Rising Home Prices, Mortgage rates edge higher, Lenders continue to ease credit standards

September 27, 2017

The housing market continues to grapple with rising home prices and limited supplies of homes on the market for sale. The National Association of REALTORS® (NAR) reported on Wednesday that Pending Home Sales fell 2.4% from July, well below the -0.4% expected. The index, 106.3, is now at its lowest reading since January 2016 of 106.1. Lawrence Yun, NAR chief economist, says this summer’s terribly low supply levels have officially drained all of the housing market’s momentum over the past year. “August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes.” Mr. Yun went on to say that the housing market is now “essentially stalled.”

The Mortgage Bankers Association (MBA) reported that mortgage rates edged higher in the latest week after the Fed signaled that it will begin to unwind its massive balance sheet consisting of Treasury and Mortgage Backed Securities. The 30-year fixed conforming mortgage rate rose 7 basis point to 4.11%, with 0.40 in points added on top of the rate. The MBA also reported that the purchase index rose 2.8%, while the refinance index fell 3.5%.

Government sponsored entity Fannie Mae released its 2017 Mortgage Lender Sentiment survey this week revealing that lenders continued to ease credit standards in the third quarter. The net share of lenders who reported easing credit standards over the prior three months reached a new high since the survey’s inception in March 2014, after climbing each quarter since Q4 2016. Competition was cited as one of the main reasons for the ease in credit standards.

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