Mortgage technology provider Roostify is hoping to bring in more self-employed borrowers by adding mortgage automation provider Indecomm‘s automated income calculation technology, it announced Tuesday.
Indecomm’s IncomeGenius integration into Roostify’s data intelligence solutions will expand Roostify’s existing income calculation capabilities for self-employed borrowers, according to a company statement. The partnership is aimed at reducing the time in middle-office mortgage operations, in which associates usually spend long hours verifying, validating and comparing data and documents.
“Improving loan assembly and processing costs, and timeframes is an imperative for all lenders in today’s environment,” said Rajesh Bhat, co-founder and CEO of Roostify. “With the integration of IncomeGenius, we can now simplify and automate calculations for self-employed borrowers, an increasingly important use case as the gig economy expands.”
When IncomeGenius receives self-employment documents and data from Roostify beyond’s analysis assistant, which uses data from automated verification of assets (VOA), verification of employment (VOE), and verification of income (VOI), it will apply its proprietary machine learning algorithms to deliver a self-employment income analysis and generate a government sponsored enterprise (GSE) worksheet in line with guidelines by Fannie Mae and Freddie Mac.
IncomeGenius will then send the information back to the Roostify beyond platform, which is displayed as a part of the interactive analysis assistant dashboard.
The partnership between two firms comes at a time when the mortgage origination market is shrinking, led by surging mortgage rates. Mortgage analysts predict the rightsizing of the mortgage market will force consolidation and most mortgage tech firms to scale back on investment until companies figure out how bad the downmarket is.
Roostify claims to be better positioned to weather the cyclical mortgage industry. Although it’s not yet profitable, the artificial intelligence and machine learning capabilities embedded into Roostify’s point-of-sale system platform make it competitive, Bhat told HousingWire in June.
In January 2021, Roostify raised $32 million in venture funding, bringing its total funding to $65 million. The firm provides tech to about 200 lending institutions on its platform, including two of its investors, J.P. Morgan Chase and Santander Bank, according to Roostify. It claims to be handling $50 billion in loan volume every month.
Mortgage fintechs Sales Boomerang and Mortgage Coach have merged, roughly six months after a Philadelphia-based private equity firm bought a controlling stake in each company.
The two companies have been working toward the merger since LLR Partners’ made an investment in each in January. Richard Harris, former chief executive officer at email sending and delivering platform Spark Post, will take the helm as CEO.
A unified name has not yet been determined and Sales Boomerang and Mortgage Coach will continue to operate as distinct brands, for now, the companies said. Specific terms of the deal were not disclosed.
In January, Sam Ryder, principal at LLR Partners, cited the companies’ solutions products as the reason for the capital investment. He said lenders reported that they received a high return on investment from Sales Boomerang and Mortgage Coach’s products, and LLR felt that there was significant upside in the firms, even though margins in the industry are narrowing due to higher rates.
The two companies’ technology solutions are already tightly integrated and the relationship between their executives was a bonus to LLR Partners, Ryder told HousingWire in January.
In 2016, LLR Partners led a $26.5 million investment in eOriginal, a digital platform that aims to securely digitize the lending process from the borrower to the secondary market.
Sales Boomerang monitors customer databases on behalf of lenders to identify when a customer is ready for a new loan. The lenders can then offer “the right loan to borrowers at the right time,” Alex Kutsishin, the former CEO of Sales Boomerang, said in January.
Mortgage Coach provides an interactive borrower education platform that lets loan officers guide borrowers through a visual presentation of their loan options so that the LO becomes a trusted advisor, Dave Savage, then co-founder and CEO Dave Savage of Mortgage Coach said back in January.
Savage currently holds the title of chief innovation officer and Kutsishin assumed the role of title visionary officer, the companies said. Savage and Kutsishin will be responsible for “informing the company’s strategy, carrying the company’s message and nurturing customer and partner relationships,” the companies said Tuesday.
When running a business, automation and delegation can make your life easier and amplify your success. This is even truer for the real estate industry. If you’re in the short-term rental (STR) business, you might have realized by now that STRs are one of the most management-intensive real estate classes.
This, of course, is because of the high volume of people coming in and out of your property. But even though STRs require more time and resources to manage, that doesn’t mean you or even someone else needs to be completing those tasks.
As my business grew, I wanted to see which pieces I could start delegating to other people as most other entrepreneurs would do.
But, instead of finding the right people for tasks, what if I could find the software or tools that can take over these time-consuming jobs without hiring people?
After all, I wanted to delegate three things:
Messaging
Pricing
Guest Services
All of these can be covered by automated software. In this article, we’ll discuss those applications.
Automated Messaging
When it comes to any online travel agency (OTA) like Airbnb or VRBO, at the end of the day, they are a search engine, and outside of keywords, their algorithm rewards specific behaviors.
One of those behaviors is how quickly you respond to your guests. The quicker you respond to a guest, the higher your account is placed in the search results.
So, the first thing I wanted to do was automate the messaging for my business.
Before automating, I would manually send booking confirmations, check-in instructions, a check-up message once the guest checks in, a pre-check-out message, and a review request message. That’s a lot for one property, let alone managing others.
To make my life easier, the first tool I found was Hospitable. For a starting price of $25 per month for up to two properties, this tool allows you to integrate with Airbnb, VRBO, and Booking.com, and it can handle all of your messages automatically for you. They also provide excellent messaging templates, so you don’t have to worry about the specifics of your writing.
The automated messages through Hospitable auto-fill the guest’s name, date of check-in, and date of check-out. When you are away from work, you can set up an automated message saying you’re not available, which comes in handy at night when you are sleeping.
Another exciting tool they provide is automated reviews. This allows you to automate all of the review requests to guests. Then, the software will read through the reviews and determine which ones should display first on your listings, which can become very time-consuming after you start managing more properties.
After messaging, the next step is to automate the pricing.
Dynamic Pricing
When I first started listing properties on Airbnb, I would sit down once every week, pull up my calendar, and assess the pricing of each listing. I would slash prices for dates that had not been booked and increase prices for weekends that I thought would do better. There was a lot of guesswork, and it simply wasn’t scalable.
Cut to today, and I firmly believe that your property is at a disadvantage if you are not using a dynamic pricing tool for your STR. Automated pricing apps will track the local market’s rental demand and adjust prices based on it, making your listing much more competitive. Another great benefit of automated pricing is that it helps your properties rank better on the OTA search results.
The dynamic pricing tool I currently use is PriceLabs.
