U.S. inflation slows to 3%, good for rates

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1. U.S. inflation slows to 3%, good for rates

U.S. inflation fell to 3% in June, its lowest level in two years and closer to the Federal Reserve’s 2% target. Economists say a Fed hike this month is still likely, but may be the last.

What they're saying:

“Low inflation means low mortgage rates. Therefore, decelerating consumer prices could steadily lift home sales and increase home production in a few months,” said Lawrence Yun, chief economist for the National Association of Realtors. “Moreover, with so many empty apartment units under construction, rents could plateau by this time next year.”

"Today’s CPI report, while really only the first of what we anticipate will become a trend toward closer to target levels of inflation, is clearly a move in the right direction," wrote bond market analysts at BlackRock.

"Most indicators of pipeline pressures — PPI, import prices, supplier deliveries — suggest goods price inflation should remain tame in coming months," wrote JPMorgan economists.

2. UWM rolls out affordability programs

UWM announced on Wednesday two new home-affordability mortgage products designed to help underserved borrowers become homeowners.

• Fannie Mae‘s Special Purpose Credit Program through HomeReady

• Freddie Mac’s BorrowSmart Geo-Target program.

These offerings will be available in select metro areas including Detroit, Baltimore and Chicago for Freddie Mac’s BorrowSmart and Detroit, Baltimore, Chicago, Atlanta, Memphis and Philadelphia for Fannie’s HomeReady program.

The lender said qualified buyers will receive up to $10,000 toward their downpayment/closing costs with BorrowSmart Geo-Target, or $5,000 toward their downpayment/closing costs and up to $1,000 toward home warranty and appraisal costs with the HomeReady SPCP.

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In related news; U.S. bank has launched and committed $100 million to the Access Home Loan program, a mortgage SPCP that provides up to $12,500 in down payment assistance and up to an additional $5,000 lender credit. The program also gives borrowers the option to use lender credit to buy down their interest rate so they can secure a lower interest rate at closing.

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3. Foreclosure activity up 13%

The number of U.S. properties with foreclosure filings increased 13% in the first half of this year, drawing closer to pre-pandemic levels, ATTOM said Thursday.

• There were a total of 185,580 properties with foreclosure filings in the first half of 2023.

• Nationwide, 0.13% of all housing units, or one in every 752 units, had a foreclosure filing in the first half.

• The number of properties that started the foreclosure process in the first half rose 15% from 2022.

• States with the largest increase in foreclosure activity from a year earlier included Maryland (up 100%); Oregon (+99%); Alaska (+95%); West Virginia (+83%); and Arkansas (+72%).

Full report here.

4. More Nuggets

Mortgage applications increased 0.9 percent last week, according to data from the MBA Weekly Mortgage Applications Survey for the week ending July 7, 2023. The week’s results included an adjustment for the observance of Independence Day. LINK

On Monday, Boston Mayor Michelle Wu announced a residential conversion program for downtown offices. Boston will offer 75% tax breaks on office-to-residential conversions, to “meet City goals of creating housing units Downtown and having more consistent foot traffic throughout the week to support Downtown businesses,”. LINK

Non-QM lender Newfi has launched a correspondent lending channel. The aim of the channel is to enable it to extend its proprietary non-QM products to mortgage bankers nationwide. The lender is also looking to hire seasoned non-QM correspondent account executives to support the expansion. LINK

In other news, If you left your bag of cocaine in the White House a couple weeks ago, you can breathe a sigh of relief because investigators haven’t turned up any DNA or fingerprints in their crime lab analysis. The FBI is doubtful that it would find the perpetrator and will not be pursuing any more leads. AP

5. TransUnion reveals concerning post-pandemic credit behavior

TransUnion is reporting a reversion in credit scores after they initially surged during the early stages of the COVID-19 pandemic. This increase was due to lower spending, reduced credit usage, and government assistance.

However, as these programs ended and inflation rose, consumer demand for credit grew, leading to a significant rise in credit card and personal loan originations. The report highlighted a worrying trend of increased delinquency rates among consumers who had improved their credit scores but reverted to prior behaviors.

Michele Raneri, VP and Head of US Research and Consulting at TransUnion, stressed the need for lenders to consider additional credit behaviors when assessing borrowers, to better distinguish between those likely to sustain their improved credit standing and those likely to revert to prior behaviors.

☀️ See you on Friday!

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