Mortgage rates & delinquencies dip while underwater loans grow
A weekly round-up of key events in mortgage lending & servicing.
In this edition, we will do a round up of key developments of the past week.
What’s inside:
Mortgage rates dip to 6.28%, tracking bond yield
Underwater mortgages hit double digit
Expanded deferral program for distressed borrowers
Delinquencies decline for 22nd straight month
Here’s a complete low-down 👇
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Weekly Roundup
Mortgage rates dip as economy cools
Mortgage rates have experienced a decline as recent data reveals signs of a slowing economy. According to the National Mortgage News, the benchmark 30-year fixed-rate mortgage dropped to an average of 6.28%, a decrease from last week's 6.32%. This shift comes as the U.S. economy shows signs of cooling, with slower job growth and other indicators suggesting a potential slowdown.
The Federal Reserve has been closely monitoring these developments, adjusting its monetary policy to maintain balance in the financial markets. With inflationary pressures easing and the job market's steady performance, experts anticipate the Fed could continue to hold off on significant rate hikes in the near term.
Homebuyers and homeowners seeking refinancing opportunities should take advantage of these lower mortgage rates, as they provide a more affordable entry point into the housing market or allow for more manageable monthly payments.
However, potential buyers should keep in mind that overall housing affordability remains a challenge due to the limited inventory and elevated home prices.
While the recent dip in mortgage rates is welcome news for many, it's important to stay informed and vigilant, as the economic landscape and mortgage rates are subject to change. Keep an eye on our daily newsletter for the latest updates on mortgage rates, economic trends, and how they may impact your financial decisions… Read More
Underwater loans grow despite equity cushion
The housing market has shown contrasting indicators as recent data reveals that more than 10% of homebuyer loans are slipping underwater, with borrowers owing more on their mortgages than their homes are worth.
Meanwhile, a substantial equity cushion has been built by U.S. homeowners due to the rapid rise in home prices over the past few years, providing a safety net in the event of a real estate downturn.
If we look under the hood, we will notice that - the increase in underwater loans can signal potential risks in the housing market. New homeowners with negative equity may struggle to refinance or sell their homes, leading to increased foreclosures and financial strain.
Conversely, the equity cushion built by many of the COVID era homeowners can remain protected even during an economic downturn, and even tap into this equity for financial needs.
These mixed signals indicate that the housing market is in a delicate balance. As home prices continue to rise, the risk of more homebuyers slipping underwater grows.
It's crucial for policymakers and lenders to monitor these trends and implement strategies that promote a more stable market, such as encouraging responsible lending practices and providing assistance to borrowers facing financial hardship.
For potential homebuyers, it's essential to carefully evaluate their financial situation and consider the long-term implications of their mortgage choices. As the market continues to evolve, staying informed and making sound decisions will be key to navigating this complex landscape… Read More
FHFA expands deferral program for distressed homeowners
The Federal Housing Finance Agency (FHFA) is extending an option previously used by borrowers facing pandemic hardships to all distressed homeowners with loans backed by Fannie Mae and Freddie Mac.
This will allow borrowers to defer up to six months of payments without paying any interest on the deferred obligations. The deferred amounts will be due when the loan matures, the collateral property gets sold, or if the borrower refinances or pays off the mortgage.
The FHFA is making this a part of the standard loss mitigation toolkit available to all borrowers with eligible hardships. The FHFA is also offering borrowers access to other options, including loan reinstatement, repayment plans, or loan modification if they meet certain requirements.
The expanded deferral option was successful in helping borrowers stay in their homes during the pandemic. The Mortgage Bankers Association and the Urban Institute's Housing Finance Policy Center have suggested that these options be adopted permanently based on their high usage rate by borrowers during the national emergency.
Servicers will have voluntary access to the expanded deferral option from July 1, 2022, and it will become mandatory for appropriate situations from October 1, 2022… Read More
Mortgage delinquencies decline for 22nd straight month
In January, mortgage delinquency rates fell for the 22nd consecutive month from the previous year, according to data from CoreLogic. However, this decline was mainly due to a decrease in seriously delinquent loans.
On the other hand, shorter-term delinquency categories saw an increase on a year-over-year basis, which could be a worrying sign for the US economy as it moves towards an anticipated recession.
Although the overall delinquency rate decreased, the foreclosure rate slowly crept up, and the subset of loans in any stage of the foreclosure process slightly increased over the same period. Two local markets in Florida experienced a rise in delinquencies, while delinquency rates increased in the 30-59 day and 60-89 day categories.
Despite declining home values, the average borrower still holds about $270,000 of equity, which will help prevent possible foreclosures, CoreLogic said.
Overall, the data suggests that the housing market is still resilient but may be facing some challenges ahead… Read More
Spotlight: Vaultedge at MBA Tech Solutions Expo 2023
It’s been an ‘eventful’ beginning of a new quarter for us.
Early this April, Vaultedge participated at MBA Tech Solutions Expo 2023, both as an exhibitor and as a demo presenter.
We not only unveiled our latest loan verification automation platform at the ‘Tech Showcase’ but also spoke to industry leaders on automation specific pain points in their current set up. All in all, it was a good learning experience
In case you missed the event, we’ve got you covered - in the coming days, we will share our post event report with some of the insights & lessons learnt from our visit.
So, stay tuned, stay with us.