Digital Guidebook
My wife and I recently took a trip to Tulum Beach, Mexico. When we checked into the resort, the front desk agent sent us a link to 4 days worth of activities. We absolutely loved this, and I wanted to see how I could apply that to the STR business. I asked myself, “How can I become my guest’s travel agent without spending too much money, and can I automate the whole process?”
That’s where a digital guidebook came in.
A digital guidebook is a link you can send your guest that provides information and a short itinerary of things to do in your market. I suggest finding 3-4 attractions and making a daily schedule around them. When your guest checks in, you can have this sent automatically.
For instance, Asheville, North Carolina, is known for breweries, hiking trails, and restaurants. I have three separate days that are planned around those things.
The digital guidebook I use is Hostfully, but there are a ton of other platforms you can use. I recommend having a digital book compared to a printed one you leave at the property for many reasons, including easier access for a guest, ease of updating, and the ability to keep it all automated.
Final Thoughts
These are the three tools I’ve implemented over the last two years to completely automate the vast majority of my business. Even better, applying all three of these tools to your rental will only cost you an extra $60 or so per month, more or less depending on the number of properties you hold. Regardless, the costs are a drop in the bucket to how much money and time these tools will give you back!
Find long-term wealth with short-term rentals
From analyzing potential properties to effectively managing your listings, this book is your one-stop resource for making a profit with short-term rentals! Whether you’re new to real estate investing or you want to add a new strategy to your growing portfolio, vacation rentals can be an extremely lucrative way to add an extra income stream—but only if you acquire and manage your properties correctly.
https://frankbuysphilly.com/wp-content/uploads/2022/06/STR-tech-1024x680.jpg6801024Frank Buys Phillyhttps://frankbuysphilly.com/wp-content/uploads/2017/10/Bo-Final-Logo.pngFrank Buys Philly2022-06-28 03:06:222022-06-28 03:06:223 Tools That Will Automate Your Short-Term Rental Business
The national mortgage delinquency dropped to an all-time low in May, continuing two consecutive months of a decline since March.
The overall delinquency rate slightly dropped five basis points from April to 2.75% in May, according to Black Knight. The delinquency rate is 42% lower than the same period a year ago.
A total of 1.46 million properties were in early-stage delinquencies, defined as borrowers who missed a single mortgage payment, which is a slight increase of 0.2% from April due to typical seasonal patterns. It’s more than a 71% drop from the same period in 2021.
“Mortgage performance continues to be strong, with inflow of new delinquencies still running below pre-pandemic levels,” said Andy Walden, vice president of enterprise research at Black Knight. “With fewer new borrowers becoming delinquent, both overall and early-stage delinquency rates continue to trend downward.”
Some 595,000 properties were considered seriously delinquent, in which loan payments are more than 90 days past due, but not in foreclosure. That metric dropped 7% in May from the previous month. However, the number of properties in serious delinquency were 45% above pre-pandemic levels.
The country is still working through a surplus from the serious delinquencies that surged in the second quarter of 2020 as borrowers struggled to pay back their loans at the start of the pandemic, Walden said.
“Even after 21 straight months of improvement, the population remains elevated some 45% over pre-pandemic levels,” he said.
Mississippi had the highest rate of serious delinquency of 2.35% in May. Louisiana followed at 2.12% and Alabama was third at 1.67%.
Despite elevated serious delinquency levels, foreclosure starts dropped 12% from April to 18,000 and continue to hold well below pre-pandemic levels while active foreclosures edged slightly higher.
Prepayment activity fell by 11.1% from the prior month and is down 59.1% from May 2021 on sharply higher interest rates.
One of the biggest talking points of the last couple of years has been the gap between supply and demand in nearly every industry, from real estate to energy.
Inflation hit 8.6% in May, according to the latest CPI report and gas prices spiked to a record average of $5 and over across all U.S. states for the first time as the cost of an oil barrel climbs to $120. Broken supply chains have caused catastrophic supply and demand issues in nearly every sector of the economy, giving us the perfect storm of inflation.
However, despite the outlook, AirDNA’s May Review indicated that supply, at least in the short-term rental market, might finally be catching up with demand.
Occupancy Falls By 8.6% As 84,000 Listings Are Added
In data generated by both Airbnb and VRBO, 84,000 new short-term rental listings were added to the market, creating a 57,000 net increase after removing closed listings.
In total, there are roughly 1.3 million listings available for rent in the United States, which is up nearly 25% year over year. This marks a record high for total available listings in the U.S.
While demand has been extremely high, especially as some reports suggest that this will be a hectic traveling summer, occupancy fell to 60.2% in May.
Change in U.S. Short-term Rental Demand vs 2019 – AirDNA
While there doesn’t seem to be any worrisome signs to keep an eye on just yet, falling occupancy rates aren’t exactly an STR investor’s favorite statistic. Yes, listings were added month over month, but if demand is as high as it is, then you wouldn’t expect a sharp near 10% decline in occupancy heading into the busy season. Instead, occupancy is mirroring 2019s numbers more than 2021, for better or worse.
U.S. Short-term Rental Occupancy (2019-2022) – AirDNA
The fact of the matter is that supply outpaced demand in the short-term rental market, despite this summer supposedly being the season of “revenge travel,” as some pundits have labeled it.
But when we consider the larger factors at play in the economy: high inflation, expensive gas, expensive goods, expensive flights, and a Fed determined to slow down inflation with historic interest rate increases. These are signs that the brakes need to be pumped on the economy, and it’s already starting. Typically, travel slows down with the brakes.
Understanding the American Consumer
In a survey conducted by Credit Karma in May, 51% of Americans reported that their financial situation was worse off than it was at the beginning of the pandemic. However, 30% of Americans plan to spend more money this summer.
Even more concerning, but adding to the surprising rationale, is that almost 33% of Americans reported taking on debt to afford rising gas prices. Yet, 22% said that they were planning to spend an extra $1,000 more than their typical budget.
Why? Why do Americans, who are feeling tremendous financial pressure from a variety of directions, feel the need to bloat their travel budgets?
It turns out it has to do with making up for lost time (33% of respondents), taking advantage of normal life again (38%), and the fear of missing out (25%). While living life to the fullest is not bad, there are real barriers to travel that can and will prevent someone from going somewhere if it will result in financial instability when they get home.
This is where short-term rental investors or prospective short-term rental investors need to be careful.
A Warning for Short-Term Rental Investors
I’m not ringing the alarm bells and signaling the end of times. I’m just being cautious about a lot of the news and reports coming out.
