The Data and Analytics division of Black Knight Financial Services reports the following “first look” at April 2017 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.
– Calendar-driven spike in delinquencies results in largest monthly rise in more than eight years
– First-lien mortgage delinquencies rose by 13%, the largest monthly increase since November 2008
– Month-over-month, the number of borrowers past due on mortgage payments increased by 241,000
– April’s delinquency rate increase was primarily calendar-driven (due to both the month ending on a Sunday and March being the typical calendar-year low) and largely isolated to early-stage delinquencies
– The inventory of loans in active foreclosure continues to decline, hitting a 10-year low in April
– At just 52,800, April saw the fewest monthly foreclosure starts since January 2005
– Prepayment speeds (historically a good indicator of refinance activity) fell by 11% from March
Oil prices steady as market await US data, extended output cut
Oil prices were little changed on Wednesday as investors awaited official data on inventories in the United States and the outcome from Vienna where ministers from OPEC and other exporting countries were discussing whether to extend production cuts. Data from the US Energy Information Administration is due to be released at 10:30 a.m. EDT (1430 GMT). Late Tuesday, data from industry group American Petroleum Institute showed crude inventories fell by 1.5 million barrels to 521.9 million barrels in the week to May 19, compared with analysts’ expectations for a decrease of 2.4 million barrels. Benchmark Brent crude oil was up 11 cents a barrel at $54.26 at 9:47 a.m. EDT. US light crude was up 1 cent at $51.48. Both benchmarks have gained more than 10% from their May lows below $50 a barrel, rebounding on a consensus that the Organization of the Petroleum Exporting Countries and other producers will maintain strict limits on oil production in an attempt to drain a global oversupply. OPEC has promised to cut supplies by 1.8 million barrels per day until June and was expected on Thursday to extend that cut as long as nine months.
CoreLogic – US economic outlook: May 2017
Mortgage originations are affected by economic growth and the level of mortgage rates. Economic growth is expected to be stronger in 2017 than last year, which creates jobs, income, and additional construction, each of which supports purchase-mortgage lending. However, higher mortgage rates work in the opposite direction: as mortgage loans become more expensive, originations generally fall. Mortgage rates have begun to move higher. To date, rates on 30-year fixed-rate mortgages are up more than one-half percentage point from the 3.5% low of last summer, and are predicted to rise to about 4.5% by year-end 2017. In the past, when mortgage rates have moved up from a recent low, refinance activity has fallen sharply, and we expect this to happen with the latest rise in rates. For example, the interest rate on fixed-rate mortgages rose by just over one percentage point during 2013, and the refinance volume in 2014 fell about 50%. With interest rates up from last summer’s lows and expected to trend higher, housing economists project refinance volumes to drop during 2017. Serving as a partial offset to the drop in refinance, home-purchase lending is expected to rise because of more new-home building and stronger income growth. (Figure 2) Also, homeowners who want to tap home equity for remodeling are likely to turn to HELOCs or other second-lien products to finance their home improvements, rather than refinance their low-rate first mortgage. Still, the expected increase in home-purchase and HELOC activity will offset only a portion of the reduction in refinance. Overall, housing economists are expecting about an 18 to 20% decline in the dollar amount of single-family originations in 2017, or about a 23 to 25% drop in new loan counts after adjusting for the projected 5% rise in home prices during 2017. Moreover, after the drop in 2017, no further big declines are expected: Origination volumes in 2018 are expected to be similar to 2017, as home-purchase gains match any further erosion in refinance volume.
House speaker Ryan says confident tax reform will pass in 2017
Republicans will be able to push through tax reform by the end of this year even as they continue to debate whether or not a final plan will include a border adjustment tax, US House Speaker Paul Ryan said an interview with Axios news outlet on Wednesday. Asked if he could envision a scenario where tax reform passes the House of Representative without including a border adjustment tax, Ryan said yes but added that internal negotiations are still ongoing.
NAHB – new home sales slip in April after strong start to year
Sales of newly built, single-family homes in April dropped for the first time in 2017, falling 11.4% to a seasonally adjusted annual rate of 569,000 units, according to newly released data by the US Department of Housing and Urban Development and the US Census Bureau. Sales numbers for the first three months of the year were all upwardly revised, and the March sales pace was the highest since October 2007. “Despite some slowness this month, total new home sales in 2017 are up more than 11% from this time last year and builders are optimistic about future market conditions,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. “We should see further gains in the months ahead as more prospective home buyers enter the market.” “New home sales were strong in the first three months of 2017, so some pullback in April is to be expected,” said NAHB Chief Economist Robert Dietz. “However, our forecast calls for new home sales to increase throughout the year, buoyed by rising household formations, continued job growth and tight existing home inventory.”The inventory of new home sales for sale was 268,000 in April, which is a 5.7-month supply at the current sales pace. The median sales price of new houses sold was $309,200. Regionally, new home sales decreased 4.0% in the South, 7.5% in the Northeast, 13.1% in the Midwest and 26.3% in the West.
