Rate buydowns might not have benefits for borrowers
National Mortgage News
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Mortgage rate buydowns may not make economic sense for consumers, because the differential between those buyers that pay discount points and those that don't is very small, Freddie Mac said. Discount points have become a sales tool used by homebuilders; D.R. Horton reported that 80% of its mortgage customers bought down the rate in the fourth quarter. The Freddie Mac study found that 58.8% of borrowers who made a home purchase paid discount points in 2023, compared with 31.3% during 2021, when mortgage rates were 3% or lower, and 53.6% for 2022, as they started to climb. Last fall, mortgage rates reached 8% .
Forbearance had primarily been a remedy for borrowers affected by the pandemic since the inception of the CARES Act, but now the latest Mortgage Bankers Association numbers show most utilize it for other reasons. Just 26.8% of the 115,000 consumers who have temporarily suspended payments are struggling due to issues linked to COVID-19, 12% have been through a natural disaster, and 61.2% are contending with more personal concerns such as death, divorce, job loss or disability. Far less than 1% or 0.23% of home mortgages had forbearance in December, down 3 basis points from the previous month, but there are other signs of a slight uptick in borrower distress.
Fannie Mae and Freddie Mac announced a coordinated update to their single-family social bond policies, including the introduction of a new mortgage-backed securities label aimed at better serving their missions. As part of the update to pertinent frameworks, the two enterprises, with the cooperation of the Federal Housing Finance Agency, will rename existing social indexes as well as adjust the criteria behind their formulation. The renamed Mission Index will put renewed focus on factors related to income, borrower and property attributes, and give investors more information about MBS tied to enterprise goals around opening up affordable housing opportunities through financing.
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The Empower loan origination system will make mortgage applicants' positive rent payments more visible to lenders, tapping into a government program that's aided thousands of borrowers. Dark Matter Technologies announced the new integration Tuesday in partnership with Informative Research, a subsidiary of title insurer Stewart. The Empower feature uses a positive rent payment history tool in Fannie Mae's Desktop Underwriter, a pilot program the government-sponsored enterprise extended through 2024. ? Positive rent payment data comes into play when a loan application doesn't initially receive an approve-eligible recommendation from DU, Dark Matter said.
While home prices are broadly expected to decline this year, ten markets within the 100 most populated metropolitan areas in the U.S. will see an average increase of 5.14%. Realtor.com analyzed the 100 largest metropolitan areas in the country to assess which of them could expect to see the greatest increases in home prices this year. The study excludes new construction and calculations are based on predicted home sales for each market. Read on to see which real estate markets are in the top 10 and the projected increase in home sales prices and home sales in these markets in 2024.
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