While short-term rentals are by no means in any jeopardy at the moment, in fact, STRs can be quite “interest-rate proof” during these times. I will say to be careful of the reports on travel and a booming season.
STRs are rapidly expanding and continue to boast growth. Nor has supply met demand nearly enough to justify lowering prices. But there is a looming recession and clear indications that many U.S. consumers are falling behind in their finances. When you put these two together, one of the first budget items to get cut is travel, regardless of how much people want to get out and about. That’s just how economics works.
As an investor, you should be prepared for the worst. In this case, low occupancy due to a recessionary environment. Depending on your market and the type of rental you’re operating, occupancy varies with the seasons. Do what’s best for your business in the long term. Be prepared for economic fallout and changing STR laws (many local governments have turned their attention towards making it harder for STRs to operate in order to create more housing availability).
Don’t allow yourself to be blindsided. Many investors have enjoyed the short-term rental growth sparked by the pandemic. But now, times are changing again, and we must be prepared for what’s to come, good or bad.
Ready to invest in short-term rentals?
From analyzing potential properties to effectively managing your listings, Short-Term Rental, Long-Term Wealth is your one-stop resource for making a profit with short-term rentals!
Mortgage lender First Guaranty Mortgage Corporation cut about 80% of its workforce on Friday and has stopped accepting new mortgage applications, HousingWire has learned. Former employees said the lender has “essentially shuttered.”
According to two former FGMC employees, the company on Friday laid off around 500 employees without severance payment, meaning only 100 staffers remain.
“They are not accepting new loan applications, so that probably means they are getting ready to close up the whole thing,” an employee who was affected by the layoff told HousingWire.
The same former employee said PIMCO was trying to strike a deal to bring more funding to FGMC, which “went south” and then FGMC “got hit with margin calls.”
“PIMCO was attempting to sell part of FGMC but when that fell through, they completely divested,” said another source. “About nearly 500 people were affected today including sales and ops in all three channels. Essentially the company is shuttered.”
“Apparently their stockpile of ‘cash’ was a lie. Time to start the job search!,” one former employee posted on LinkedIn.
In a written statement, a spokesperson for the lender said FGMC “made the difficult but necessary decision to institute a reduction in force as the mortgage market faces significant, unexpected, and unprecedented economic pressures.”
FGMC declined to comment further, and PIMCO did not immediately return requests for comment.
Licensed in 49 states and the District of Columbia, FGMC offers mortgage loans for new home purchases and refinancings. The company offers a variety of loan products, including FHA, USDA, VA and non-QM loans. Just last week FGMC launched a new second-lien program, where borrowers could tap their equity without disrupting their rate.
The mortgage lender does business as Goodmortgage in retail branches, where they work directly with consumers. It also works closely with third-party origination partners through the correspondent and wholesale channels, where the company offered its proprietary line of Non-QM products called Maverick Solutions.
This week’s HW+ member spotlight features Ben Bernstein, director at Axonic Capital, an investment firm with a deep focus on the structured credit sector of the financial markets. Prior to that, Bernstein held leadership roles in Odeon Capital Group and JPMorgan Chase.
Below, Bernstein answers questions about the housing industry:
HousingWire: What is your current favorite HW+ article and why?
Ben Bernstein: Logan and Sarah’s Monday podcast is my go to. Logan cuts through all the noise and delivers clear concise opinions rooted in the data. So not only do I get updates on what is going on in the housing market but I learn which data points are relevant and how to analyze them. And Sarah always asks insightful questions. On top of that, it is super entertaining!
HousingWire: What has been your biggest learning opportunity?
Ben Bernstein: My biggest learning opportunity (and weirdest job I ever had) was every job I ever had. I started my career at Bear Stearns on February 23 2008. To say that was an interesting time and place to start a career would be an understatement. Two weeks later I was working for JPMorgan and eventually made it to a desk whose focus was working out of the assets that brought Bear down in the first place.
Think funky bonds linked to housing like subprime RMBS and CDOs. Getting to dig deep into what these bonds were and how the underlying mortgages impacted them was priceless. I started at Axonic, a credit fund focused on investments linked to residential and commercial real estate, in November of 2019.
Another interesting time to join an investment firm! Three months later, I was working remotely and figuring out how to be productive from home. Fourteen years into my career and my biggest learning opportunity is right now.
I’m learning new stuff every single day whether it be about the bond market, housing, trading, macro economics, etc. All I need to do is turn around and ask a question out loud and I’ll learn something new.
HousingWire: What is the best piece of advice you’ve ever received?
Ben Bernstein: The best piece of advice I’ve ever received was what is important is what you do when no one is looking. Your reputation, work ethic, success, productivity and integrity are all linked to what you do because you know you need to do it as opposed to what you think other people want you to do.
HousingWire: What’s 2-3 trends that you’re closely following?
Ben Bernstein: I don’t think anyone will be surprised by the trends I’m following these days: Inflation, credit spreads, housing prices and how they are all intertwined. Fortunately I have smart people around me (including HousingWire) to give me their opinions on where we are headed. It’s my job to put it all together. The past two years have been some of the most interesting times in markets and from where I sit I don’t think that will change any time soon.
HousingWire: What keeps you up at night and why?
Ben Bernstein: What keeps me up at night is the state of the housing market. 35+% home price appreciation since COVID-19 began. Two months supply of housing. Mortgage rates going up faster than they ever have. There’s a lot going on!
One thing as bond traders that we do is we look down before we look up. In other words we look at risk before we look at upside. An overheated housing market is something we pay close attention to because we don’t want prices to go down precipitously but we don’t want inflation to run away either. So it’s really an interesting time to be tracking the housing market and all of the ancillary markets that are impacted by it.
The Federal Housing Finance Agency (FHFA) today reiterated its stance on a new fee on some government-backed enterprise securities.
The agency made no promise to delay the fee. Still, some stakeholders unhappy with the fee see an opportunity.
In a statement, FHFA Director Sandra Thompson said her agency was “committed to the continued strength and resilience” of the process for issuing single securities, “given the significant improvement in liquidity and stability” it has given the market. The new fee for securitizing collateral of the other enterprise, the agency said, is meant to help meet the capital requirements in the FHFA’s 2020 capital rule.
Thompson also said FHFA would continue to monitor the markets for uniform mortgage-backed securities and agency-backed securities to make sure they “function as intended.” The FHFA said it would also “continue regular engagement with stakeholders.”
For some stakeholders opposed to the fee, the outreach showed the FHFA is willing to listen, rather than ignore criticism at all costs.
