Housing Beat: 30-Year Mortgage At 13-Year High; Major Lenders In LinkedIn Spat

The housing and mortgage world witnessed rising rates, an upswing in application levels, and public feud between two major lenders.

On The Mortgage Front: Freddie Mac FMCC reported the 30-year fixed-rate mortgage averaged 5.27%, up from last week when it averaged 5.10%. The 15-year fixed-rate mortgage averaged 4.52%, up from last week when it averaged 4.40%. And the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.96%, up from last week when it averaged 3.78%.

“Mortgage rates resumed their climb this week as the 30-year fixed reached its highest point since 2009,” said Sam Khater, Freddie Mac’s chief economist. “While housing affordability and inflationary pressures pose challenges for potential buyers, house price growth will continue but is expected to decelerate in the coming months.”

While rates were on the rise, so were mortgage applications. The Mortgage Bankers Association (MBA) reported its Market Composite Index, a measure of mortgage loan application volume, increased 2.5% on a seasonally adjusted basis from one week earlier. The seasonally adjusted Purchase Index increased 4% and the Refinance Index squeaked out a 0.2% uptick, although it was also 71% lower than the same week one year ago.

Joel Kan, MBA’s associate vice president of economic and industry forecasting welcomed the upward movement in application activity, calling it a “potentially a good sign for the spring home buying season, which has seen a slow start thus far.”

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On The Homebuyer Front: But those entering the market will be paying more on their mortgages. New data from Redfin RDFN found the typical homebuyer’s monthly mortgage payment increased by 39%, the largest year-over-year gain recorded since the company began tracking this data in 2015

“Rising mortgage rates are taking a bite out of pending sales as both buyers and sellers take a step back from the turbulent market,” said Redfin Chief Economist Daryl Fairweather. “It seems as though the ratio of buyers to sellers remains mostly the same, which is why we have yet to see a substantial drop in bidding wars or the share of homes selling quickly. It's still early days though when it comes to 5% mortgage rates. The number of buyers willing to pay such high mortgage payments could evaporate by late summer.”

But some buyers are looking outside of their states for better home deals. During the first quarter of this year, 40.5% of prospective homebuyers using the Realtor.com site viewed home listings outside of their current state — up from 36.4% one year ago and up from 33.4% in the first quarter of 2020.

The top 10 destinations, in rank order, were: El Paso, Texas; Albuquerque, New Mexico; Washington, D.C.; Birmingham, Alabama; Hartford, Connecticut; Omaha, Nebraska; McAllen, Texas; New York City; Augusta, Georgia; and Greensboro, North Carolina.

"After two years of pandemic remote work, offices have started to reopen, but instead of seeing a slowdown in the number of people interested in homes out of state, we're seeing an acceleration," said Realtor.com Chief Economist Danielle Hale, who cited housing affordability and buyer flexibility in fueling these searches.

"And finally, some people are simply ready to get back to normal, with some buyers' desire to live downtown lifestyles driving two big cities into the top 10," said Hale.

Realtor.com is operated by News Corp NWS NWSA subsidiary Move, Inc.

On The Mortgage Employment Front: The slowdown in mortgage origination is having an impact on the mortgage industry, with several industry leaders including Wells Fargo WFC, Better.com and Union Home Mortgage laying off workers.

Last week, Detroit-based Rocket Companies Inc. RKT announced it would offer voluntary buyouts to 8% of the workforce at Rocket Mortgage and title insurer Amrock. The head of another major Michigan-based lender — Mat Ishbia, president and CEO of United Wholesale Mortgage UWMC — took umbrage with Rocket’s actions.

“Disappointed is the nicest way to describe my thoughts around Rocket Mortgage/Quicken Loans laying off over 2,000 of their people, as this should not be necessary for a company that made over $5 Billion last year in profits,” Ishbia wrote on LinkedIn. “Even though United Wholesale Mortgage directly competes with Rocket, I hate seeing this type of negative impact on families in Metro Detroit. These 2,000+ people will struggle to find new jobs, and I think it’s disgusting that they’re thinking short term and are solely focused on cutting a few million per month in costs… this is the wrong thing to do to people.”

Ishbia added he was “proud that we have not had a single layoff in 35 years at UWM."

Jared Fleisher, Rocket's vice president of government affairs, responded on Ishbia’s LinkedIn page by calling his remarks “nothing but empty cynicism” and defending Rocket’s actions.

“Rocket is responding to dramatically changed market conditions in the most thoughtful and caring way possible,” he said. “The fact that you seek to exploit it for your own ends is evidence of nothing but the true depth of your cynicism, lack of caring and immorality."

Photo: SSWJ / Flickr Creative Commons