The Debt Domino Effect of Homebuying

A study of 16.7 million mortgage applications from borrowers with an existing mortgage — indicating a likely move or refinancing — between 2013 and 2015 by TransUnion highlights the debt domino effect, in which consumers who are buying a home also buy a new car and increase credit card spending at the same time. Charlie Wise, co-author of the study and vice president of TransUnion's innovative solutions group, says, "Whether it's to purchase furnishings or for renovations, many consumers actually increase their card spending in the months before moving into their new residence." According to the study, consumers who apply for a new mortgage also are two to three times more likely to open a new auto loan or credit card account over the next year. New credit card originations for consumers who moved into new homes were 54 percent higher in the month after obtaining a new mortgage, and new auto originations were 84 percent higher during that period. "The folks that are refinancing are lowering their monthly payment and giving themselves a raise, and they're spending that," says Wise. "They now have additional cash flow."

From "The Debt Domino Effect of Homebuying"
CNBC (05/26/16) Dickler, Jessica

Memorial Day

St Casimirs would like extend its appreciation and thanks to the families of the fallen on this Memorial Day.  

Friday Rate Update

Mortgage Rates in the U.S. Rise While Investors Wait for the Fed

Freddie Mac reported on May 26 that mortgage rates rose from their lowest levels since 2013 as investors speculated about the timing of the Federal Reserve's next interest rate hike. The average 30-year fixed-rate mortgage rose to 3.64 percent from 3.58 percent the previous week, and the average 15-year fixed-rate mortgage climbed to 2.89 percent from 2.81 percent. Mortgage rates edged up in response to an increase in Treasury yields following the release of minutes from the Federal Open Market Committee's April 27 meeting. According to data compiled by Bloomberg on federal funds futures, there is a 32 percent chance the Fed will increase rates at its June meeting, up from only 4 percent two weeks ago.

From "Mortgage Rates in the U.S. Rise While Investors Wait for the Fed"
Bloomberg (05/26/16) Maurus, Christine

Homebuying, Not Refinancing, Drives Mortgage Applications Up 2.3 Percent

The Mortgage Bankers Association (MBA) reported on May 25 that total mortgage application volume rose 2.3 percent on a seasonally adjusted basis from the previous week and that applications are up almost 24 percent from a year ago. Purchase applications rose 5 percent from the previous week and 17 percent from a year ago, fueling the increase in total application volume. "Purchase applications got back on track last week, resuming the level of activity observed throughout most of April and May," said Lynn Fisher, vice president of research and economics at the MBA. Meanwhile, refinance applications rose only 0.4 percent from the previous week. MBA also noted that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances climbed to 3.85 percent from 3.82 percent, and the average loan size for purchase applications reached a survey high of $307,700.

From "Homebuying, Not Refinancing, Drives Mortgage Applications Up 2.3 Percent"
CNBC (05/25/16) Olick, Diana

Congress to Consider Dramatic Overhaul of Credit Reporting

Legislation introduced on May 19 by U.S. Rep. Maxine Waters (D-Calif.) aims to overhaul the nation's credit reporting system in an effort to make it fairer, more accurate, and less confusing for consumers. The Comprehensive Consumer Credit Reporting Reform Act of 2016 would, among other things, reduce the time most adverse credit information stays on a consumer's credit report to four years; require the removal of paid and settled debts within 45 days; give the Consumer Financial Protection Bureau "explicit authority" to monitor the development of credit scoring models; and require the Federal Housing Finance Agency to study using alternate, additional, or updated credit scoring models as part of the seller-servicers guides used by Fannie Mae and Freddie Mac on an ongoing basis.

From "Congress to Consider Dramatic Overhaul of Credit Reporting"
HousingWire (05/19/16) Lane, Ben

Friday Rate Update

Mortgage Rates Hold Steady Amid Positive Economic News

Freddie Mac reported on May 19 that the average 30-year fixed-rate mortgage rose to 3.58 percent from 3.57 percent a week ago, while the average 15-year fixed-rate mortgage held steady at 2.81 percent and the average five-year adjustable-rate mortgage climbed to 2.8 percent from 2.78 percent a week ago. Last year, rates averaged 3.84 percent for 30-year fixed-rate mortgages, 3.05 percent for 15-year fixed-rate mortgages, and 2.88 percent for five-year adjustable-rate mortgages. "The 10-year Treasury yield saw minimal movement over the past week, despite encouraging news from April's consumer spending and [consumer-price index] data," said Freddie Mac chief economist Sean Becketti. "Although there was minimal change in rates this week, the hawkish tone of ... [the Federal Reserve's] minutes release had an immediate impact on Treasury yields and could possibly shake up next week's survey results." The minutes from the Fed's April meeting, released May 18, left open the possibility of a rate increase in June.

