End of 2020 Home Prices Soared Year-Over-Year

Bob Vaughan

According to the end of 2020 census, home prices in December increased 10.4% year-over-year from 2019. In November a similar gain was experienced, with home prices rising 9.5% in 2020 when compared to 2019. Last year started in a way that almost no one expected, but low interest rates allowed more homebuyers across the country to enter the housing market, shortening inventory, and causing a surplus of demand in the market. As inventory remains low this far into 2021, demand will continue to outweigh supply and home prices should remain high. While this comes as no surprise given the extremely hot housing market nationwide, this leads to the question of exactly how much higher home prices can go.

Home Mortgage Application Levels Bounce Back

Bob Vaughan

Applications for home mortgages increased a marginal amount, going up 0.5% last week after falling the week prior. Refinances made up 67.5% of total applications this past week despite the uptick in mortgage rates. Many borrowers across the country can still save themselves hundreds of dollars a month by refinancing their mortgages and it’s clear people are willing to take advantage of this opportunity. One other movement to note is the increase in VA and FHA mortgage refinance application volume this past week. Typically as rates rise and fall, in terms of volume, government backed conventional loans see more volatility than both FHA and VA loans and this past week was another example of that.

 

 

Mortgage Application Volume Deflates

Bob Vaughan

This week mortgage application volume decreased 11.4% from the previous week. The main cause of this large decrease may have been the large storm in Texas causing impacts on homeowners and lenders in the area, dropping application volume 40% in the state last week. The homes priced in the higher portion of the market are continuing to do well, with an average purchase loan size hitting $418,000.

 

  • The FHA share of total mortgage volume increased to 11.2% from 9%.
  • The VA share of total mortgage volume decreased to 11.9% from 13.2%.

Applications for Home Mortgage Loans Dip This Week

Bob Vaughan

After an up and down start to 2021 in terms of mortgage loan application volume, this week saw yet another dip. The total amount of applications coming in last week dropped 4.1% from week before. Marking a fair portion of the total volume’s decrease was the fall in refinance applications, dipping 4%. This drop did not stop yet another week of year-over-year gains in the refinance market compared to this time in 2020.

 

  • The FHA share of home mortgage applications increased from 9.1% to 9.5% this past week.
  • The VA share of home mortgage applications increased from 12.1% to 13.3% this past week.

Home Mortgage Applications on the Rise Again

Bob Vaughan

Last week mortgage application volume jumped 8.15% from the week prior. The previous two weeks application volume saw decreases after starting the year strong. Refinance volume was the highest, up 11% from the previous week, reaching the highest level since March 2020. This level of refinance activity was 59% higher than this time last year.

 

  • The FHA share of mortgage application volume went down to 9.1% from 9.4% the previous week.
  • The VA share of mortgage application volume went down also, dropping from 12.4% to 12.1% this week.

Do Mortgage Rates Have Seasons?

Bob Vaughan

In a recent study by tech startup Haus, they analyzed over 8.5 million mortgage originations between 2012 and 2018. In this study, Haus found that mortgage rates were the lowest in the beginning of the year around January when there were fewer home mortgage applications coming in. In order to compete for the lower levels of application volume, lenders were forced to make their rates more desirable than their competition. Of note, in 2020 this did not hold to be true as the high volume of mortgage originations allowed lenders to keep their prices relatively steady. That being said, as the economy begins it’s post-pandemic recovery it’s believed that mortgage rates will return to a more predictable pattern. According to a chief economist with Freddie Mac, mortgage rates are expected to stay near record lows as the economy continues to rebound this year.

FHA Raises Single-Family Loan Limit

Bob Vaughan

The Federal Housing Administration announced recently that the loan limit for single-family FHA mortgages will be increased from $331,760 to $356,362 in the majority of counties for 2021. The FHA is required to set single-family loan limits at 115% of area median house prices, subject to a ceiling and floor. This requirement was brought about by the National Housing Act per the Housing and Economic Recovery Act of 2008. The loan limit ceiling for single-family homes in high price housing areas will be raised from $765,600 to $822,375 for 2021. Recently the FHFA announced that the conforming loan limit for conventional loans was raised to $548,250 also, so the rise in FHA loan limits comes as no surprise.

Home Mortgage Application Volume Drops for Second Consecutive Week

Bob Vaughan

For the second week in a row, home mortgage application volume was down. Last week mortgage application volume dropped 4.1% despite being up 83% year-over-year. The second consecutive week of application volume decreases comes as mortgage rates see a slight uptick to close January.

 

  • The FHA’s share of mortgage application volume increased to 9.4% from 9.3% the previous week.
  • The VA’s share of mortgage applications decreased tp 12.4% from 13.8% the previous week.

Mortgage Application Volume Dips

Bob Vaughan

Home mortgage application volume dipped 1.9% this past week after jumping 16.7% week-over-week the period prior. This dip was paced by a 5% drop in refinance activity. Despite last weeks slight drop, as the start to 2021 continues, we should see strong mortgage application numbers for both first time and repeat home buyers.

 

  • FHA’s share of mortgage application volume decreased to 9.3% of total application volume this past week.
  • VA’s share of mortgage application volume increased to 15.8% of total application volume during the same period.

First Week of the New Year Sees Mortgage Application Volume Jump

Bob Vaughan

In the first week of 2021, mortgage application volume jumped 16.7% according to a report from the Mortgage Bankers Association. This comes as no surprise as year after year the market sees a jump in mortgage application volume to begin January after a slow finish to the year  prior due to the holiday season. An increase in refinance volume has once again been a major factor in rising application numbers, bringing them to the highest level since March of 2020.

 

  • FHA’s share of mortgage applications dropped to 9.6% from 10.1% the week before.
  • VA’s share of mortgage applications increased by 2.2% from last week, reaching 15.8%.