“It is a positive first step, although there is a lot of work needed to clearly map how the activity will be destructive to UMBS,” said Michael Bright, CEO of the Structured Finance Association. “I hope it means we have an opportunity to explain how this fee destroys the fungibility of assets in a futures contract.”
Since the announcement, numerous stakeholders have been vociferous about their unhappiness with the fee, which becomes effective July 1.
The Securities Industry and Financial Markets Association, a trade association that represents broker-dealers, investment banks and asset managers, condemned the new fee in a letter it sent the FHFA on Wednesday.
Members of the trade group said that both GSEs are already charging the fee on commingled securities, a spokesperson said.
Freddie Mac and Fannie Mae did not immediately respond to requests to comment.
The fee “will effectively eliminate the ability of market participants to create [the commingled securities], as it will be non-economic in nearly any conceivable scenario,” wrote Christopher Killian, SIFMA managing director of securitization and credit. “This means UMBS are no longer completely fungible, and breaks a core underpinning of the market’s acceptance of UMBS.”
The Urban Institute today issued a report decrying the fee, authored by its researchers Laurie Goodman, co-founder of the Housing Finance Policy Institute, Jim Parrott, a former Obama administration senior advisor, and Bob Ryan, a former senior advisor at the FHFA.
The researchers wrote that under the prior system, since investors preferred Fannie Mae securities, Freddie Mac had to compensate lenders for the value difference to the tune of about $400 million each year. That reduced the profits sent to taxpayers and, they wrote, and made it more difficult to enact GSE reform, because it gave Fannie Mae a market advantage.
The UMBS “saved taxpayers hundreds of millions of dollars a year and helped pave the way for long-term reform,” the researchers wrote. But they argued the new fee would undo those gains.
“By eliminating the fungibility of the GSEs’ commingled securities, investors may begin to pay more for Fannie Mae’s security, again forcing Freddie Mac to pay lenders a premium to make up for the weaker investor demand for their security.”
Bright, of the SFA, said that the new fee may already have damaged the trust of investors. That could have long-term ramifications for the securities that underpin the functioning of the mortgage market, he said.
“You don’t want to be in a position where investors feel lied to,” said Bright. “Because once they’ve been burnt, they have to price for the possibility of being burnt again.”
https://frankbuysphilly.com/wp-content/uploads/2022/03/HW-FHFA-sandra-thompson.png7781200Frank Buys Phillyhttps://frankbuysphilly.com/wp-content/uploads/2017/10/Bo-Final-Logo.pngFrank Buys Philly2022-06-23 21:57:362022-06-23 21:57:36FHFA: No delay on 50 bps fee, but open to “engagement”
Purchase mortgage rates this week averaged 5.81%, compared to 5.78% the week prior, when rates rose 55 basis points, the largest 1-week increase since 1987, according to the latest Freddie Mac PMMS index.
A year ago at this time, 30-year fixed rate purchase rates were at 3.02%. The PMMS, a government-sponsored enterprise index, accounts solely for purchase mortgages reported by lenders during the past three days.
“Fixed mortgage rates have increased by more than two full percentage points since the beginning of the year,” said Sam Khater, Freddie Mac’s chief economist, according to a statement.
However, another index showed mortgage rates declining this week.
Black Knight’s Optimal Blue OBMMI pricing engine, which includes some refinancing data — but excludes cash-out refis to avoid skewing averages – measured the 30-year conforming rate at 5.9% Wednesday, down from 6.03% the previous week. The 30-year fixed-rate jumbo was at 5.326% Wednesday, a decline from 5.46% the week prior, according to the Black Knight index.
Mortgage rates tend to move in concert with the 10-year Treasury yield, which reached 3.16% Wednesday, down from 3.33% a week before.
According to Khater, the combination of rising rates and high home prices likely is the driver behind recent declines in existing home sales.
“However, in reality, many potential homebuyers are still interested in purchasing a home, keeping the market competitive but leveling off the last two years of red-hot activity.”
Mortgage application volumes rose 4.2% from the past week, propelled by borrowers’ demand for purchase loans. Refi applications decreased 3% from the prior week, and purchase apps ticked up 8%, according to the Mortgage Bankers Association (MBA).
According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 4.92% with an average of 0.9 point, up from last week’s 4.81%. The 15-year fixed-rate mortgage averaged 2.34% a year ago.
The 5-year ARM averaged 4.41%, with buyers on average paying for 0.3 point, up from 4.33% the week prior. The product averaged 2.53% a year ago.
Despite mortgage rates reaching the highest level in 14 years, mortgage applications increased 4.2% from the prior week, according to the latest Mortgage Bankers Association (MBA) survey for the week ending June 17.
“Mortgage rates continued to surge last week, with the 30-year fixed mortgage rate jumping 33 basis points to 5.98% – the highest since November 2008 and the largest single-week increase since 2009,” Joel Kan, associate vice president of economic and industry forecasting for the trade group, said in a statement.
Rates for mortgage loans were strongly impacted by tightening monetary policy to combat rising inflation. On June 10, the U.S. Consumer Price Index showed an 8.6% increase year-over-year in May, the highest level in four decades. Consequently, the Federal Reserve raised the federal funds rate by 75 basis points last week, a rate hike not seen since 1994. Another 0.75% hike is expected from the Fed’s meeting in July.
With mortgage rates now at almost double what they were a year ago, refinancing applications decreased 3% from the prior week and were 77% lower than the same week in 2021. Refis were 29.7% of total applications last week, decreasing from 31.7% the previous week, the survey shows.
Meanwhile, the seasonally adjusted purchase index ticked up 8% from the prior week but was 9.4% down from the same week a year ago. According to Kan, purchase applications increased for the second straight week, driven mainly by conventional applications.
Higher rates usually cool off prices, and Kan noted a potential trend in this week’s data. “The average loan size, at just over $420,000, is well below its $460,000 peak earlier this year and is potentially a sign that home price growth is moderating,” the economist said.
The adjustable-rate mortgages (ARM) share of applications jumped to over 10.6%, demonstrating continued popularity among borrowers. The average interest rate for a 5/1 ARM rose to 4.78% from 4.57% a week prior, according to the MBA
The FHA share of total applications increased to 12% from 11.8% the week prior. Meanwhile, the VA share went from 11.7% to 10.7%. The USDA share of total applications declined to 0.5% from 0.6% the week prior.
The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased to 5.98%, from 5.65% the previous week. For jumbo mortgage loans (greater than $647,200), it went to 5.49% from 5.25%.
