Mortgage Demand Surges to 5-Week High on Lower Interest Rates

Mortgage demand saw a 2.8% increase last week, marking the second consecutive week of gains, as homeowners and potential buyers responded to slightly lower mortgage rates. The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 7.61% after a notable drop the previous week. Applications for refinancing homes rose by 2% but were still 7% higher than the same week last year. However, the purchase applications increased by 3% from the previous week. Still, they were 12% lower than a year ago, with rising home prices and limited housing supply posing challenges for potential buyers.

Despite lower rates this week, mortgage rates are still challenging for many prospective and current homebuyers. The recent increase in purchase and refinance applications represents the highest weekly pace in five weeks, although they remain relatively low. The housing market continues to grapple with the impact of rising home prices and a shortage of available homes, even as mortgage rates have slightly declined due to a bond market rally following a lower-than-expected monthly inflation report.

US Continuing Jobless Claims Surge to Nearly 2-Year Peak

Continuing jobless claims in the United States reached their highest point in nearly two years, reaching 1.87 million in the week ending November 4. This marks the eighth consecutive week of increases, reflecting the growing challenges unemployed individuals face in securing new employment. Additionally, initial jobless claims rose to 231,000 in the week ending November 11, the highest since August. The reports and other data revealing a decline in factory production and a drop in homebuilder sentiment contribute to the speculation that the Federal Reserve might conclude its interest rate hikes.

While the jobless claims data can be volatile, especially around holidays, the recent trend and other economic indicators suggest a potential softening in the labor market, subdued consumer spending, and decreased price pressures. Economists anticipate that the previously resilient labor market may lose momentum due to higher borrowing costs, resulting in slower job growth, rising unemployment, and decelerating wage growth. The reports reinforce the belief that the Federal Reserve might pause its rate hikes for the remainder of the year.

Biden Administration Spotlights First-Time Homebuyers with FHA Support in New Report

The Department of Housing and Urban Development (HUD) has emphasized the achievements of the Federal Housing Administration (FHA) in promoting homeownership, particularly for first-time homebuyers. In fiscal year 2023, the FHA assisted over 478,000 first-time homebuyers in obtaining mortgage insurance, contributing to the agency’s commitment to creating wealth opportunities for underserved borrowers. HUD Secretary Marcia Fudge expressed the significance of this effort, stating that in 2023, HUD successfully brought nearly half a million new homebuyers into the housing market, aiming to build a fairer, more inclusive, and stronger country.

Overall, the FHA played a crucial role in providing mortgage credit access to 765,000 homeowners, including more than 33,000 seniors, during the fiscal year ending on September 30. The agency’s focus on supporting low- and middle-income homebuyers with FHA mortgages, featuring lower down payments and greater flexibility on credit requirements than conventional loans, contributed to these positive outcomes. Despite facing challenges such as rising home costs and inadequate housing supply, the FHA remained dedicated to facilitating financing availability for first-time homebuyers, borrowers of color, and others traditionally underserved by the conventional mortgage market, as outlined in the 135-page report. The report also highlighted that the average age of first-time homebuyers remained steady at 38, maintaining a consistent trend observed since 2015.

Source:

Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.