Mortgage applications decreased 0.6% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 10, 2019. The Market Composite Index, a measure of mortgage loan application volume, decreased 0.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1% compared with the previous week. The Refinance Index decreased 1% from the previous week. The seasonally adjusted Purchase Index decreased 1% from one week earlier. The unadjusted Purchase Index decreased 1% compared with the previous week and was 7% higher than the same week one year ago. “Purchase applications declined slightly last week but still remained almost 7% higher than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite the third straight decline in mortgage rates, refinance applications decreased for the fifth time in six weeks, albeit by less than 1%.” Added Kan, “It’s worth watching if ongoing global trade disputes lead to increased anxiety about the economy, which could cause some potential homebuyers to put off their home search until the uncertainty is resolved.” The refinance share of mortgage activity remained unchanged from the previous week at 37.9% of total applications. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3% of total applications. The FHA share of total applications increased to 10.1% from 9.5% the week prior. The VA share of total applications decreased to 10.6% from 11.1% the week prior. The USDA share of total applications remained unchanged from 0.6% the week prior.
New York, California get ‘aggressive’ when residents try to flee high taxes
As an increasing number of residents are looking to leave high-tax states, such as California and New York, some of these state and local governments are not making the process easy. The Tax Cuts and Jobs Act introduced a number of reforms, including a $10,000 cap on state and local tax deductions, which have caused Americans to look into establishing legal primary residences in states where they can limit their liabilities. But some states give taxpayers a hard time when they are trying to change their domicile – thereby establishing their permanent residency elsewhere. “California … they don’t particularly like when people that were large taxpayers … leave,” Marc Minker, lead managing director at accounting provider and consulting firm CBIZ MHM, told FOX Business. “The state becomes very aggressive with respect to making you prove that you essentially changed your domicile.” Changing a domicile requires an individual to physically move with the intent to stay either permanently or indefinitely. The state of domicile determines your income, estate and other taxes. Even when you change your domicile, that is not always enough, Minker added. If you own a property in the old state, you must be able to prove that you resided in the new domicile for more than 183 days out of the year. In addition to California, Minker said New York is “equally aggressive,” as are New Jersey, Connecticut and Ohio, among others. Lance Christensen, a partner at accounting firm Margolin Winer & Evens, agreed that New York State and New York City are aggressive when it comes to allowing taxpayers to leave. He said individuals must be ready to “withstand New York State and New York City challenges.”
To prove where they were throughout the year, Christensen recommends people keep a detailed diary. He also said taxpayers should keep items like receipts, plane tickets – even EZ pass receipts. “The burden of proof is on the taxpayer to prove where he is, or she is, and it can be very close,” Christensen said. “We’ve seen this come down to where your pet is.” He added that taxpayers should make sure they have thoroughly planned and are prepared for the move, adding for some clients with a lot of taxable income during a certain year it may be cheaper to take a trip around the world than it would be to return to New York and be hit with those taxes. Christensen has seen an increasing number of people in New York looking to domicile in Florida as a consequence of the new tax law – which he says is especially common among people who already have a second home there. While Florida received more movers than any other state last year, New York’s outflows to the Sunshine State were the highest – 63,772 people. New York had the third-largest outflows of any state, with 452,580 people moving out within the past year. California, another high-tax state, had the largest outflow of domestic residents – with the highest proportion of people headed to Texas, Arizona and Washington. Washington and Texas collect no state income tax. New York was found to have the highest state and local tax burden Opens a New Window. of any of the 50 states, with the average individual paying nearly 13% of income toward those obligations. President Trump said last month that residents were “fleeing” New York over high taxes, which he suggested were “oppressive.”
