Hello, LOs!
Unfortunately, the Mortgage Bankers Association (MBA) purchase app data did not contain a lot of good news this morning: Some individuals across the country are putting the American dream of homeownership on standby, reducing demand for purchase loans.
The Federal Reserve's battle to control inflation has already increased mortgage rates to a 5.5% level, strongly reducing refinancing volumes. Combined with a lack of inventory and surging home prices, rates are now also sapping purchases.
The MBA reported this week it reduced the expectation for purchase volumes in 2022 from $1.721 trillion in its April forecast to $1.694 trillion in its May forecast. But that's still an increase of 3% compared to 2021 when the volume reached $1.646 trillion.
Refinance, of course, is expected to decline even more during the period, from $2.345 trillion in 2021 to $819 billion in 2022. The MBA reports refi applications fell 9.5% for the week ending May 13, compared to a 12% decline in purchase apps.
"General uncertainty about the near-term economic outlook, as well as recent stock market volatility, may be causing some households to delay their home search," Joel Kan, associate vice president of economic and industry forecasting at MBA.
But to some industry observers, the drop in purchase apps wasn't as bad as they anticipated.
"I expected declines of 18%-22% in purchase applications data on a four-week moving average, year-over-year. But, so far, after the rate increase, we've got a decline of 12.75%. So, we're doing better than I expected," said Logan Mohtashami, lead analyst for HousingWire.
He added: "We have more mortgage buyers now than in the past, and the growth in adjustable-rate mortgages has mitigated the higher mortgage rate move."
LOs, what are you doing to grow your purchase loans right now? How are you working with your referral network to reach borrowers? At a HousingWire event this week, several real estate agents said they were working with their lending partners closer than ever before — even having LOs create videos for home sellers about the strong financial state of their buyers to help them win a bidding war.
I'm especially interested in your marketing strategies, whether you are spending more or less, and your initiatives. Please share your thoughts at flavia@hwmedia.com.
Flávia Furlan Nunes
Mortgage reporter, HousingWire
EmoticonEmoticon