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Market Update - June 23, 2023

Friday, June 23, 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.

For the week of June 15th – June 22nd, 30-year and 15-year interest rates decreased slightly.  Following the Federal Reserve's decision to pause rate hikes, mortgage demand increased.

According to the Mortgage Bankers Association, mortgage applications for the week ending June 21st saw a 0.5% climb compared to the previous week. This modest growth highlights that while demand is there, activity continues to be constrained by low levels of affordable inventory.

Joel Kan, MBA's Vice President and Deputy Chief Economist, noted that "Purchase applications increased, driven by a 2% gain in conventional purchase applications and a 3% increase in FHA purchase activity."

On Tuesday, data from the U.S. Census Bureau revealed a 21.7% surge in housing starts from April, with a 5.7% increase from May 2022, reaching a total of 1.63 million. It's a hopeful sign that homebuilders will help offset an extremely low level of existing home inventory by getting a jump start on new projects.

Fed Watch: Looking ahead, the focus is on the upcoming July 25th Federal Open Market Committee (FOMC) meeting. According to the CME Group, 76.9% of forecasters anticipate a 0.25 percentage point increase in interest rates, while 23.1% predict rates to remain the same. No forecasters expect rates to decrease.

Stay tuned for more updates as we navigate the ever-evolving market landscape.

Did You Know?

We're excited to spotlight our Debt Service Credit Ratio (DSCR) Program, designed for the new-age real estate landscape dominated by short-term rentals.

Properties leased on platforms like Airbnb or VRBO on a nightly, weekly, monthly, or seasonal basis offer exceptional flexibility and revenue potential for investors. Our DSCR cash flow loan harnesses this potential by qualifying based on the property's rental income, with no need for personal income or employment verification. Even non-warrantable condos can be financed through this program, along with all our Non-QM loan options.

Program Highlights:

• Financing for Airbnb, VRBO, and long-term rentals

• Enhanced guidance on short-term rental income assessment

• Up to 80% LTV for purchases and rate/term refinances

• Up to 75% LTV for cash-out refinances

• Non-warrantable condos allowed

Unlock more opportunities and close more loans confidently!

Market Review:

  • Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 87.71% for purchase transactions, 10.22% for cash-out refinances, and 2.07% for rate and term refinances.
Per Black Knight 51% of all Retail loan production were Government Loans (FHA, VA, USDA), while 49% were Conventional and Non-Conforming loans.

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