CoreLogic – US overall delinquency rate lowest for a February in nearly two decades (monthly)
– Elevated delinquency rates persist in some regions impacted by natural disasters
– No state logged an annual gain in its overall delinquency, serious delinquency or foreclosure rate in February
– Overall US foreclosure and delinquency rates were the lowest for a February in at least 20 and 19 years, respectively
CoreLogic released its monthly Loan Performance Insights Report. The report shows, nationally, 4% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in February 2019, representing a 0.8 percentage point decline in the overall delinquency rate compared with February 2018, when it was 4.8%. This was the lowest for the month of February in at least 19 years. As of February 2019, the foreclosure inventory rate – which measures the share of mortgages in some stage of the foreclosure process – was 0.4%, down 0.2 percentage points from February 2018. The February 2019 foreclosure inventory rate tied the November and December 2018 and January 2019 rates as the lowest for any month since at least January 1999. Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market. To monitor mortgage performance comprehensively, CoreLogic examines all stages of delinquency, as well as transition rates, which indicate the percentage of mortgages moving from one stage of delinquency to the next.
The rate for early-stage delinquencies – defined as 30 to 59 days past due – was 2% in February 2019, down from 2.1% in February 2018. The share of mortgages 60 to 89 days past due in February 2019 was 0.6%, down from 0.7% in February 2018. The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.4% in February 2019, down from 2.1% in February 2018. The serious delinquency rate of 1.4% this February was the lowest for that month since 2001 when it was also 1.4%. Since early-stage delinquencies can be volatile, CoreLogic also analyzes transition rates. The share of mortgages that transitioned from current to 30 days past due was 1% in February 2019, unchanged from February 2018. By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2%, while it peaked in November 2008 at 2%. “The persistently impressive economic expansion continues to drive down housing market distress, with delinquencies and foreclosures hitting near two-decade lows,” said Dr. Ralph McLaughlin, deputy chief economist at CoreLogic. “Furthermore, with unemployment at a 50-year low, wage growth nearing double inflation and a positive demographic structure that will drive housing demand upwards, the future of US housing and mortgage markets look bright even if short term indicators suggest cooling.” The nation’s overall delinquency rate has fallen on a year-over-year basis for the past 14 consecutive months. Fewer delinquencies attribute to the strength of loan vintages in the years since the residential lending market has recovered following the housing crisis. In February, 11 metropolitan areas experienced annual gains – mostly very small – in their serious delinquency rates. The largest gains were in four Southeast metros affected by natural disasters in 2018. “We are on track to test generational lows as delinquency rates hit their lowest point in almost two decades. Given the economic outlook, we are likely to see more declines over the balance of this year,” said Frank Martell, president and CEO of CoreLogic. “Reflective of the drop in delinquency rates, no state experienced a year-over-year increase in its foreclosure inventory rate so far in 2019.”
Treasury yields move lower after weak Chinese economic data
US government debt prices rose on Wednesday as disappointing economic data led investors to seek safety in Treasurys. At around 8:36 a.m. ET, the yield on the benchmark 10-year Treasury note was lower at around 2.368%, while the yield on the 30-year Treasury bond was also lower at around 2.818%. Yields move inversely to prices. The 10-year yield was also about three basis points from hitting its 2019 low. Retails sales in the US fell 0.2% last month, while economists polled by Dow Jones expected an increase of 0.2%. Chinese industrial production rose 5.4% in April, well below a Refinitiv estimate of 6.5%. The print was also the weakest since May 2003. “I think the weak Chinese data is kind of confirmation the trade war matters, which is more fuel on the fire of the worries we’ve seen over the past two weeks,” said BMO Treasury strategist Ben Jeffrey. The slowdown in Chinese industrial production comes as trade tensions between China and the US have reignited. Earlier this week, China hiked tariffs on $60 billion worth of US goods. The move came after the US raised levies on $200 billion worth of Chinese imports. President Donald Trump said in a tweet Tuesday that the US is in a “much better position now than any deal we could have made.” Fed Vice Chair Richard Clarida is due to speak at 9:30 a.m. ET and Richmond Fed President Thomas Barkin will also give a speech at 10 a.m. ET.