NAR – existing-home sales slip 2.3% in April; days on market falls to under a month
Stubbornly low supply levels held down existing-home sales in April and also pushed the median number of days a home was on the market to a new low of 29 days, according to the National Association of Realtors (NAR). Total existing-home, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 2.3% to a seasonally adjusted annual rate of 5.57 million in April from a downwardly revised 5.70 million in March. Despite last month’s decline, sales are still 1.6% above a year ago and at the fourth highest pace over the past year. The median existing-home price for all housing types in April was $244,800, up 6.0% from April 2016 ($230,900). April’s price increase marks the 62nd straight month of year-over-year gains. Total housing inventory at the end of April climbed 7.2% to 1.93 million existing homes available for sale, but is still 9.0% lower than a year ago (2.12 million) and has fallen year-over-year for 23 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.6 months a year ago. Properties typically stayed on the market for 29 days in April, which is down from 34 days in March and 39 days a year ago, and surpasses last May (32 days) as the shortest timeframe since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 88 days in April, while foreclosures sold in 46 days and non-distressed homes took 28 days. Fifty-two% of homes sold in April were on the market for less than a month (a new high).
Inventory data from realtor.com reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in April were San Jose-Sunnyvale-Santa Clara, Calif., 23 days; San Francisco-Oakland-Hayward, Calif., 25 days; Denver-Aurora-Lakewood, Colo., 27 days; and Seattle-Tacoma-Bellevue, Wash., 28 days. According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage declined for the first time in six months, dipping to 4.05% in April from 4.20% in March. The average commitment rate for all of 2016 was 3.65%. Matching the highest percentage since last September, first-time buyers were 34% of sales in April, which is up from 32% both in March and a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released in late 20164 – revealed that the annual share of first-time buyers was 35%. President William E. Brown says it’s not only prospective homebuyers who are facing housing issues; many middle-income homeowners who benefit from the mortgage interest deduction could be slapped with a tax increase if some of the tax reform proposals currently being discussed go through. A recently released study commissioned by NAR titled, “Impact of Tax Reform Options on Owner-Occupied Housing,” (link is external) estimated taxes would rise on average by $815 each year for homeowners with adjusted gross incomes between $50,000 and $200,000. Furthermore, home values could shrink by an average of more than 10%, with areas with higher property taxes or state income taxes experiencing an even steeper decline. “Realtors support tax reform, but any plan that effectively nullifies the current tax benefits of owning a home is a non-starter for the roughly 75 million homeowners and countless prospective first-time buyers that see owning a home as part of their American Dream,” said Brown. Thousands of Realtors® took this message to Capitol Hill last week during NAR’s annual legislative meetings in Washington, D.C.
All-cash sales were 21% of transactions in April, down from 23% in March and 24% a year ago. Individual investors, who account for many cash sales, purchased 15% of homes in April, unchanged from March but up from 13% a year ago. Fifty-seven% of investors paid in cash in April. Distressed sales – foreclosures and short sales – were 5% of sales in April, down from 6% in March and 7% a year ago. Three% of April sales were foreclosures and 2% were short sales. Foreclosures sold for an average discount of 18% below market value in April (16% in March), while short sales were discounted 12% (14% in March). Single-family home sales decreased 2.4% to a seasonally adjusted annual rate of 4.95 million in April from 5.07 million in March, but are still 1.6% above the 4.87 million pace a year ago. The median existing single-family home price was $246,100 in April, up 6.1% from April 2016. Existing condominium and co-op sales declined 1.6% to a seasonally adjusted annual rate of 620,000 units in April, but are still 1.6% higher than a year ago. The median existing condo price was $234,600 in April, which is 5.6% above a year ago. April existing-home sales in the Northeast dipped 2.7% to an annual rate of 730,000, and are now 2.7% below a year ago. The median price in the Northeast was $267,700, which is 1.6% above April 2016. In the Midwest, existing-home sales increased 3.8% to an annual rate of 1.36 million in April, but are 0.7% below a year ago. The median price in the Midwest was $194,500, up 7.8% from a year ago. Existing-home sales in the South in fell 5.0% to an annual rate of 2.30 million, but are still 3.6% above April 2016. The median price in the South was $217,700, up 7.9% from a year ago. Existing-home sales in the West declined 3.3% to an annual rate of 1.18 million in April, but are still 3.5% above a year ago. The median price in the West was $358,600, up 6.8% from April 2016.
MBA – refi apps up, purchase apps slightly down in latest MBA weekly survey
Mortgage applications increased 4.4% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 19, 2017. The Market Composite Index, a measure of mortgage loan application volume, increased 4.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3% compared with the previous week. The Refinance Index increased 11% from the previous week to its highest level since March 2017. The seasonally adjusted Purchase Index decreased 1% from one week earlier. The unadjusted Purchase Index decreased 2% compared with the previous week and was 3% higher than the same week one year ago. The refinance share of mortgage activity increased to 43.9% of total applications from 41.1% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.2% of total applications. The FHA share of total applications increased to 10.8% from 10.6% the week prior. The VA share of total applications decreased to 10.5% from 10.7% the week prior. The USDA share of total applications remained unchanged at 0.8% from the week prior.