Mortgage rates surge higher, but not because of the Fed rate hike

☀️ Welcome back. This is Mortgage Nuggets; we tell you what’s going on in the industry in less than 5 minutes, so you can spend the rest of your day closing.

1. Fed hike

Fed Chair Jerome Powell announced another quarter-point hike to try to temper inflation, bringing interest rates into the 5.25%–5.50% range for the first time since January 2001.

This is the 11th rate increase since March 2022, when interest rates were raised from nearly zero. And the Fed might not be done:

Chair Jerome Powell left open the possibility of further hikes, signaling that they would be data dependent. However, investors are wagering that the Fed has reached the end of its 16-month long policy-tightening cycle — trimming bets on more increases this year.

2. Pending home sales rise

Pending home sales unexpectedly rose in June for the first time in four months, despite ongoing supply and financing challenges facing the resale market.

Data released yesterday showed that the National Association of Realtors' index of contract signings to purchase previously owned homes advanced 0.3% last month to 76.8.

“The recovery has not taken place, but the housing recession is over,” Lawrence Yun, NAR’s chief economist, said in a statement. “Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next.”

3. Catch up quick

📉 Total mortgage application volume dropped 1.8% last week compared with the previous week. (MBA)

📈 Mortgage rates surge higher, but not because of the Fed rate hike. (MND)

🏦 JPMorgan buys $1.8 billion in single-family residential loans from Banc of California. (Bloomberg)

💸 Student loan borrowers had 3.5 years without payments, yet many still can’t afford to break into the housing market. (Fortune)

4. FHFA should add VantageScore first, CHLA

The Community Home Lenders of America (CHLA) yesterday sent a letter to Sandra Thompson, director of the FHFA, urging the slower implementation of changes to the credit score reporting process.

Specifically, CHLA advocated for the inclusion of the new VantageScore first, especially in the wake of a significant price increase from the other vendor, FICO.

"One way to achieve a slower implementation schedule would be to take more incremental steps, by starting with VantageScore, the new entrant in this space. CHLA recommends that the FICO 10T requirement be deferred to a later phase," the association said in the letter.

5. Update: Old houses are now pricier than new ones

With mortgage rates still hovering around 7%, homeowners are holding onto homes financed at low rates, squeezing the supply and keeping prices at high levels.

Meanwhile, homebuilders are more willing to sell affordable smaller houses to tap into demand from frustrated buyers.

Data Source.

☀️ See you on Friday!

1 other thing… If you had to guess, when would you say most Americans eat dinner? 5:29 pm, 6:19 pm, 7:09 pm. Answer.

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