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Roostify partners with Indecomm to court self-employed borrowers
Mortgage technology provider Roostify is hoping to bring in more self-employed borrowers by adding mortgage automation provider Indecomm‘s automated income calculation technology, it announced Tuesday.
Indecomm’s IncomeGenius integration into Roostify’s data intelligence solutions will expand Roostify’s existing income calculation capabilities for self-employed borrowers, according to a company statement. The partnership is aimed at reducing the time in middle-office mortgage operations, in which associates usually spend long hours verifying, validating and comparing data and documents.
“Improving loan assembly and processing costs, and timeframes is an imperative for all lenders in today’s environment,” said Rajesh Bhat, co-founder and CEO of Roostify. “With the integration of IncomeGenius, we can now simplify and automate calculations for self-employed borrowers, an increasingly important use case as the gig economy expands.”
When IncomeGenius receives self-employment documents and data from Roostify beyond’s analysis assistant, which uses data from automated verification of assets (VOA), verification of employment (VOE), and verification of income (VOI), it will apply its proprietary machine learning algorithms to deliver a self-employment income analysis and generate a government sponsored enterprise (GSE) worksheet in line with guidelines by Fannie Mae and Freddie Mac.
IncomeGenius will then send the information back to the Roostify beyond platform, which is displayed as a part of the interactive analysis assistant dashboard.
The partnership between two firms comes at a time when the mortgage origination market is shrinking, led by surging mortgage rates. Mortgage analysts predict the rightsizing of the mortgage market will force consolidation and most mortgage tech firms to scale back on investment until companies figure out how bad the downmarket is.
Roostify claims to be better positioned to weather the cyclical mortgage industry. Although it’s not yet profitable, the artificial intelligence and machine learning capabilities embedded into Roostify’s point-of-sale system platform make it competitive, Bhat told HousingWire in June.
In January 2021, Roostify raised $32 million in venture funding, bringing its total funding to $65 million. The firm provides tech to about 200 lending institutions on its platform, including two of its investors, J.P. Morgan Chase and Santander Bank, according to Roostify. It claims to be handling $50 billion in loan volume every month.
The post Roostify partners with Indecomm to court self-employed borrowers appeared first on HousingWire.
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Sales Boomerang and Mortgage Coach merge
Mortgage fintechs Sales Boomerang and Mortgage Coach have merged, roughly six months after a Philadelphia-based private equity firm bought a controlling stake in each company.
The two companies have been working toward the merger since LLR Partners’ made an investment in each in January. Richard Harris, former chief executive officer at email sending and delivering platform Spark Post, will take the helm as CEO.
A unified name has not yet been determined and Sales Boomerang and Mortgage Coach will continue to operate as distinct brands, for now, the companies said. Specific terms of the deal were not disclosed.
In January, Sam Ryder, principal at LLR Partners, cited the companies’ solutions products as the reason for the capital investment. He said lenders reported that they received a high return on investment from Sales Boomerang and Mortgage Coach’s products, and LLR felt that there was significant upside in the firms, even though margins in the industry are narrowing due to higher rates.
The two companies’ technology solutions are already tightly integrated and the relationship between their executives was a bonus to LLR Partners, Ryder told HousingWire in January.
In 2016, LLR Partners led a $26.5 million investment in eOriginal, a digital platform that aims to securely digitize the lending process from the borrower to the secondary market.
Sales Boomerang monitors customer databases on behalf of lenders to identify when a customer is ready for a new loan. The lenders can then offer “the right loan to borrowers at the right time,” Alex Kutsishin, the former CEO of Sales Boomerang, said in January.
Mortgage Coach provides an interactive borrower education platform that lets loan officers guide borrowers through a visual presentation of their loan options so that the LO becomes a trusted advisor, Dave Savage, then co-founder and CEO Dave Savage of Mortgage Coach said back in January.
Savage currently holds the title of chief innovation officer and Kutsishin assumed the role of title visionary officer, the companies said. Savage and Kutsishin will be responsible for “informing the company’s strategy, carrying the company’s message and nurturing customer and partner relationships,” the companies said Tuesday.
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3 Tools That Will Automate Your Short-Term Rental Business
When running a business, automation and delegation can make your life easier and amplify your success. This is even truer for the real estate industry. If you’re in the short-term rental (STR) business, you might have realized by now that STRs are one of the most management-intensive real estate classes.
This, of course, is because of the high volume of people coming in and out of your property. But even though STRs require more time and resources to manage, that doesn’t mean you or even someone else needs to be completing those tasks.
As my business grew, I wanted to see which pieces I could start delegating to other people as most other entrepreneurs would do.
But, instead of finding the right people for tasks, what if I could find the software or tools that can take over these time-consuming jobs without hiring people?
After all, I wanted to delegate three things:
All of these can be covered by automated software. In this article, we’ll discuss those applications.
Automated Messaging
When it comes to any online travel agency (OTA) like Airbnb or VRBO, at the end of the day, they are a search engine, and outside of keywords, their algorithm rewards specific behaviors.
One of those behaviors is how quickly you respond to your guests. The quicker you respond to a guest, the higher your account is placed in the search results.
So, the first thing I wanted to do was automate the messaging for my business.
Before automating, I would manually send booking confirmations, check-in instructions, a check-up message once the guest checks in, a pre-check-out message, and a review request message. That’s a lot for one property, let alone managing others.
To make my life easier, the first tool I found was Hospitable. For a starting price of $25 per month for up to two properties, this tool allows you to integrate with Airbnb, VRBO, and Booking.com, and it can handle all of your messages automatically for you. They also provide excellent messaging templates, so you don’t have to worry about the specifics of your writing.
The automated messages through Hospitable auto-fill the guest’s name, date of check-in, and date of check-out. When you are away from work, you can set up an automated message saying you’re not available, which comes in handy at night when you are sleeping.
Another exciting tool they provide is automated reviews. This allows you to automate all of the review requests to guests. Then, the software will read through the reviews and determine which ones should display first on your listings, which can become very time-consuming after you start managing more properties.
After messaging, the next step is to automate the pricing.
Dynamic Pricing
When I first started listing properties on Airbnb, I would sit down once every week, pull up my calendar, and assess the pricing of each listing. I would slash prices for dates that had not been booked and increase prices for weekends that I thought would do better. There was a lot of guesswork, and it simply wasn’t scalable.
