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As mortgage rates continued to climb, mortgage applications took their biggest hit since mid-April. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, decreased 6.0 percent on both a seasonally adjusted and unadjusted basis compared to the previous week. The Refinance Index dropped by 7.0 percent and was 11 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 31.7 percent of total applications from 31.9 percent the previous week. [refiappschart] There was also a 6.0 percent decrease in the seasonally adjusted and unadjusted Purchase indices. This drove the unadjusted index to a level 22 percent lower than the same week one year ago. [purchaseappschart] “Mortgage rates continued to move higher last week as markets digested the recent upswing in Treasury yields. Rates for all mortgage products increased, with the 30-year fixed mortgage rate increasing for the fourth consecutive week, up to and above 7.53 percent – the highest rate since 2000,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result, mortgage applications ground to a halt, dropping to the lowest level since 1996. The purchase market slowed to the lowest level of activity since 1995, as the rapid rise in rates pushed an increasing number of potential homebuyers out of the market. ARM loan applications picked up over the week and the ARM share increased to 8 percent, as some borrowers searched for ways to lower their payments.”
A tempest in a teapot or the start of an uprising? Redfin, the publicly owned Seattle-based real estate company with 50 offices nationwide, announced on Monday it is walking away from the National Association of Realtors (NAR). The company, in a letter published on its website, said it was moving to end its association with NAR. The letter, signed by CEO Glenn Kelman and seven other members of Redfin’s leadership team, said it was making the change because of NAR policies requiring a commission be paid to the buyer’s agent on every listing and “a pattern of alleged sexual harassment.” In August, the New York Times reported that a number of NAR employees had come forward with claims of sexual harassment, discrimination and retribution at the association’s Chicago headquarters and local offices. Many of the complaints involved former NAR president Kenny Parcell. Both NAR and Parcell denied the allegations. Parcell quit shortly after the article was published. Redfin said it had resigned its national board seat in June, before the alleged sexual harassment came to light, because of NAR’s policies on commissions and its prohibition on websites like Redfin.com from showing for-sale-by-owner homes. “Removing these blocks would be easy, and it would make our industry more consumer-friendly and competitive,” the letter said. Redfin said it will now require its brokers and agents to leave NAR wherever possible but because of the independent agent nature of most brokerages “they don’t want to impose a policy that could alienate any of the people who generate its revenue.” However, NAR rules require that Redfin also leave local and state associations even though its beef is only with the national group. In about half of Redfin’s markets, losing membership will mean loss of access to listing databases, lockboxes, and industry-standard contracts. “It’s impossible to be an agent if you can’t see which homes are for sale, or unlock the door to those homes, or even write an offer.”
Pending home sales failed to add a third month onto the mini rally it staged in June and July. The National Association of Realtors® (NAR) said its Pending Home Sale Index (PHSI) declined 7.1 percent to 71.8 in August and is now down 18.7 percent from its August 2022 level. The PHSI ended a three-month decline in June, rising 0.3 percent followed by a 0.9 percent increase in July. [pendinghomesdata] The PHSI is based on contracts signed during the month to purchase existing single-family houses, condos, and cooperative apartments. It is a leading indicator of those sales which are expected to close over the following 30 to 60 days. NAR will report September's existing sales on October 19. “Mortgage rates have been rising above 7 percent since August, which has diminished the pool of home buyers,” said Lawrence Yun, NAR chief economist. “Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets.” “It’s clear that increased housing inventory and better interest rates are essential to revive the housing market ,” added Yun. The index in all four of the nation’s major regions declined compared to both July and to the prior August. The Northeast PHSI was down 0.9 percent to 62.6 and was 18.2 percent lower on an annual basis. The index for the Midwest lost 7.0 percent and 19.1 percent compared to the two earlier periods to a reading of 71.3.