Giddy Up! Mortgage Refis Decline Most In Three Years (Fed To The Rescue?)

According to the Mortgage Bankers Association (MBA), mortgage refinancing applications declined the most in three years on a slight rise in mortgage rates.

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Of course, some of the decline is due to smaller pool of eligible borrowers following a “refi wave.” But still, The Federal Reserve may be prodded into action like in the song “Elvira.” Giddy up!

The MBA purchase applications index fell by 3.5% from the previous week, which is understandable since it is October and the October Country from home sales and purchase applications.

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Actually, it is somewhat surprising that purchase applications are rising despite the decline in “subprime” (FICO < 620) borrowers.

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Yes, it is The October Country for mortgage purchase applications which normally peak in May then decline.

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Regulatory Arbitrage Alert! FHFA’s Calabria Ends G-Fee Discounts For High-volume Lenders Like Quicken

Recently Federal Housing Finance Agency Director Mark Calabria issued a directive ordering the end of the GSEs’ practice of guarantee fee discounts for high-volume lenders.

The Temporary Payroll Tax Cut Continuation Act of 2011 required the FHFA director, in setting guaranty fees, to:

“provide for uniform pricing among lenders;” and
“provide for adjustments in pricing based on risk levels.

From my FNAN 432 class at George Mason University using Python to analyze Freddie Mac’s Q4 2017 online mortgage data,

All Data	Average	St. Deviation
FICO	748	110
LTV	74	16
DTI	35	10

Count of Quicken loans: 18,261 (about 6% of all the loans)

Quicken	Average	St. Deviation
FICO	730	50
LTV	71	15
DTI	36	10

Quicken has the lowest FICO (credit) scores of lenders selling loans to Freddie Mac and lower LTV and higher DTI than the rest of the pack.

Yes, as lenders try to avoid regulatory burdens, lenders like Quicken originate loans and sell to Fannie Mae and Freddie Mac, we may see a change in Fannie and Freddie’s loan purchases from non-bank, high volume lenders.

My students will have an update on Fannie Mae loan purchases by Monday.

It’s Always Sunny at GMU School of Business using Python in my class!

Rollercoaster! Mortgage Refi Wave Seems Over As Refi Apps Decline 15% WoW

Refi rollercoaster!

US home mortgage rates fell from almost 5% in November 2018 to 3.5% in September 2019 before rising a bit. This spurred a “refi wave” since late November 2018.

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But the refi party seems to have ended (for the moment).

Mortgage applications decreased 10.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 20, 2019.

The Refinance Index decreased 15 percent from the previous week and was 104 percent higher than the same week one year ago.

Yes, the “refi wave” seems over as

The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 9 percent higher than the same week one year ago.

Now, as Democrats in the US House of Representatives undertake their impeachment of President Trump in part for not releasing the transcript of his call with the Ukrainian President Zelenskyy (that has been released), it will likely lead to an increase in Treasury Note 10y prices and a decline in yields (and mortgage rates) as Democrats focus on impeachment and stonewall any attempts at a trade agreement with China.

Jerome?

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Mortgage Purchase Applications Back To 1998 Levels As Mortgage Refi Applications Slow A Bit From Refi Wave

If you have recently applied for a mortgage refinancing given plunging mortgage rates, you may have noticed a delay in the underwriting. Why? US lenders are in the midst of a “refi wave” and some lenders are swamped with work, particularly underwriters.

Mortgage applications decreased 6.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 23, 2019.

The Refinance Index decreased 8 percent from the previous week and was 167 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 2 percent higher than the same week one year ago.

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The 30 year mortgage rate has been generally falling since November 2018 as European (Brexit) and Asian (China trade) pressures have increased. As a consequence, we have seen a “refi wave” in 2019.

Mortgage purchase applications have risen gradually since 2014, but litigation against lenders and rules created under the Consumer Financial Protection Bureau (CFPB) resulted in mortgage purchase applications at 1998 levels.

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A refi wave can feel like surfing at Nazare in Portugal.

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