Cut to today, and I firmly believe that your property is at a disadvantage if you are not using a dynamic pricing tool for your STR. Automated pricing apps will track the local market’s rental demand and adjust prices based on it, making your listing much more competitive. Another great benefit of automated pricing is that it helps your properties rank better on the OTA search results.
The dynamic pricing tool I currently use is PriceLabs.
Digital Guidebook
My wife and I recently took a trip to Tulum Beach, Mexico. When we checked into the resort, the front desk agent sent us a link to 4 days worth of activities. We absolutely loved this, and I wanted to see how I could apply that to the STR business. I asked myself, “How can I become my guest’s travel agent without spending too much money, and can I automate the whole process?”
That’s where a digital guidebook came in.
A digital guidebook is a link you can send your guest that provides information and a short itinerary of things to do in your market. I suggest finding 3-4 attractions and making a daily schedule around them. When your guest checks in, you can have this sent automatically.
For instance, Asheville, North Carolina, is known for breweries, hiking trails, and restaurants. I have three separate days that are planned around those things.
The digital guidebook I use is Hostfully, but there are a ton of other platforms you can use. I recommend having a digital book compared to a printed one you leave at the property for many reasons, including easier access for a guest, ease of updating, and the ability to keep it all automated.
Final Thoughts
These are the three tools I’ve implemented over the last two years to completely automate the vast majority of my business. Even better, applying all three of these tools to your rental will only cost you an extra $60 or so per month, more or less depending on the number of properties you hold. Regardless, the costs are a drop in the bucket to how much money and time these tools will give you back!
Find long-term wealth with short-term rentals
From analyzing potential properties to effectively managing your listings, this book is your one-stop resource for making a profit with short-term rentals! Whether you’re new to real estate investing or you want to add a new strategy to your growing portfolio, vacation rentals can be an extremely lucrative way to add an extra income stream—but only if you acquire and manage your properties correctly.
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Mortgage delinquency rate falls to historic low
The national mortgage delinquency dropped to an all-time low in May, continuing two consecutive months of a decline since March.
The overall delinquency rate slightly dropped five basis points from April to 2.75% in May, according to Black Knight. The delinquency rate is 42% lower than the same period a year ago.
A total of 1.46 million properties were in early-stage delinquencies, defined as borrowers who missed a single mortgage payment, which is a slight increase of 0.2% from April due to typical seasonal patterns. It’s more than a 71% drop from the same period in 2021.
“Mortgage performance continues to be strong, with inflow of new delinquencies still running below pre-pandemic levels,” said Andy Walden, vice president of enterprise research at Black Knight. “With fewer new borrowers becoming delinquent, both overall and early-stage delinquency rates continue to trend downward.”
Some 595,000 properties were considered seriously delinquent, in which loan payments are more than 90 days past due, but not in foreclosure. That metric dropped 7% in May from the previous month. However, the number of properties in serious delinquency were 45% above pre-pandemic levels.
The country is still working through a surplus from the serious delinquencies that surged in the second quarter of 2020 as borrowers struggled to pay back their loans at the start of the pandemic, Walden said.
“Even after 21 straight months of improvement, the population remains elevated some 45% over pre-pandemic levels,” he said.
Mississippi had the highest rate of serious delinquency of 2.35% in May. Louisiana followed at 2.12% and Alabama was third at 1.67%.
Despite elevated serious delinquency levels, foreclosure starts dropped 12% from April to 18,000 and continue to hold well below pre-pandemic levels while active foreclosures edged slightly higher.
Prepayment activity fell by 11.1% from the prior month and is down 59.1% from May 2021 on sharply higher interest rates.
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Short-Term Rental Occupancy Falls in May: Should Investors Be Concerned?
One of the biggest talking points of the last couple of years has been the gap between supply and demand in nearly every industry, from real estate to energy.
Inflation hit 8.6% in May, according to the latest CPI report and gas prices spiked to a record average of $5 and over across all U.S. states for the first time as the cost of an oil barrel climbs to $120. Broken supply chains have caused catastrophic supply and demand issues in nearly every sector of the economy, giving us the perfect storm of inflation.
However, despite the outlook, AirDNA’s May Review indicated that supply, at least in the short-term rental market, might finally be catching up with demand.
Occupancy Falls By 8.6% As 84,000 Listings Are Added
In data generated by both Airbnb and VRBO, 84,000 new short-term rental listings were added to the market, creating a 57,000 net increase after removing closed listings.
In total, there are roughly 1.3 million listings available for rent in the United States, which is up nearly 25% year over year. This marks a record high for total available listings in the U.S.
While demand has been extremely high, especially as some reports suggest that this will be a hectic traveling summer, occupancy fell to 60.2% in May.
While there doesn’t seem to be any worrisome signs to keep an eye on just yet, falling occupancy rates aren’t exactly an STR investor’s favorite statistic. Yes, listings were added month over month, but if demand is as high as it is, then you wouldn’t expect a sharp near 10% decline in occupancy heading into the busy season. Instead, occupancy is mirroring 2019s numbers more than 2021, for better or worse.
The fact of the matter is that supply outpaced demand in the short-term rental market, despite this summer supposedly being the season of “revenge travel,” as some pundits have labeled it.
But when we consider the larger factors at play in the economy: high inflation, expensive gas, expensive goods, expensive flights, and a Fed determined to slow down inflation with historic interest rate increases. These are signs that the brakes need to be pumped on the economy, and it’s already starting. Typically, travel slows down with the brakes.
Understanding the American Consumer
In a survey conducted by Credit Karma in May, 51% of Americans reported that their financial situation was worse off than it was at the beginning of the pandemic. However, 30% of Americans plan to spend more money this summer.
Even more concerning, but adding to the surprising rationale, is that almost 33% of Americans reported taking on debt to afford rising gas prices. Yet, 22% said that they were planning to spend an extra $1,000 more than their typical budget.
Why? Why do Americans, who are feeling tremendous financial pressure from a variety of directions, feel the need to bloat their travel budgets?
It turns out it has to do with making up for lost time (33% of respondents), taking advantage of normal life again (38%), and the fear of missing out (25%). While living life to the fullest is not bad, there are real barriers to travel that can and will prevent someone from going somewhere if it will result in financial instability when they get home.
This is where short-term rental investors or prospective short-term rental investors need to be careful.
A Warning for Short-Term Rental Investors
I’m not ringing the alarm bells and signaling the end of times. I’m just being cautious about a lot of the news and reports coming out.
While short-term rentals are by no means in any jeopardy at the moment, in fact, STRs can be quite “interest-rate proof” during these times. I will say to be careful of the reports on travel and a booming season.
