical repairs and projects that have material deficiencies (such as significant deferred maintenance) or special assessments.” Updates

4. More Nuggets

New: The average rate on a 30-year mortgage jumped 14 basis points to 7.22% yesterday, following a strong ADP jobs report. LINK

Anticipated Twitter rival, Threads, has been officially unveiled by Meta Platform’s Instagram, launching the most serious threat to Elon Musk’s social media platform. The app had more than 30 million sign-ups on its first day. LINK

U.S. non-bank mortgage companies are well-positioned to handle liquidity and funding challenges in the face of recent bank failures, a looming recession, and stricter lending standards, Fitch Ratings said Wednesday. LINK

Better.com disclosed that it posted a net loss of $89.9 million in the first quarter of 2023 and cut approximately 91% of its workforce over an approximately 18-month period largely due to a substantial decline in its funded loan volume. LINK

5. Churchill sues Easy Financial for $6M in faulty loans

Churchill Funding is suing Easy Financial for allegedly violating a master mortgage loan purchase agreement by selling faulty loans worth nearly $6 million.

The lawsuit claims Easy Financial sold loans tied to properties that were not unencumbered as the agreement specified. The company is also accused of hiding loan defaults and reselling loans already sold to other investors.

This lawsuit aligns with a wider trend of lenders suing brokers and partners who fail to repurchase defective loans. Churchill is demanding that Easy Financial repurchase the faulty loans according to their initial agreement and has suspended all payments until the issue is resolved.

☀️ See you on Monday!

In lighter news... We all know how pesky those telemarketing calls can be. Now, a California entrepreneur has found a humorous, high-tech way to deal with them. He created Jolly Roger, an AI-powered service that keeps telemarketers busy by responding to them with fake personalities, including a rambling old man and a distracted mother.

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