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Comments on Rising Interest Rates

In a recent CNBC interview, Kansas City Federal Reserve President Esther George noted that the Fed is looking to tighten financial conditions, of which equity markets are a component, in an effort to tamp down price increases running at their fastest pace in more than 40 years

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It’s No Surprise that Refinance Mortgage Application Volume Continues to Fall

If you have kept an eye on mortgage interest rates as they climb to the highest point in years, it’s no surprise to read this article on MortgageNewsDaily state “The Mortgage Bankers Association’s (MBA) latest weekly mortgage application data shows an ongoing and unsurprising decline in refinance applications.” In light of increased prices and rising rates it is interesting to note that purchase application volume is only seeing a slight decline.

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Notary Near YouIt’s No Surprise that Refinance Mortgage Application Volume Continues to Fall
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Mortgage Interest Rates have seen Biggest Quarterly Climb in 28 years

This spike is a result of rising inflation and Federal Reserve rate hikes. The consumer price index (CPI) rose to 8.5% which is the highest level since 1981. The Federal Reserve starting rate hikes in March was the first increase since 2018. It is expected that the Federal Reserve will continue with rate hikes due to current aggressive inflation.

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Notary Near YouMortgage Interest Rates have seen Biggest Quarterly Climb in 28 years
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Mortgage Application Volume Drops 8% in One Week

Rapidly rising mortgage interest rates are having a direct impact on mortgage application volumes, particularly for mortgage refinance applications. In an article by Adam DeSanctis for the Mortgage Bankers Association (MBA) “The Market Composite Index, a measure of mortgage loan application volume, decreased 8.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 8 percent compared with the previous week. The Refinance Index decreased 14 percent from the previous week and was 54 percent lower than the same week one year ago.”

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Notary Near YouMortgage Application Volume Drops 8% in One Week
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Mortgage Interest Rates see the Biggest 3-month Rate Spike since 1994

According to an article written by Matthew Graham for Mortgage News Daily “Adults who are old enough to remember 1994 have always had an ace in the hole when it comes to today’s young whipper snappers complaining about abrupt spikes in mortgage rates. Sure, even older adults have the first few months of 1980, but 1994 was a more compelling example because it wasn’t part of the once-in-a-lifetime inflationary spike.  As such, it is a more worthy comparison to any modern example of rate volatility.  As of today, the race between the first few months of 1994 and 2022 are neck and neck in terms of damage done to mortgage rates in a short amount of time.”

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Notary Near YouMortgage Interest Rates see the Biggest 3-month Rate Spike since 1994
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Mortgage Delinquencies Nationwide Dropped Below Pre-Pandemic Levels

According to an article written by Jann Swanson for MortgageNewDaily.com  “The number of non-current loans has declined in every stage. Loans that were in the early delinquency, 30 to 59 days past due, represented 1.2 percent of loans in November, down from 1.4 percent the prior November and the rate of those 60 to 89 days delinquent was slashed in half, to 0.3 percent. Serious delinquencies, loans 90 days or more past due, including loans in foreclosure, which reached a high of 4.3 percent in August 2020, are now at a 2.0 percent rate, again only slightly more than half the rate a year earlier.”

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Notary Near YouMortgage Delinquencies Nationwide Dropped Below Pre-Pandemic Levels
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Pandemic Related Predictions for High Real Estate Foreclosures in 2021 Did Not Materialize

According to a Mortgage News Daily article (link is below) ATTOM Data Solutions, a provider of real estate and property data, recently released statistics that foreclosure activity in 2021 was at the lowest level since they started tracking in 2005. This is in stark contrast to many who predicted a Tsunami of real estate foreclosures would occur in 2021 due to the Pandemic.

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Notary Near YouPandemic Related Predictions for High Real Estate Foreclosures in 2021 Did Not Materialize
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Refinance Index is 50 Percent Lower than Same Week in January Last Year

According to the Mortgage Bankers Association (MBA) Market Composite Index, the Refinance Index is 50 percent lower compared to the same week one year ago, in January 2021. During the same week there was a small uptick over last year in purchase mortgage activity.

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Notary Near YouRefinance Index is 50 Percent Lower than Same Week in January Last Year
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