Mortgage News for the Week of January 11, 2019
Plunge in rates sparks 23.5% spike in mortgage applications after unusually weak holidays

The combination of lower mortgage rates and an unusually slow end to 2018 caused mortgage applications to surge to start this year.

Overall volume jumped 23.5 percent last week from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. An adjustment was also made for the New Year's Day holiday. Volume was still 9 percent lower than a year ago.

A sharp drop in interest rates to the lowest level since April sparked a mini-boom in refinancing. Those applications surged 35 percent week-to-week to their highest level since July. Volume was still lower by nearly 22 percent than a year ago, when the average rate on the 30-year fixed mortgage was 51 basis points lower.  Read more at CNBC.
How a recession could impact the housing market

The United States has enjoyed one of the largest economic expansions in its history since the 2008 housing bust brought the global economy to its knees. But with each passing year, the recovery gets a little longer in the tooth, prompting questions about if or when a cyclical recession might take place.

These questions have gotten louder in recent months as rising interest rates and tariffs have wreaked havoc on the stock market, which had been hitting new all-time highs on a regular basis. One of the most reliable tells of an impending recession-the dreaded Treasury bond yield curve inversion-occurred earlier this month between 2-year and 5-year Treasury bonds, leading some economists to sound their alarms.

If a recession does hit, how would it affect a housing market that's already starting to cool? With the scars of 2008 still fresh, it's understandable that some would worry about another housing implosion. But most real estate professionals don't expect a possible recession to spell doom for the housing market. Some even think it would hardly affect housing at all.

"People's incomes get squeezed [in a downturn], but they still need a place to live," said Aaron Terrazas, Zillow's director of economic research. "Usually what that means is they're still in the market if they need one, but their price-point is lower." 
2019 a buyer's market for real estate as millennials buckle down

Trulia Senior Economist Cheryl Young on the outlook for the housing market in 2019.  "We are starting to see a changing tide in the housing market," Trulia Senior Economist Cheryl Young told FOX Business'  Stuart Varney  on Thursday. "We are starting to see home price growth slowing - it's not going down, it's slowing but that's a change from the past few years." 

For three consecutive months, annual home price gains have slowed across the United States, data from the latest S&P CoreLogic Case-Shiller Home Price Index showed. According to Young, it's becoming a buyer's market.

"We are starting to see home sales slow down and drop," she said. "So things are starting to move a little bit more towards buyers than sellers. "

What's more, Young said millennials are beginning to jump into the market. "Millennials have not really shown up in the housing market," she said. "For the past few years people were worried when are they going to start buying homes? And it's starting to happen."  Read more at Fox Business.
More mortgage borrowers now have incentive to refinance
2.4 million homeowners can cut their interest rates by 0.75%

While refinance volume has  dropped off in recent years as interest rates have inched upward, incentive to refinance has returned for some homeowners.

According to the latest data from Black Knight, about 550,000 more borrowers could lower their mortgage payments by refinancing.
As of Dec. 27, 2018, interest rates fell 30 basis points to 4.55%, the report states, meaning that about 2.4 million borrowers can now likely qualify to reduce their interest rates by 0.75% by refinancing their existing mortgages.

The data represents a 29% boost from a recent 10-year low for refis. Still, the number of refi candidates is down 50% from last year.  Read More at HousingWire.
Mortgage Rate Update
Drop in Rates Leads to Jump in Mortgage Applications

house and graph Mortgage rates fell to the lowest level in nine months, and in response, mortgage applications jumped more than 20 percent. Lower mortgage rates combined with continued income growth and lower energy prices are all positive indicators for consumers that should lead to a firming of home sales.

We hope you enjoyed this week's Market News. For more information about how PMA can help you, please contact us.

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Information and analysis is obtained through third parties and is deemed accurate but not guaranteed.  Philadelphia Mortgage Advisors is a licensed mortgage lender by the PA Dept. of Banking and Securities, NJ Dept. of Banking & Insurance, the state of DE, the Florida Office of Financial Regulation, MD Mortgage Lender #23004 and VA State Corporation Commission #MC - 6797. NMLS #128570.

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