We deliver the absolute best lending experience through knowledge.
Login to My Portal
At 3 Keys Lending, LLC we help you get the absolute best mortgage rates and options.
We will save you thousands of dollars on your loan, AND get you into your home quickly.
Today's weekly mortgage application survey from the Mortgage Bankers Association (MBA) was fairly unsurprising in that applications declined, but at a slightly slower pace compared to recent weeks. The moderation in the pace makes sense for a few reasons. First off, refi applications are near their historical lower boundary. Secondly, interest rates have improved noticeably in each of the past 2 weeks. It's not that this drop in rates is going to reinvigorate the refi market, by any means. Rather, it simply helps maintain the interest of those buyers or refi candidates who were on a fence due to rates. The dotted lines in the chart below show the current levels for rates and applications. Applications fell only 1.2 percent overall on a seasonally adjusted basis. The refi index fell 4% and the purchase index essentially sidestepped with a 0.2 percent decline (note: the component indices don't line up with the overall number due to the higher volume of purchase applications at the moment). Other highlights: Refis accounted for 32.3% of the total vs 33.0% previously ARMs accounted fir 9.4% of the total No major changes in FHA/VA/USDA market share Jumbo rates continue running about 0.45% lower than conventional rates MBA's press release
The housing market has been keeping its head down, keeping calm, and carrying on in the face of the biggest rate spike since the 1980s. The ability to ignore higher interest rates is nothing new for home sales. In fact, sometimes we see almost no reaction in sales numbers when rates rise. The following chart shows several of the biggest rate spikes of the past decade (and yes, they do look small in comparison to 2022). While there is perhaps some small impact on new home sales, it's minimal at best. Perhaps home price stability had something to do with that, or perhaps those rate spikes weren't big enough to have a major impact in their respective home price environments. Perhaps sales were simply still experiencing a rebound effect from the housing crisis. Whatever it was that accounts for the resilience in the past, it's clear that something new is happening right now. Moreover, it is happening QUICKLY. Just last month, New Home Sales were still at 763k, a level not seen between the housing crisis and the pandemic. Now in today's new numbers from the Census Bureau, New Home Sales have plummeted to the lows seen only a few times in the 3 years leading up to the pandemic. Let's not overcomplicate this: whether we're talking about new or existing homes, prices have surged at the fastest pace on record. This has occurred in spite of wages growing at nowhere near the same pace.
The regular monthly release of the New Residential Construction report from the Census Bureau is typically fairly dry. To be fair, this month's update is no exception outside the housing nerd community. But even amid the seemingly soporific data, we can find some interesting themes. First off, there's the fact that construction activity continues to operate near its best levels since before the housing meltdown more than a decade ago. Building permits technically dropped 3.2% from last month, but that's after an upward revision of 1.2%. More importantly, despite the drop, the outright pace of 1.819 million units per year means the last 5 months been over 1.8 million. January 2021 was the only other month over 1.8m going back to 2006. The story is similar for the next construction phase, Housing Starts (a measure of when construction actually begins). Starts held fairly steady at 1.724m, making April the 4th best month since 2006. The gap between permits and starts highlights the first aspect of the current challenges faced by the industry. It's a lot easier to file some paperwork than it is to actually break ground. Moving on to "Housing Completions," we see it's even harder to finish construction. Completions have flat-lined in a range centered on April's level of roughly 1.3 million--the same level as early 2019. Back then, there were almost 600k fewer Housing Starts and Building Permits.