Powell: The U.S. housing market is ‘putting in a bottom’

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• Programming note: We'll be off on Monday for Juneteenth and back in your inbox on Wednesday. Hope your weekends are wonderful.

1. Mortgage applications increase for the first time since early May

Mortgage application volumes increased for the first time in five weeks as conforming 30-year interest rates receded, according to the Mortgage Bankers Association.

The MBA's Market Composite Index, a measure of weekly loan application activity based on surveys of the trade group's members, jumped a seasonally adjusted 7.2% for the seven-day period ending June 9. Despite the turnaround, the uptick in activity came from depressed levels following a weeks-long acceleration of mortgage rates, which peaked in late May. Overall volumes were still 32% below numbers in the same time frame of 2022.

"Rates that are still more than a percentage point higher than a year ago, and low for-sale inventory continue to constrain home buying activity in many markets," said Joel Kan, MBA's vice president.

2. Federal Reserve pauses interest rates after 15 months of hikes

It finally happened: The Fed declined to raise interest rates at its policy meeting for the first time since March 2022. The last 15 months saw the sharpest series of rate hikes in 40 years — radically reshaping markets and the economy. Now, it might be the beginning of the end of that era.

• Mortgage rates soared from roughly 3% at the beginning of 2022, to more than 7% at times, drastically reducing affordability and slamming the brakes on home sales activity.

It's unclear if all that interest-rate-related tumult is over. In announcing its decision not to lift rates, the Fed's rate-setting committee hastened to say it could return to rate hikes if inflation doesn't continue to drop. "It may make sense for rates to move higher, but at a more moderate pace," Fed chair Jerome Powell told reporters.

Despite such warnings, the stock market seems to be running with the idea that its long nightmare of rate hikes is over, as the S&P 500 inched up on Wednesday, closing at a new high for the year.

3. Powell: The U.S. housing market is ‘putting in a bottom’

Towards the end of the Federal Reserve press event, Fed Chair Jerome Powell was asked to give an update on the nation’s most interest-rate-sensitive sector: the U.S. housing market.

Powell didn’t specify if he thought U.S. housing market activity had bottomed, or if he meant U.S. home prices had bottomed. That said, both have seen a little improvement this spring. Powell's housing "bottom" comment on Wednesday is a stark contrast from last year when the Fed Chair repeatedly made bearish housing comments.

4. CFPB looking to simplify mortgage servicing rules

The Consumer Financial Protection Bureau (CFPB) plans to simplify and improve mortgage servicing rules, aiming to reduce risks for borrowers struggling with their mortgage payments.

This decision follows public comments indicating that both borrowers and servicers often grapple with unnecessary complexities. The CFPB's focus will be on automating and streamlining long-term loss mitigation assistance, minimizing servicing fees and negative credit reporting for borrowers awaiting review of their options.

In the words of CFPB Director Rohit Chopra, "When homeowners who struggle to make payments get the help they need without unnecessary delay or hurdles, it is better for borrowers, servicers, and the economy as a whole."

5. More Nuggets

Mortgage production defect rates declined in Q4. (ACES)

LoanDepot notches early victory in second CrossCountry poaching suit. (NMN)

Mortgage rates tick down again. (Freddie Mac)

☀️ See you on Monday!

1 fun thing: What life will be like in 2030...

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