Mortgage Market Surges Amid Fluctuating Interest Rates
Despite some fluctuations in mortgage rates, demand for mortgages rose for the second consecutive week. The seasonally adjusted index from the Mortgage Bankers Association shows that the total number of applications increased by 6.5% last week compared to the week before.
Despite higher interest rates, the number of mortgage applications to buy a home increased for the week. Once interest rates increased by roughly an entire percentage point in early February, home purchases essentially stopped. Nevertheless, buyers are again starting to resume their searches, possibly due to concerns that interest rates would go further.
Although they were up 5% from the previous week, refinancing applications for house loans were 74% lower than a year ago.
Mortgage rates continued to fall Monday, according to a separate survey from Mortgage News Daily, but rose once more Tuesday following the release of the February consumer price index, suggesting that the Federal Reserve may raise interest rates again next week despite recent turmoil in the banking sector.
New Bill Seeks to Reinstate Mortgage Insurance Tax Deduction
The introduction of a bipartisan measure in the House of Representatives reignited the battle in Congress to reinstate and make the mortgage insurance tax deduction permanent. Similar legislation, though, introduced in the House and Senate during the last session fizzled out.
The mortgage, banking, and housing industries widely support the initiative; signatories to the letter submitted to Senate Committee on Finance chairman Ron Wyden, D-Oregon, and ranking member Mike Crapo, R-Idaho, in November included the U.S. the National Association of Hispanic Real Estate Professionals, Mortgage Insurers, Mortgage Bankers Association, Community Home Lenders of America, American Bankers Association, and others.
According to a statement from USMI President Seth Appleton, “We are grateful to Representatives Buchanan and Panetta for their continued leadership on this critical legislation that would make permanent the ability of middle-class homeowners to deduct private and government MI premiums on their individual federal income tax returns, importantly restoring parity with the deductibility of mortgage interest.”
CoreLogic: Home Equity Gains Weaken in the Fourth Quarter
According to CoreLogic, homeowners with mortgages (who make up about 63% of all properties) saw equity growth drop to 7.3% year over year, totaling $1 trillion, or an average of $14,300 per borrower, from the previous year.
As reported in the company’s quarterly Homeowner Equity Report, home equity trends followed suit as U.S. home price growth gradually dropped in the latter months of 2022. As opposed to the $63,100 gain observed a year earlier, the average borrower had an equity increase of about $14,300 in the fourth quarter.
Idaho, Washington, California, Utah, and Washington, D.C. reported annual home equity reductions. On the other hand, Florida has had the most significant national increases in home prices over the past year, with prices rising by 13.4% in January.
Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.