Mortgage volumes rise despite higher rates

Good morning and Happy Friday! This is Mortgage Nuggets, your mortgage news tour guide. Keeping you updated every Mon, Wed & Fri. Let’s do this!

1. Mortgage volumes rise despite higher rates

Despite higher mortgage rates, homebuyers are still seeking to purchase homes, and demand for both conventional and government loans has risen. The MBA's Market Composite Index, a measure of application volume, increased 3.7% for the week ending April 21 compared to one week earlier on a seasonally adjusted basis.

• Demand from borrowers for conventional and government loans increased by 4.50% and 1.20% from one week earlier, respectively. Mortgage applications also rose 4.7% for home purchases and 1.7% for refinancing.

However, activity remains lower than last year due to high mortgage rates and low supply. Mortgage rates have been trending upward ahead of the Federal Reserve's meeting in May 2-3, with the average interest rate for 30-year fixed-rate mortgages rising to 6.55% last week.

2. FHFA director says that ain't it

On Tuesday, FHFA Director Sandra Thompson issued a statement to clarify misinformation about the agency's loan-level pricing adjustments for conventional mortgages.

Thompson stated that the updated fees are generally based on the risk characteristics of borrowers and loans, not their credit scores. She emphasized that the new framework does not incentivize lower down payments for lower fees.

According to Thompson, borrowers with high credit scores or substantial down payments will experience a reduction or no change in their fees. However, the revised fees, like the previous ones, tend to rise as credit scores decrease, irrespective of the down payment amount.

3. More Nuggets

🍃 Weed: PRMG has expanded its non-QM mortgage program to allow legal cannabis industry workers to apply for loans to buy or refinance a home. Federal housing agencies do not purchase such loans due to the legal status of cannabis. (NMN)

💸 $17 million: A COVID-19 relief program spun up by the South Carolina State Housing Finance and Development Authority has $17 million left of undistributed federal money. The money is available for eligible applicants. (WLTX)

🏚️ Debt collectors who pursue "zombie mortgages" past the statute of limitations may violate the law, warns the CFPB, after reports of collectors demanding payments, inflating interest and fees, and threatening to foreclose homes. (CFPB)

4. Pending home sales fall 5.2%

According to the National Association of Realtors, pending home sales fell by 5.2% month-over-month in March, marking the first decline since November 2022. This drop suggests that the housing market is still struggling.

“The lack of housing inventory is a major constraint to rising sales,” Lawrence Yun, NAR’s chief economist, said in a statement. “Multiple offers are still occurring on about a third of all listings, and 28% of homes are selling above list price. Limited housing supply is simply not meeting demand nationally.”

The pending home sales report typically serves as a leading indicator of existing-home sales, as homes generally go under contract a month or two before they are sold.

5. Regions with the highest average mortgage payments

According to data analyzed by LendingTree, the average monthly payment on a new mortgage in the US is $2,317.

However, this amount can vary greatly depending on the location of the buyer, ranging from $1,700 to $3,696. Hawaii has the highest average payment at $3,696, followed by California at $3,399 and Massachusetts at $3,021.

On the other hand, West Virginia, Kentucky, and Michigan are the least expensive states with averages of $1,700, $1,711, and $1,742 respectively.

☀️ See you on Monday!

1 fun thing: I have four identical looking keys and four identical looking locks. Each key will open just one lock. What is the maximum number of times that I need to try the locks to be certain that I can match each key with its rightful lock?

Answer.

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