Editor’s Note: The Mortgage Mix is RISMedia’s weekly highlight reel of need-to-know mortgage-industry happenings. Watch for it each Friday afternoon.
– The Federal Reserve announced that they are continuing to keep rates steady and are again making no changes at the latest FOMC meeting on Wed., Aug. 31. Inflation has cooled, however it is yet to hit the realm of 2% that the Fed wants in order to start cutting rates. Economists continue to predict that a rate cut will be incoming this September, and Fed Chair Jerome Powell suggested the same during the Wednesday press conference.
– Mortgage rates dropped to the lowest level seen since this past February, according to the latest Freddie Mac data. The 30-year FRM averaged 6.73%, down from last week when it averaged 6.78%, and the 15-year FRM averaged 5.99%, down from last week when it averaged 6.07%. “Expectations of a Fed rate cut coupled with signs of cooling inflation bode well for the market, but apprehension in consumer confidence may prevent an immediate uptick as affordability challenges remain top of mind,” commented Sam Khater, Freddie Mac’s chief economist.
– Despite the rate drop, mortgage applications saw a decrease this week, according to the latest Mortgage Bankers Association (MBA) data. Overall applications were down 3.9%. “Borrowers may be waiting for signs that mortgage rates will drift lower as the Federal Reserve begins to cut short-term rates,” commented Mike Fratantoni, MBA’s SVP and chief economist. Some recent “bursts” of refinance activity and the up and down nature of applications as of late support Fratantoni’s statement.
– The mortgage industry should be looking toward developing new intervention policies for distressed borrowers, according to a new report from the MBA’s Research Institute for Housing America. The study—“Mortgage Design, Underwriting, and Interventions: Promoting Sustainable Homeownership”—analyzed the mortgage industry in times of housing market stress to determine how to design a better system to deal with future housing market stressors. A main point of the paper is that minimizing defaults relies on creating assistance for the various needs of borrowers.
