MortgageReal Estate

HOT or NOT September: What’s trending in housing right now

Refinances heating up, Zillow mortgage hits the brakes

Hot or NotRefinances

Low rates could push mortgage refinancings to a near-three-year high, the Mortgage Bankers Association said in its latest forecast. The refi volume probably will grow to $180 billion in 2019’s third quarter, the highest since the $265 billion of refis in 2016’s fourth quarter, according to MBA data. The refi share of total mortgage originations probably will be 33% this quarter, the highest since the first quarter of 2018 when it was 37%, the forecast said. In fact, millions homeowners with 30-year mortgages currently are “refi eligible,” according to Black Knight.

Build to rent

Homebuilders are stepping up to the plate and becoming landlords in the latest growing housing industry trend, and more single-family homes are being built to be rented out. This allows investors to buy newly built homes and rent them out instead of selling again, transforming the typical single-family rental into an ever-growing class. Homebuilders are now catching onto the trend and building homes for rent, rather than building to sell. The cost of labor on top of the cost of land, materials and other things, make it hard to profit off the sale of a new build.

Buyer’s market

In May, home prices fell 0.7%, declining 3.7% year over year, according to First American’s Real House Price Index. According to First American’s data, unadjusted house prices sit 3.2% above the housing boom peak. Whereas consumer buying power rose 1.3% between April and May, rising 9.3% year over year. First American Chief Economist Mark Fleming explained that as interest rates decline, which he predicts they will throughout 2019, homebuyers’ house-buying power would increase to 13.35, the highest in the history of the series, which dates to the year 2000.

Hot or NotZillow Mortgages

A few months ago, Zillow Group announced it was officially entering the mortgage arena with the launch of Zillow Home Loans, a move made possible by its November 2018 acquisition of Mortgage Lenders of America. Since then, the real estate giant has been working on the development of its own mortgage software, but it seems the platform’s creation is taking longer than expected. On a call with investors in August, Zillow CEO Rich Barton said the company plans to slow hiring for Zillow Home Loans until the software is officially up and running.

Coastal cities

Homeowners continue to flee pricey cities for more affordable metros, with Phoenix, Sacramento, Atlanta and Las Vegas among the destinations that are searched the most online, according to Redfin. In the second quarter, 25% of Redfin users searching for home were looking to move to another city, up 1% from the previous year. Some of the top cities homebuyers are looking to leave include: New York City; San Francisco; Los Angeles; Washington, D.C.; Chicago; Denver; Hartford, Connecticut; Milwaukee, Wisconsin; Houston, Texas and Detroit.

Mortgage fraud risk

The risk of mortgage application fraud fell in the second quarter of 2019 thanks to a decrease in interest rates. According to CoreLogic’s National Mortgage Application Fraud Risk Index, fraud risks on mortgage applications decreased by 11.4% year over year last quarter. At the same time, shares of refinance transitions increased from 31% in the first quarter to 35.5% in the second quarter. The risk levels from refinance segments decreased anywhere from 12% to 30%, according to CoreLogic. Because these rate-driven refinances increased, it impacted fraud index scores positively.

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