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Mortgage Credit More Available In December

The standards used to determine whether or not a borrower is approved for a mortgage aren’t fixed. There are times when they tighten and times when they loosen. Because of this, the Mortgage Bankers Association tracks credit availability each month in order to measure how easy or difficult it is for borrowers to get a mortgage. Any increase in their index indicates that credit has become more available, while a decline means standards have tightened. In December, the overall index rose 0.8 percent, pushing it to its highest level since May 2021. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said standards have loosened due to current market challenges. “December’s growth was driven by more ARM and lower credit score loan programs, which was likely due to a combination of the rising rate environment and affordability challenges,” Kan said. “Lenders expanded offerings to qualified borrowers who were the most impacted by these market conditions.” Despite the improvement, credit availability is still 30 percent lower than its pre-pandemic level. (source)

Purchase Activity Increases Despite Rising Rates

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates rose last week across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The increases, while significant, weren’t enough to slow buyer demand, however. In fact, demand for purchase loan applications increased 2 percent from one week earlier. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the year has started off strong. “The housing market started 2022 on a strong note. Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9 percent, and VA applications increasing more than 5 percent,” Kan said. “MBA expects solid growth in purchase activity this year, as demographic drivers and the strong economy support housing demand.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Climate A Factor When Considering A Move

There a lot of things to consider when thinking about making a move. How close you’ll be to family and friends, affordability, and the local job market are all important factors that play a role when choosing where we’d like to live. But, according to one recent survey, climate is also a factor for homeowners and renters considering a move. In fact, among renters it was the most important factor, ranking higher than both the job market and home prices. Homeowners, on the other hand, ranked it second behind proximity to family and friends. Interestingly, there were also differences when broken down by generation, with Gen-Z homeowners ranking it first, while millennial and Gen-X respondents put it behind both home prices and closeness to family and friends. Ultimately, though, there wasn’t a whole lot of separation between the various priorities offered to survey participants – which is an indication that, in a perfect world, we’d all choose to live somewhere with nice weather, good jobs, and affordable homes close to family, friends, and nature. (source)

Homeownership Still More Affordable Than Renting

It’d be easy to get the impression that owning a home is more expensive than renting. After all, home prices have been increasing for years – and especially over the past year. But, according to a recent analysis from ATTOM Data Solutions, homeownership is still more affordable then renting in 58 percent of counties. The analysis compared the cost of owning a median-priced home to the average rent on a three-bedroom property in 1,154 counties and found that homeownership expenses consumed a smaller portion of average local wages than renting. Todd Teta, ATTOM’s chief product officer, says home prices are rising faster than rents but have yet to flip the affordability equation. “Home prices are rising faster than both rents and wages while wages rise faster than rents,” Teta said. “Yet homeownership still remains the more affordable option for average workers in a majority of the country because it still takes up a smaller portion of their pay.” One of the main factors driving homeownership’s continuing affordability is the fact that mortgage rates remain low, which helps to counteract rising prices and keeps mortgage payments manageable. (source)

Americans Say It’s A Good Time To Sell

The percentage of Americans who say it’s a good time to sell a house rose 26 percent year over year, according to the December results of Fannie Mae’s monthly Home Purchase Sentiment Index. The survey – which asks Americans what they think about buying or selling a home, mortgage rates, home prices, their jobs, and household income – was relatively flat from the month before. However, year-over-year comparisons show a large spike in the number of respondents who think it’s a good time to sell – while the number who believe it’s a good time to buy saw a significant drop. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the results may be a sign that the housing market will soften this year. “The HPSI’s underlying components changed dramatically in the last 12 months – particularly the two related to home-buying and home-selling sentiment – and we have seen the index drift slightly downward since March 2021, an indication that the housing market may begin to soften in the coming year,” Duncan said. (source)

