Mortgage applications soaring in 2020

Mortgage applications are soaring in 2020
by Brad Cartier, posted in Newsletter

Diana Olick of CNBC reports this week on the strong start to 2020 for mortgages. Total application volume ballooned 30% last week from the week before, according to Mortgage Bankers Association data. The surge was led by refinancing, which jumped 43% from the prior week. This is not just the time of year, refinances were 109% higher from this time last year according to Olick, due to low-interest rates.

We’ve written extensively about tactics investors should consider in our low-interest rate environment.

Doug Whiteman of Yahoo! Finance explores data this week from the Housing Market Index from the National Association of Home Builders and Wells Fargo that shows that homebuilders have felt more optimistic in December and January 2019 than at any time since July 1999. As such, home starts are hitting 13-year highs, according to Whiteman.

Whiteman also reported last week via Yahoo! Finance that “Mortgage rates are being held down by unsettling world events, including the tense situation with Iran and the U.S.-China tariffs. All of the uncertainty could continue to keep rates low — meaning more opportunities for homebuyers and homeowners to cut their interest costs.”

Alcynna Lloyd of Housing Wire reports on the same news, stating that “the Refinance Index rose by 43% from a week ago, while the seasonally adjusted Purchase Index grew by 16% and the unadjusted Purchase Index increased by 51%.”

Multifamily growth in 2020

Liz Kiesche of Seeking Alpha broke interesting news this week that Fannie Mae issued $70B+ in financing to support the U.S. multifamily market in 2019, the highest volume since it began its Delegated Underwriting and Servicing (DUS) program in 1988.

According to a press release from Fannie Mae, their top producing DUS lenders in 2019 were:

Mortgage applications are soaring in 2020

Source: Yahoo! Finance

Holly Dutton of Multi-Housing News discusses a recent Freddie Mac report, noting that the agency expects multifamily originations to hit $390B in 2020. “More legislation and reform surrounding rent regulation laws across the country last year have added additional risks to the multifamily market, especially in terms of decreased supply…While there are several economic uncertainties that could impact the broader economy, we believe the most likely scenario for 2020 is one of economic stability and continued growth in the multifamily market.” The Freddie Mac report also highlighted the strength of the sunbelt market throughout 2020.

Connect Commercial Real Estate commented this week on the prospects for multifamily growth in 2020, noting that the high volume of completions expected in 2020 will test the overall market’s absorption ability. Rent growth is expected to slow and occupancy rates will likely slip, according to Connect.

Interest rates and politics, that’s what keeps multifamily watchers up at night according to Erika Morphy at Globe St. “For trends impacting multifamily investing, investment sales brokers ranked interest rates (77%), the 2020 presidential election (63%) and debt underwriting (40%) as the top three factors.”

Microsoft and affordable housing

Further to similar moves by Facebook and Apple, Microsoft revealed this past summer their criteria for a $500M affordable housing fund before it began accepting applications. In a recent blog post, Microsoft committed an additional $250 million line of credit to help the Washington State Finance Commission finance 3,000 additional units of affordable housing. The announcement goes on to stay that “This brings our total to $380 million allocated over the past year to support the preservation or creation of over 6,500 affordable housing units in the greater Seattle area.”

Gene Johnson of the Associated Press covered this announcement, noting that $50 million of the newly allocated funding “will go to a new partnership between the Seattle Foundation and the Washington State Housing Finance Commission with support from JPMorgan Chase, the Evergreen Impact Housing Fund.” This fund will promote the development of 1,250 low-income units east of Seattle.

Katherine Khashimova Long and Scott Greenstone of the Seattle Times reported that the new funding isn’t free, it’s a line of credit for a state agency “that administers tax-exempt bonds, a kind of low-cost financing for affordable-housing projects” statewide. As with other major U.S. metros, Long and Greenstone note that “high prices for land and a lack of incentives to build other-than-market-rate housing have hamstrung affordable developments.”