MBA – mortgage delinquencies rise in the first quarter of 2019 (quarterly)
The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 4.42% of all loans outstanding at the end of the first quarter, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. Despite an uptick of 36 basis points on a quarterly basis, the delinquency rate was still down 21 basis points from one year ago. The percentage of loans on which foreclosure actions were started last quarter fell by 5 basis points from a year ago and 2 basis points from last quarter (to 0.23%). “The national mortgage delinquency rate in the first quarter of 2019 was down on a year-over-year basis, which is another sign of a very strong economic environment, bolstered by low unemployment and rising wage growth,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Moreover, the serious delinquency rate – the percentage of loans that are 90 days or more past due or in the process of foreclosure – dropped across all loan types from the previous quarter and a year ago to its lowest overall level since the second quarter of 2006.” Walsh noted that early 30-day delinquencies rose in the first quarter of 2019 on a seasonally-adjusted basis across all loan types. The rise in early delinquencies resulted in the overall mortgage delinquency rate climbing by 36 basis points. While higher than several quarters in 2017 and 2018, it is still the fourth lowest overall mortgage delinquency rate in the past 12 years.
Key findings of MBA’s First Quarter of 2019 National Delinquency Survey:
- – Compared to last quarter, the seasonally adjusted mortgage delinquency rate increased for all loans outstanding. By stage, the 30-day delinquency rate increased 29 basis points to 2.58%, the 60-day delinquency rate increased 7 basis points to 0.81%, and the 90-day delinquency bucket remained unchanged at 1.03%.
- – By loan type, the total delinquency rate for conventional loans increased 27 basis points to 3.46% compared to the last quarter of 2018. The FHA delinquency rate increased 28 basis points to 8.93%, and the VA delinquency rate increased by 66 basis points to 4.37%.
– On a year-over-year basis, the seasonally adjusted overall delinquency rate decreased for all loans outstanding. The delinquency rate decreased by 32 basis points for conventional loans, decreased 9 basis points for FHA loans and increased 5 basis points for VA loans.
– The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 0.92%, down 3 basis points from the fourth quarter and 24 basis points lower than one year ago. This is the lowest foreclosure inventory rate since the fourth quarter of 1995.
– The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was at 1.96% – a decrease of 10 basis points from last quarter and a decrease of 65 basis points from last year. The serious delinquency rate decreased by 6 basis points for conventional loans, 31 basis points for FHA loans, and 9 basis points for VA loans from the previous quarter. Compared to a year ago, the serious delinquency rate decreased by 67 basis points for conventional loans, 77 basis points for FHA loans and 35 basis points for VA loans.
NAR – metro home prices see 3.9% increase in 2019’s first quarter
Inventory increased and metro market prices rose in the first quarter of 2019, but at a slower pace than the previous quarter, according to the latest quarterly report by the National Association of Realtors®. The national median existing single-family home price in the first quarter was $254,800, up 3.9% from the first quarter of 2018 ($245,300). Single-family home prices increased in 86% of measured markets last quarter, with 153 of 178 metropolitan statistical areas showing sales price gains compared to the first quarter of a year ago. Thirteen metro areas (7%) experienced double-digit increases, down from 14 in 2018’s fourth quarter. Lawrence Yun, NAR chief economist, says the first quarter has been beneficial to US homeowners. “Homeowners in the majority of markets are continuing to enjoy price gains, albeit at a slower rate of growth. A typical homeowner accumulated $9,500 in wealth over the past year,” he said. Total existing-home sales, including single family homes and condos, increased 1.2% to a seasonally adjusted annual rate of 5.207 million in the first quarter, up from 5.143 million in the fourth quarter of 2018. That is 5.4% lower than the 5.507 million-pace in the first quarter of 2018. At the end of 2019’s first quarter, 1.68 million existing homes were available for sale, 2.4% up from the 1.64 figure at the end of 2018’s first quarter. Average supply during the first quarter of 2019 was 3.8 months – up from 3.5 months in the first quarter of 2018. National family median income rose to $77,752 in the first quarter, while higher home prices caused overall affordability to decrease from last year. A buyer making a 5% down payment would need an income of $60,143 to purchase a single-family home at the national median price, while a 10% down payment would require an income of $56,978, and $50,647 would be necessary for a 20% down payment.
