With the Fed set to end its MBS purchases tomorrow, removing free money from the MBS market, where do you think home affordability will go from here? Mortgage rates are already at their highest levels since 2008 and in theory, a large buyer exiting the space should push MBS prices down and thus mortgage rates up. As one California mortgage executive wrote to me, “Home prices ran up 20 to 30 percent for two years, as Fed Chair Powell could not figure how to get his foot off the accelerator. There are good borrowers and good LTVs out there, but most have been priced out of the market with home values rising 20 percent per year. Take the free money away, and none of this is sustainable.” There is debate about if the Fed’s actions have created some sort of housing bubble. It remains to be seen whether home prices work their way lower, we see no price increases for a couple of years, or the pace of appreciation merely moderates. Helping affordability, more lenders are raising their conforming limits ahead of the expected November announcement from FHFA. Pennymac and Finance of America followed UWM and Rocket by raising their limit to $715,000, 10 percent higher than the current limit. (Available here, this week’s podcast is sponsored by SimpleNexus an nCino company and award-winning developer of mobile-first technology for the modern mortgage lender. Todays has an interview with TMS EVP of Servicing Jason Kwasny on client happiness in the servicing space.) Vendor Services
Source: Mortgage News Daily