STRs are rapidly expanding and continue to boast growth. Nor has supply met demand nearly enough to justify lowering prices. But there is a looming recession and clear indications that many U.S. consumers are falling behind in their finances. When you put these two together, one of the first budget items to get cut is travel, regardless of how much people want to get out and about. That’s just how economics works.
As an investor, you should be prepared for the worst. In this case, low occupancy due to a recessionary environment. Depending on your market and the type of rental you’re operating, occupancy varies with the seasons. Do what’s best for your business in the long term. Be prepared for economic fallout and changing STR laws (many local governments have turned their attention towards making it harder for STRs to operate in order to create more housing availability).
Don’t allow yourself to be blindsided. Many investors have enjoyed the short-term rental growth sparked by the pandemic. But now, times are changing again, and we must be prepared for what’s to come, good or bad.
Ready to invest in short-term rentals?
From analyzing potential properties to effectively managing your listings, Short-Term Rental, Long-Term Wealth is your one-stop resource for making a profit with short-term rentals!
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PIMCO-backed FGMC lays off most staffers
Mortgage lender First Guaranty Mortgage Corporation cut about 80% of its workforce on Friday and has stopped accepting new mortgage applications, HousingWire has learned. Former employees said the lender has “essentially shuttered.”
According to two former FGMC employees, the company on Friday laid off around 500 employees without severance payment, meaning only 100 staffers remain.
“They are not accepting new loan applications, so that probably means they are getting ready to close up the whole thing,” an employee who was affected by the layoff told HousingWire.
The investment management firm PIMCO bought a sizable stake in the mortgage lender in 2015 and initiated layoffs and management changes in 2018, another tough year for the mortgage industry.
The same former employee said PIMCO was trying to strike a deal to bring more funding to FGMC, which “went south” and then FGMC “got hit with margin calls.”
“PIMCO was attempting to sell part of FGMC but when that fell through, they completely divested,” said another source. “About nearly 500 people were affected today including sales and ops in all three channels. Essentially the company is shuttered.”
“Apparently their stockpile of ‘cash’ was a lie. Time to start the job search!,” one former employee posted on LinkedIn.
In a written statement, a spokesperson for the lender said FGMC “made the difficult but necessary decision to institute a reduction in force as the mortgage market faces significant, unexpected, and unprecedented economic pressures.”
FGMC declined to comment further, and PIMCO did not immediately return requests for comment.
Licensed in 49 states and the District of Columbia, FGMC offers mortgage loans for new home purchases and refinancings. The company offers a variety of loan products, including FHA, USDA, VA and non-QM loans. Just last week FGMC launched a new second-lien program, where borrowers could tap their equity without disrupting their rate.
The mortgage lender does business as Goodmortgage in retail branches, where they work directly with consumers. It also works closely with third-party origination partners through the correspondent and wholesale channels, where the company offered its proprietary line of Non-QM products called Maverick Solutions.
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HW+ Member Spotlight: Ben Bernstein
This week’s HW+ member spotlight features Ben Bernstein, director at Axonic Capital, an investment firm with a deep focus on the structured credit sector of the financial markets. Prior to that, Bernstein held leadership roles in Odeon Capital Group and JPMorgan Chase.
Below, Bernstein answers questions about the housing industry:
HousingWire: What is your current favorite HW+ article and why?
Ben Bernstein: Logan and Sarah’s Monday podcast is my go to. Logan cuts through all the noise and delivers clear concise opinions rooted in the data. So not only do I get updates on what is going on in the housing market but I learn which data points are relevant and how to analyze them. And Sarah always asks insightful questions. On top of that, it is super entertaining!
HousingWire: What has been your biggest learning opportunity?
Ben Bernstein: My biggest learning opportunity (and weirdest job I ever had) was every job I ever had. I started my career at Bear Stearns on February 23 2008. To say that was an interesting time and place to start a career would be an understatement. Two weeks later I was working for JPMorgan and eventually made it to a desk whose focus was working out of the assets that brought Bear down in the first place.
Think funky bonds linked to housing like subprime RMBS and CDOs. Getting to dig deep into what these bonds were and how the underlying mortgages impacted them was priceless. I started at Axonic, a credit fund focused on investments linked to residential and commercial real estate, in November of 2019.
Another interesting time to join an investment firm! Three months later, I was working remotely and figuring out how to be productive from home. Fourteen years into my career and my biggest learning opportunity is right now.
I’m learning new stuff every single day whether it be about the bond market, housing, trading, macro economics, etc. All I need to do is turn around and ask a question out loud and I’ll learn something new.
HousingWire: What is the best piece of advice you’ve ever received?
Ben Bernstein: The best piece of advice I’ve ever received was what is important is what you do when no one is looking. Your reputation, work ethic, success, productivity and integrity are all linked to what you do because you know you need to do it as opposed to what you think other people want you to do.
HousingWire: What’s 2-3 trends that you’re closely following?
Ben Bernstein: I don’t think anyone will be surprised by the trends I’m following these days: Inflation, credit spreads, housing prices and how they are all intertwined. Fortunately I have smart people around me (including HousingWire) to give me their opinions on where we are headed. It’s my job to put it all together. The past two years have been some of the most interesting times in markets and from where I sit I don’t think that will change any time soon.
HousingWire: What keeps you up at night and why?
Ben Bernstein: What keeps me up at night is the state of the housing market. 35+% home price appreciation since COVID-19 began. Two months supply of housing. Mortgage rates going up faster than they ever have. There’s a lot going on!
One thing as bond traders that we do is we look down before we look up. In other words we look at risk before we look at upside. An overheated housing market is something we pay close attention to because we don’t want prices to go down precipitously but we don’t want inflation to run away either. So it’s really an interesting time to be tracking the housing market and all of the ancillary markets that are impacted by it.
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To view past issues of our HW+ exclusive HousingWire Magazine, go here.
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FHFA: No delay on 50 bps fee, but open to “engagement”
The Federal Housing Finance Agency (FHFA) today reiterated its stance on a new fee on some government-backed enterprise securities.
The agency made no promise to delay the fee. Still, some stakeholders unhappy with the fee see an opportunity.
In a statement, FHFA Director Sandra Thompson said her agency was “committed to the continued strength and resilience” of the process for issuing single securities, “given the significant improvement in liquidity and stability” it has given the market. The new fee for securitizing collateral of the other enterprise, the agency said, is meant to help meet the capital requirements in the FHFA’s 2020 capital rule.
