Wells Fargo cuts 140 positions

GM. This is Mortgage Nuggets, the daily newsletter that gets you caught up with important news and updates. Every Mon, Wed, and Fri morning.

All in less time than it takes to pick a show to watch on Netflix. Tadum.

1. Mortgage rates back under 6% 

In March 2022, the housing market was hit by a shock due to the Fed's fight against inflation. Mortgage rates soared, reaching 7.37% in October, pushing the housing market into a sharp recession.

The second half of 2022 saw sales of both new and existing homes fall at a pace not seen since 2006.

Fast forward, and it's starting to head in a more positive direction. The economic shock caused by spiked mortgage rates has been declining lately, thanks to the mounting signs of decelerating inflation.

As the financial markets loosen up, we're seeing mortgage rates fall, making the housing market more accessible for those looking to buy a home. The average 30-year fixed rate mortgage has dropped to 5.99%, the lowest rate since September 2022.

The recent drop resulted from Federal Reserve Chairman Jerome Powell's shift in language regarding inflation, leading to decreased bond yields and mortgage rates.

Lower rates are already driving more interest from potential homebuyers, as evidenced by the rise in pending home sales for the first time in six months and a boost in homebuilder stocks.

But where will rates head from here? Researchers remain divided; The MBA expects the average 30-year fixed mortgage rate to be 5.2% in 2023, dropping to 4.4% in 2024. However, Goldman Sachs and Moody's Analytics predict a higher average of 6.5% for 30-year fixed mortgage rates in 2023.

2. Fannie Mae imposes restrictions on cash-out refis

Fannie Mae is introducing a new restriction on cash-out refinances starting April 1. This move follows a similar action by competitor Freddie Mac.

The restriction requires any first mortgage being refinanced to have a note date at least one year prior to the new mortgage and requires at least one borrower to have been on the title of the collateral property for at least six months before the disbursement of the new loan.

The new restrictions, along with the increased fees, have caused disappointment among lenders and brokers who feel that it will hurt middle-income borrowers and limit their ability to purchase and refinance homes.

3. Wells Fargo cuts 140 positions

The 140 employees laid off were part of Wells Fargo's correspondent lending team and were fired due to Wells Fargo's exit from the correspondent lending channel.

The layoffs took place on January 11, and impacted employees received severance and career assistance.

The bank's decision to exit correspondent lending is part of its plan to reduce risk in the mortgage business by reducing its size and narrowing its focus.

4. More Nuggets

The housing market continues to improve for buyers (Realtor.com)

First American acquires 1031 Solutions (Seeking Alpha)

First Internet Bank exits consumer mortgage business (NMP)

5.Meme of the day

🧠 Odd one out: Let's see if you can guess who among these four politicians wasn't serving as UK Prime Minister in 2022. Liz Truss, Theresa May, Rishi Sunak, and Boris Johnson. Don't google; just hit reply!

🕶️ Thanks for starting your Friday with us. See you on Monday!

p.s. If you like this newsletter, your friends may too. Forward it to a friend, and let them know they can subscribe here. Written by Ian M.