The five most expensive housing markets in the first quarter were the San Jose-Sunnyvale-Santa Clara, Calif., metro area, where the median existing single-family price was $1,220,000; San Francisco-Oakland-Hayward, Calif., $930,000; Anaheim-Santa Ana-Irvine, Calif., $800,000; Urban Honolulu, Hawaii $794,100; and San Diego-Carlsbad, Calif., $620,000. “There are vast home price differences among metro markets,” Yun says. “The condition of extremely high home prices may not be sustainable in light of many alternative metro markets that are much more affordable. Therefore, a shift in job search and residential relocations into more affordable regions of the country is likely in the future.” The five lowest-cost metro areas in the fourth quarter were Decatur, Ill., $80,800; Youngstown-Warren-Boardman, Ohio, $89,200; Elmira, N.Y., $90,400; Cumberland, Md., $99,300; and Binghamton, N.Y., $107,200. Yun continues to call on the construction industry to develop more affordable housing units, which he says will combat slower price gains and buyer pullback. “More supply is needed to provide better homeownership opportunities, taming home price growth and widening the inventory choices for consumers. Housing Opportunity Zones could provide the necessary financial benefits for homebuilders to construct moderately priced-homes,” Yun said. Total existing-home sales in the Northeast sat at an annual rate of 683,000 (down 1.4% from last quarter) and are down only 1.0% from a year ago. The median existing single-family home price in the Northeast was $277,200 in the first quarter, up 3.7% from a year ago. In the Midwest, existing-home sales fell 4.0% in the first quarter and are 5.5% below a year ago. The median existing single-family home price in the Midwest sat at $194,100, a 3.9% increase from the first quarter of 2018. Existing-home sales in the South increased 4.3% in the first quarter but were 4.0% lower than the first quarter of 2018. The median existing single-family home price in the South was $225,700 in the fourth quarter, 2.5% above a year ago. In the West, existing-home sales in the first quarter grew by 2.8% and are 10.7% below a year ago. The median existing single-family home price in the West increased 3.5% year-over-year to $384,300.
MBA – commercial/multifamily originations increase 12% in the first quarter
Commercial and multifamily mortgage loan originations rose 12% in the first quarter compared to the same period last year, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. In line with seasonality trends, originations the first three months of the year were 34% lower than the fourth quarter of 2018. “The momentum seen in 2018’s record year of borrowing and lending continued in the first quarter of this year,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “First quarter volumes were higher for nearly every property type, and double-digit growth in loan volume for Fannie Mae and Freddie Mac led the increase among capital sources. Low interest rates and strong property values continue to make commercial real estate an attractive market for borrowers.” Compared to a year earlier, a rise in originations for industrial, health care and hotel properties led the overall increase in commercial/multifamily lending volumes. By property type, industrial (73%), health care (41%), hotels (14%), retail (9%) and multifamily (9%) all saw year-over-year gains by dollar volume. The dollar volume of office property loans was unchanged.
Among investor types, the dollar volume of loans originated for Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) increased by 14% year-over-year. Life insurance company loans increased 7%, commercial bank portfolios increased 6%, while loans originated for Commercial Mortgage Backed Securities (CMBS) decreased 4%. As is typical in the first quarter, originations decreased in comparison to last year’s fourth quarter, with total activity falling 34%. Among property types, declines were seen in health care (49%), hotels (45%), multifamily (40%), retail (32%) and office space (30%). Industrial properties bucked the overall trend, rising 17% from the fourth quarter of 2018. Among investor types, the dollar volume of loans for GSEs decreased 43%, originations for commercial banks decreased 34%, loans for life insurance companies decreased by 28%, and loans for CMBS decreased 22%.