Thompson also said FHFA would continue to monitor the markets for uniform mortgage-backed securities and agency-backed securities to make sure they “function as intended.” The FHFA said it would also “continue regular engagement with stakeholders.”
For some stakeholders opposed to the fee, the outreach showed the FHFA is willing to listen, rather than ignore criticism at all costs.
“It is a positive first step, although there is a lot of work needed to clearly map how the activity will be destructive to UMBS,” said Michael Bright, CEO of the Structured Finance Association. “I hope it means we have an opportunity to explain how this fee destroys the fungibility of assets in a futures contract.”
Since the announcement, numerous stakeholders have been vociferous about their unhappiness with the fee, which becomes effective July 1.
The Securities Industry and Financial Markets Association, a trade association that represents broker-dealers, investment banks and asset managers, condemned the new fee in a letter it sent the FHFA on Wednesday.
Members of the trade group said that both GSEs are already charging the fee on commingled securities, a spokesperson said.
Freddie Mac and Fannie Mae did not immediately respond to requests to comment.
The fee “will effectively eliminate the ability of market participants to create [the commingled securities], as it will be non-economic in nearly any conceivable scenario,” wrote Christopher Killian, SIFMA managing director of securitization and credit. “This means UMBS are no longer completely fungible, and breaks a core underpinning of the market’s acceptance of UMBS.”
The Urban Institute today issued a report decrying the fee, authored by its researchers Laurie Goodman, co-founder of the Housing Finance Policy Institute, Jim Parrott, a former Obama administration senior advisor, and Bob Ryan, a former senior advisor at the FHFA.
The researchers wrote that under the prior system, since investors preferred Fannie Mae securities, Freddie Mac had to compensate lenders for the value difference to the tune of about $400 million each year. That reduced the profits sent to taxpayers and, they wrote, and made it more difficult to enact GSE reform, because it gave Fannie Mae a market advantage.
The UMBS “saved taxpayers hundreds of millions of dollars a year and helped pave the way for long-term reform,” the researchers wrote. But they argued the new fee would undo those gains.
“By eliminating the fungibility of the GSEs’ commingled securities, investors may begin to pay more for Fannie Mae’s security, again forcing Freddie Mac to pay lenders a premium to make up for the weaker investor demand for their security.”
Bright, of the SFA, said that the new fee may already have damaged the trust of investors. That could have long-term ramifications for the securities that underpin the functioning of the mortgage market, he said.
“You don’t want to be in a position where investors feel lied to,” said Bright. “Because once they’ve been burnt, they have to price for the possibility of being burnt again.”
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Purchase mortgage rates continue incremental, upward trend
Purchase mortgage rates this week averaged 5.81%, compared to 5.78% the week prior, when rates rose 55 basis points, the largest 1-week increase since 1987, according to the latest Freddie Mac PMMS index.
A year ago at this time, 30-year fixed rate purchase rates were at 3.02%. The PMMS, a government-sponsored enterprise index, accounts solely for purchase mortgages reported by lenders during the past three days.
“Fixed mortgage rates have increased by more than two full percentage points since the beginning of the year,” said Sam Khater, Freddie Mac’s chief economist, according to a statement.
However, another index showed mortgage rates declining this week.
Black Knight’s Optimal Blue OBMMI pricing engine, which includes some refinancing data — but excludes cash-out refis to avoid skewing averages – measured the 30-year conforming rate at 5.9% Wednesday, down from 6.03% the previous week. The 30-year fixed-rate jumbo was at 5.326% Wednesday, a decline from 5.46% the week prior, according to the Black Knight index.
Mortgage rates tend to move in concert with the 10-year Treasury yield, which reached 3.16% Wednesday, down from 3.33% a week before.
According to Khater, the combination of rising rates and high home prices likely is the driver behind recent declines in existing home sales.
“However, in reality, many potential homebuyers are still interested in purchasing a home, keeping the market competitive but leveling off the last two years of red-hot activity.”
Mortgage application volumes rose 4.2% from the past week, propelled by borrowers’ demand for purchase loans. Refi applications decreased 3% from the prior week, and purchase apps ticked up 8%, according to the Mortgage Bankers Association (MBA).
According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 4.92% with an average of 0.9 point, up from last week’s 4.81%. The 15-year fixed-rate mortgage averaged 2.34% a year ago.
The 5-year ARM averaged 4.41%, with buyers on average paying for 0.3 point, up from 4.33% the week prior. The product averaged 2.53% a year ago.
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Purchase mortgage apps defy surging rates
Despite mortgage rates reaching the highest level in 14 years, mortgage applications increased 4.2% from the prior week, according to the latest Mortgage Bankers Association (MBA) survey for the week ending June 17.
“Mortgage rates continued to surge last week, with the 30-year fixed mortgage rate jumping 33 basis points to 5.98% – the highest since November 2008 and the largest single-week increase since 2009,” Joel Kan, associate vice president of economic and industry forecasting for the trade group, said in a statement.
Rates for mortgage loans were strongly impacted by tightening monetary policy to combat rising inflation. On June 10, the U.S. Consumer Price Index showed an 8.6% increase year-over-year in May, the highest level in four decades. Consequently, the Federal Reserve raised the federal funds rate by 75 basis points last week, a rate hike not seen since 1994. Another 0.75% hike is expected from the Fed’s meeting in July.
With mortgage rates now at almost double what they were a year ago, refinancing applications decreased 3% from the prior week and were 77% lower than the same week in 2021. Refis were 29.7% of total applications last week, decreasing from 31.7% the previous week, the survey shows.
Meanwhile, the seasonally adjusted purchase index ticked up 8% from the prior week but was 9.4% down from the same week a year ago. According to Kan, purchase applications increased for the second straight week, driven mainly by conventional applications.
Higher rates usually cool off prices, and Kan noted a potential trend in this week’s data. “The average loan size, at just over $420,000, is well below its $460,000 peak earlier this year and is potentially a sign that home price growth is moderating,” the economist said.
The adjustable-rate mortgages (ARM) share of applications jumped to over 10.6%, demonstrating continued popularity among borrowers. The average interest rate for a 5/1 ARM rose to 4.78% from 4.57% a week prior, according to the MBA
The FHA share of total applications increased to 12% from 11.8% the week prior. Meanwhile, the VA share went from 11.7% to 10.7%. The USDA share of total applications declined to 0.5% from 0.6% the week prior.
The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased to 5.98%, from 5.65% the previous week. For jumbo mortgage loans (greater than $647,200), it went to 5.49% from 5.25%.
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