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Housing Shortage Drives Equity Surge

According to a TD Bank survey, many homeowners are leveraging home equity to address financial challenges amid low housing inventory and rising debt. With many choosing to stay in their homes instead of selling, 60% cited low inventory and historically low mortgage rates as reasons for holding on to their properties. Home equity is being used to consolidate debt, fund renovations, and build generational wealth, with applications for home equity loans and lines of credit (HELOCs) expected to rise, especially among younger generations.

Younger homeowners, particularly Gen Z (74%) and Millennials (71%), are leading the use of home equity to manage finances and invest in their properties. Many use equity to fund renovations, focusing on cosmetic upgrades, outdoor improvements, and eco-friendly features to boost property value. Additionally, 84% of surveyed homeowners carry debt beyond their mortgage, with 71% interested in consolidating it through equity products. Federal Reserve rate cuts have made HELOCs and similar products more appealing, helping homeowners improve their financial flexibility while enhancing their homes.

MBA Weekly Survey: Mortgage Applications Rise

Mortgage applications rose 1.7% last week despite mortgage rates climbing to 6.9%, the highest since July 2024, according to the Mortgage Bankers Association. The increase was driven by higher demand for conventional and FHA loans, with FHA purchase applications up 7%. Refinancing activity also saw a slight boost, particularly among VA loan applications, which jumped 10%. However, unadjusted purchase applications fell 3% compared to the previous week and were 1% lower than the same time last year.

The refinance share of applications rose to 41%, while the FHA and VA shares grew slightly to 16.6% and 13.6%, respectively. Interest rates for most loan types, including 15-year fixed mortgages and 5/1 ARMs, continued to edge higher. FHA rates, however, saw a marginal decrease, helping some buyers take advantage of improved inventory and lower borrowing costs.

First American Reports Stable October Home Prices

Home prices are stabilizing across the U.S. after nine months of slowing growth, according to First American’s October Home Price Index (HPI). Nationally, prices rose 3.8% in October 2024 compared to the previous year and are now 54.2% higher than pre-pandemic levels. First American Chief Economist Mark Fleming noted that while mortgage rates briefly dipped in September, their rebound in October may slow homebuying activity through the end of 2024. However, he expects home price growth to remain steady and balanced moving forward.

The report highlighted regional differences, with slower price growth observed in southern and western markets due to affordability challenges and increased inventory in some areas. First American also tracks home price trends across three tiers—starter, mid-tier, and luxury—revealing varied growth across market segments. Fleming emphasized that while affordability pressures persist, the current trend signals a healthier pace of home price appreciation.