Market Update - September 1, 2023

This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.

Rates are provided by Housing Wire in conjunction with Optimal Blue. Rates are updated in real-time. Optimal Blue data is calculated using actual locked rates with consumers across 42% of all mortgage transactions nationwide. Rates are inclusive of locks that occur below par, at par and therefore consider discounts and rebates.

For the week of Aug 25^th - Aug 31^st, 30-year and 15-year interest rates decreased slightly.

In the space of just 2-3 short days, mortgage rates have moved from multi-decade highs to the lowest levels in 3 weeks.

As highlighted by Sam Khater, Freddie Mac's Chief Economist, the housing market finds itself in a unique scenario:

"Mortgage rates leveled off this week but remain elevated. Despite continued high rates, low inventory is keeping house prices steady. Recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes."

Joel Kan, MBA's Vice President and Deputy Chief Economist, noted that

"Treasury yields peaked early in the week and did move lower by the end, which may have spurred some activity. Mortgage applications for home purchases and refinances increased for the first time in five weeks..."

The housing market's positive momentum is further evidenced by the increase in contracts to buy previously owned homes in July at the fastest pace since January, indicating that the housing market may be rebounding.

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Fed Watch: 

Looking ahead, all eyes are on the upcoming September 20^th Federal Open Market Committee (FOMC) meeting. According to the CME Group, 11.5% of forecasters predict an increase in interest rates, while 88.5% predict rates will remain the same. None of the forecasters expect rates to decrease.

Did You Know?

25% of home sale purchases in June were investment properties.

We have you covered by offering the ability to purchase a home without using income.

A Debt Service Coverage Ratio loan may be a great option for Investors who have significant cash flow:

• Down payments as low as 30%
• Fixed and ARM options available
• 1-4 Unit investment properties, PUDs, condos eligible
• Loan amounts from $250,000 to $2,000,000
• Buyers must qualify based solely on the DSCR of the investment property*

 

Market Review:

• Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 85.01% for purchase transactions, 12.69% for cash-out refinances, and 2.30% for rate and term refinances.

Type image caption here (optional)Per Black Knight 53.40% of all Retail loan production were Government Loans (FHA, VA, USDA), while 46.59% were Conventional and Non-Conforming loans.

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News You Can Use

• The Fed's preferred inflation measure stayed high in July — and consumers are continuing to spend
• Home prices increased for 5 consecutive months: Case-Shiller
• Personal Income increased 0.2% in July; Spending increased 0.8%
• Inflation Adjusted House Prices 3.9% Below Peak; Price-to-rent index is 7.6% below recent peak
• U.S. consumer sentiment slips slightly in August
• A few comments on the Seasonal Pattern for House Prices

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*This loan type may not be the best product for all borrowers. Some restrictions apply. Not all borrowers will qualify. Consult your mortgage consultant to discuss each of your financing options.

Communication is intended for Industry Professionals only and not intended for Consumer Distribution

Interest rate and annual percentage rate (APR) are based on current market conditions as of 08/31/2023, are for informational purposes only, are subject to change without notice, and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score, and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR, and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. The rate is as of 08/31/2023 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac's economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac's business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an "as is" basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.

*Not available in New York or Hawaii. Prosperity Home Mortgage, LLC, Prosperity Home Mortgage, LLC dba Edina Realty Mortgage, and HomeServices Lending are not affiliated with or endorsed by any government agencies. Some and/or all qualifying criteria may be set by independent third-party program sponsors. Contact your mortgage consultant for program eligibility and details.

Home Advantage is only available with the purchase of a property with an FHA home loan. Low down payment options may not be the best option for all borrowers. Consult your mortgage consultant to review potential loan scenarios and financing options to determine the home loan that is right for you. Not all borrowers will qualify.

1. Standard & customary closing costs still apply.

2. Forgiven after 5 years if there is no 90-day or greater delinquency on the first 60 payments of the FHA first lien and property remains a primary residence. f the borrower moves out, sells, or refinances the mortgage, borrower owes the remaining unpaid principal balance.

3. Repayable second mortgage lien is amortized over 30 years and repayable with a 10-year balloon payment

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