Surging lock volume may hint at stabilization of the housing market: Optimal Blue 

Key Takeaways:

– Mortgage rates continued to decrease, encouraging more people to apply for loans
– The inventory shortage in the housing market is starting to ease, indicating a more stable market
– Lock volume increased by 36% between December and January, with a significant increase in purchase lock volume
– Cash-out and rate-and-term refinance volumes also rose
– The spread between the 10-year Treasury yield and mortgage rates narrowed
– Conforming rates dropped, while rates for FHA and VA loans fell and jumbo rates increased
– Conforming products gained market share, while nonconforming products also rose
– Government-backed loan products saw a decrease in market share
– The demand for adjustable-rate mortgages remained consistent
– The top 20 metropolitan areas all experienced increased rate lock volume, with Las Vegas seeing a significant increase
– The average loan amount and home purchase price both increased in January after several months of decline.

HousingWire:

Mortgage rates continued their downward trajectory at the start of 2024, incentivizing homebuyers to apply for loans. Meanwhile, an easing of the inventory shortage foreshadows the possible return of a stable housing market. 

Lock volume increased by 36% between December and January,  driven by a 38% seasonal increase in purchase lock volume, according to Optimal Blue’s Originations Market Monitor report. Cash-out and rate-and-term refinance volumes rose 30% and 20%, respectively. 

Brennan O’Connell, data solutions manager at Optimal Blue, also noted that January’s year-over-year decline in purchase lock counts, which exclude the impact of changes in home prices, was the lowest seen since May 2022. 

The spread between the 10-year Treasury yield and mortgage rates narrowed to 250 basis points in January, 19 basis points less than a month earlier.

The Optimal Blue Mortgage Market Indices’ 30-year conforming rate dropped 4 basis points in January to reach 6.53%. Meanwhile, rates for Federal Housing Administration (FHA) and U.S. Department of Veteran Affairs (VA) loans also fell in January, while jumbo rates moved up. 

Overall, conforming products gained market share in January, accounting for 57.3% of total volume. Nonconforming products also rose to comprise 9.7% of the total volume. These include jumbo and nonqualified mortgage (non-QM) loans. 

Government-backed loan products posted a setback in market shares in January, with the FHA share dropping to 20.7% and the VA share dropping to 11.7% of total volume. An improving rate environment and an inverted yield curve put a cap on the demand for adjustable-rate mortgages (ARMs) as their market share stayed consistent at slightly more than 5% of total volume.

Each of the top 20 metropolitan statistical areas by share of origination volume experienced monthly increases in rate lock volume. Notably, Las Vegas posted a 90.8% increase in lock volume from December to January. 

The average loan amount rose from $349,500 in December to $355,600 in January. And the average home purchase price increased from $435,900 to $444,900 after six straight months of declines.

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Property Chomp’s Take:

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In the world of mortgage rates and real estate, the start of 2024 has brought some positive news for homebuyers. Mortgage rates have continued to decline, which is encouraging more people to apply for loans. This decrease in rates has created an incentive for potential buyers to enter the market and make their homeownership dreams a reality.

Additionally, there has been an easing of the inventory shortage, indicating a potential return to a stable housing market. This is good news for both buyers and sellers, as a stable market allows for more balanced negotiations and transactions.

According to Optimal Blue’s Originations Market Monitor report, there has been a significant increase in lock volume between December and January. This increase is primarily driven by a seasonal rise in purchase lock volume, indicating a growing interest in buying homes. Refinance volumes have also seen a boost during this period.

Brennan O’Connell, data solutions manager at Optimal Blue, notes that the decline in purchase lock counts, when excluding changes in home prices, is the lowest seen since May 2022. This suggests that the demand for home purchases is becoming more stable and less affected by external factors.

The narrowing spread between the 10-year Treasury yield and mortgage rates is another positive indicator. This indicates that mortgage rates are closely aligned with the overall interest rate environment, making it an opportune time for buyers to secure favorable loan terms.

In terms of specific mortgage rates, the 30-year conforming rate dropped in January to reach 6.53%. Rates for FHA and VA loans also saw a decline, while jumbo rates increased slightly. Conforming products gained market share, accounting for 57.3% of total volume, while nonconforming products, such as jumbo and non-QM loans, also saw a rise.

Government-backed loan products experienced a setback in market share, with the FHA and VA shares dropping. The demand for adjustable-rate mortgages (ARMs) remained consistent, accounting for slightly more than 5% of total volume.

When looking at specific metropolitan areas, there were monthly increases in rate lock volume across the top 20 metropolitan statistical areas. Notably, Las Vegas saw a significant increase of 90.8% in lock volume from December to January. This indicates a growing interest in the Las Vegas housing market.

Furthermore, both the average loan amount and average home purchase price increased in January. After six consecutive months of declines, this rise suggests a potential recovery in the real estate market.

In conclusion, the current trends in mortgage rates and real estate indicate a positive outlook for homebuyers. The downward trajectory of mortgage rates, along with an easing of the inventory shortage, is incentivizing more people to apply for loans and enter the housing market. This, coupled with the increase in lock volume and the rise in average loan amounts and home purchase prices, points towards a potential return to a stable and thriving housing market in the near future.

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