From "Mortgage Rates Hold Steady Amid Positive Economic News"
Washington Post (05/19/16) Orton, Kathy

MBA: Foreclosure Starts Lowest in 16 Years

The Mortgage Bankers Association's (MBA) National Delinquency Survey indicates that the residential mortgage delinquency rate stood at 4.77 percent in the first quarter, holding steady from the fourth quarter but down 77 points from the year-ago quarter. That rate is the lowest since 2006 and has returned to typical pre-recession levels. The report also shows that foreclosure starts fell to 0.35 percent in the first quarter, down one basis point from the fourth quarter and 10 basis points from the year-ago quarter, marking their lowest level since mid-2000. "A total of 28 states and Washington, D.C. either saw decreases or no change in the foreclosure starts rate this quarter, while the remaining 22 states experienced increases in the foreclosure starts rate. Only two of these 22 states have strictly non-judicial processes in place," says Marina Walsh, vice president of industry analysis at the MBA. Furthermore, mortgages in the foreclosure process dropped to 1.74 percent, down three basis points from the fourth quarter and 48 basis points from a year ago, and the serious delinquency rate was 3.29 percent, down 15 basis points from the fourth quarter and marking the lowest rate since 2007.

From "MBA: Foreclosure Starts Lowest in 16 Years"
HousingWire (05/12/16) Ramírez, Kelsey

Friday Rate Update

Freddie Mac: Mortgage Rates at 2016 Lows

Fixed mortgage rates fell for the third straight week and are at their low point for the year, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 3.57 percent, a three-year low. The 15-year FRM averaged 2.81 percent, down from 2.86 percent last week and 3.07 percent last year.  --ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Fall 

The rate for a 30-year fixed-rate mortgage was 3.61 percent this week, down from 3.66 percent the week prior, Freddie Mac said yesterday. At this time last year, the 30-year FRM averaged 3.80 percent.

This week’s 15-year FRM averaged 2.86 percent, up from last week’s average of 2.89 percent. A year ago, the 15-year FRM averaged 3.02 percent. 

Ellie Mae Launches Mortgage App Tracking Millennials

Ellie Mae's new Ellie Mae Millennial Tracker will track millennial loan trends across the United States, refreshing with new data during the first week of every month to provide updated demographic data about millennial home buyers. The tracker uses data from 66 percent of mortgages closed since 2014 that were initiated on Ellie Mae's Encompass all-in-one mortgage management solution. According to March data from the Millennial Tracker, women were listed as the primary borrower on 31 percent of all closed loans, with an average age of 30 and average FICO score of 724. Men were listed as the primary borrower on 66 percent of closed loans, with an average age of 29 and an average FICO score of 727. Furthermore, conventional loans accounted for 60 percent of all loans made and took an average of 43 days to close, while Federal Housing Administration loans accounted for 37 percent and took an average 44 days to close. "There are roughly 87 million would-be home buyers in the millennial generation, and 91 percent of them say they intend to own a home one day. Lenders must prepare today to meet their needs," says Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae.

From "Ellie Mae Launches Mortgage App Tracking Millennials"
HousingWire (05/02/16) Ramírez, Kelsey

Mortgage Rates Wander Upward But May Be Headed Back Down

Freddie Mac reported on April 28 that the average 30-year fixed-rate mortgage rose to 3.66 percent, up from 3.59 percent the previous week but down from 3.68 percent a year ago. The average 15-year fixed-rate mortgage edged up to 2.89 percent from 2.85 percent but was down from 2.94 percent last year. Meanwhile, the average five-year adjustable-rate mortgage climbed to 2.86 percent from 2.81 percent the previous week and 2.85 percent a year ago. "Treasury yields marched higher this week," said Freddie Mac chief economist Sean Becketti. "As a result, the 30-year mortgage rate jumped seven basis points to 3.66 percent. The Federal Reserve's decision to leave the federal funds rate unchanged triggered a nine basis point drop in the 10-year Treasury yield on [April 27]; however, the drop occurred too late to impact this week's survey."

From "Mortgage Rates Wander Upward But May Be Headed Back Down"
Washington Post (04/28/16) Orton, Kathy