According to the latest Freddie Mac PMMS Mortgage Survey, the average 30-year-fixed mortgage rate declined one basis point this past week. This drop comes after nearly a month of consistent increases. The expectation is that mortgage rates will continue to move in concert with the 10-year Treasury yield. If the Federal Reserve continue to raise interest rates, there is a good chance mortgage rates continue to rise also.
Mortgage application volume is up 2.3% from the previous period according to a report from the Mortgage Bankers Association. The amount of purchase applications rose 7.9% from the week prior, while the refinance numbers decreased 3.1%. The average loan size for purchase applications hit a record level this past week, at $418,500. The hot housing market creating higher prices has allowed record setting loan amounts to become more frequent over the last few years.
2021 was another huge year for real estate in all parts of the United States. Specifically, the Southwest Florida real estate market saw higher than average home price increases when compared to the rest of the country. U.S. home prices rose 18.5% year-to-year in Q3 but eight Florida markets saw higher gain than that. Cape Coral-Fort Myers saw the 2nd highest annual gains nationally at 34.7% year-over-year with North Port-Sarasota-Bradenton coming in 8th highest at 25.6%. More notably, the Cape Coral-Fort Myers market saw a 9.8% increase from Q2 to Q3 of 2021.
Overall, the real estate market stayed hot all of 2021 after a record 2020. The low interest rate environment coupled with increased home buying demand created a high level of competition for the already low inventory in Southwest Florida. Historically low interest rates not only allowed more potential home buyers to enter the market, but helped current homeowners save money through refinancing at record volume also. Whether homeowners looked to take cash out of their homes via cash-out refinances or simply just lower their interest rates and monthly payments, 2021 saw nearly 59% of total loan originations come via refinances.
As we head into 2022 low interest rates and high buyer demand should keep the housing market on its current path. As the new year begins and people begin to implement their goals, what do you expect to happen in the housing market?
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Mortgage application volume fell 0.6% for the week ending December 17th according to a report from the Mortgage Bankers Association. The lower end of the market specifically saw less applications for purchases coming in. Compared to last year, refinance volume was down 42.4% year-over-year. However, refinances still made up 65.2% of total mortgage application volume last week, up 1.9% from the previous period. The average purchase loan amount increased to $416,200 for last week’s period.
Mortgage application volume increased 2% for the period ending December 3rd according to a survey from the Mortgage Bankers Association. Compared to last year, mortgage application volume has dropped across all loan products, but still remains high overall. The main obstacle continues to be lack of inventory creating higher homes prices than some buyers are prepared for. Homebuying activity is still close to the highest levels the market has seen since March. Refinances made up 63.9% of total mortgage applications this past period.
According to a Federal Housing Finance Agency report, home prices posted the largest ever year-over-year gains since the beginning of the FHFA House Price Index. Home prices across the country rose 18.5% this past year. Specifically, the “mountain division”, including Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming, went up 25% in the third quarter of this year. Annual gains can be seen in housing prices in every area of the country in 2021. As has been the case throughout the entirety of 2021, low inventory and high demand continue to play a part in the rising home prices in the United States. While home price increases month to month have started to slow, there is no doubt the demand for housing will remain high going into the new year.
According to a recent report by Redfin, real estate investors spent a record $63.6 billion on home purchases in the 3rd quarter of 2021. This number represents a 78% increase from this time last year. Investors acquired a total of 90,215 homes in Q3 which represents a 80.2% increase from 2020. As increasing home prices are forcing more Americans to consider renting, real estate investors have more opportunities for tenants in their properties. One negative impact that the market is seeing as a result of investors being more active in real estate is the competition this is bringing to individual homebuyers looking to purchase homes. These cash rich investors purchased homes with full cash offers 75% of the time in Q3. Of all real estate transactions in the third quarter of 2021, real estate investors made up 18.2%. This number is considerably higher than last year. In large markets such as Atlanta, Phoenix, and Charlotte investors made up over 30% of all transactions in Q3. As home prices continue to rise and more investors enter the housing market, it may become more difficult for homebuyers to compete for homes throughout the country.
For the week ending November 5th, mortgage application volume saw a 5.5% increase according to a Mortgage Bankers Association report. Refinances particularly saw a 7% increase in application volume despite being 28% lower than this time last year. New purchase application volume also rose 3% this past week.
This quarter marked the first time since the pandemic that applications for new purchase mortgages outpaced the application volume for refinances. New home purchase mortgages accounted for 53% of the total application volume in the 3rd quarter. The demand for rate and term refinances decreased 23% year-over-year marking the end of what many would consider a year plus long refinance boom.
According to a report from the Mortgage Bankers Association, mortgage application activity dropped 6.3% for the week ending October 15th. As a part of this decrease, mortgage refinance application volume decreased for the fourth consecutive week marking the lowest level since July 2021. High levels of competition and rising home prices continue to scare some potential buyers out of the housing market.
For the week ending October 1st, mortgage application volume dropped 6.9%. Refinance volume dropped 10% from the previous period amidst rising interest rates. Purchase activity also saw a 2% dip this past period. Year-over-year total mortgage application volume was down 15% compared to last year. Refinances still made up 64.5% of new mortgage applications despite falling from 66.4% the previous week.