New Listings Bounce Back In Many Metros

Shopping for a home to buy can be challenging in markets where there aren’t many homes for sale. For one, it’s more difficult to find an available house in the right neighborhood with the right features. Then, when you do find one, you often have to outbid other prospective buyers who also want it. But, while the number of homes for sale is still lower than normal, you shouldn’t let the current inventory crunch put your home-buying plans on hold. Why? Well, there’s an expectation that this year’s market will see inventory rebound from the declines suffered in 2021. And, according to a new report from the National Association of Realtors’ consumer website, there is already evidence that new listings are beginning to bounce back. In fact, December data shows 20 percent of the 50 largest U.S. metros saw more new sellers enter the market than last year at the same time – and some of those cities saw double-digit increases. That doesn’t mean those markets won’t still be competitive but it does offer hope to home buyers that they’ll have an easier time finding a house that fits their needs. (source)

Mortgage Rates Mostly Flat To End 2021

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat during the final two weeks of December. Rates for 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans saw little movement from the week before. But, while rates were relatively unchanged, they remained at their highest level since April 2021, which – along with the holiday season – slowed demand for mortgage applications. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says demand fell for both refinance and purchase loans. “Refinance demand continues to dwindle, as many borrowers refinanced in 2020, and in early 2021 – when mortgage rates were around 40 basis points lower,” Kan said. “The purchase market also finished the year on a slower note, with the final week coming in at the weakest since October 2021.” Still, 2021 was a record year for purchase originations and the MBA expects this year to be even stronger. (source)

Housing Remains Hot Despite Seasonal Slowdown

The housing market typically slows down at the end of the year. The reasons for this aren’t difficult to understand. Between harsher weather and the holidays, not a lot of people have moving on their mind during the month of December. But while the market has been experiencing a typical seasonal slowdown, it remains hot when compared to pre-pandemic levels. For example, a look at recently released numbers shows that the number of homes for sale with an accepted offer within one week was nearly double what it was during the same period in 2019, jumping from 15.8 percent two years ago to 29.6 percent in 2021. Similarly, the median number of days homes were on the market has nearly doubled from 2019. New listings and pending sales have also spiked compared to their pre-pandemic level. Simply put, the winter market has slowed down but continues to run hotter than normal, when compared to an average year. (source)

What’s Ahead For The Housing Market In 2022?

There’s a natural inclination at the beginning of the year to look forward. The new year offers us a fresh start and a great time to set goals. For a lot of us, one of those goals will be to buy a house. But what should we expect out of the housing market in 2022? Well, according to a survey of more than 20 top economic and housing experts conducted by the National Association of Realtors, we can expect the market to normalize. “Overall, survey participants believe we’ll see the housing market and broader economy normalize [this] year,” Lawrence Yun, NAR’s chief economist, said of the survey’s results. “Though forecasted to rise 4 percent, inflation will decelerate after hefty gains in 2021, while home price increases are also expected to ease with an annual appreciation of less than 6 percent.” Survey participants expect home sales to fall slightly from 2021 but they also see an uptick in the number of new homes built. And, while they expect mortgage rates to move higher, the increases aren’t expected to push rates higher than their pre-pandemic level. (source)

Americans Look To Move Somewhere Less Expensive

If you’re like most Americans, your monthly mortgage payment will be among your biggest bills. That’s why it’s important for prospective home buyers to crunch the numbers before shopping for a house. Knowing how much you can comfortably afford will help you avoid buying a house that causes you financial stress. And these days, that’s a factor. The pandemic has led to more economic uncertainty and it has a lot of us thinking about our bills. For example, in one recent survey, nearly 50 percent of participants said they’ve worried about their house payment during the past month. And those worries – along with increasing opportunities for remote work – have many of us looking to move somewhere more affordable. In fact, the same survey found 45 percent of respondents considering a move to a less expensive area. It’s a common theme, lately. Since the beginning of the pandemic, many surveys have found a growing number of Americans interested in moving to smaller metros, suburbs, exurbs, and anywhere else they can get more house for their money. (source)