Housing Activity 'Took a Nosedive' as Mortgage Rates Hit 15-Year Highs—a Chart That Says It All

Housing Activity 'Took a Nosedive' as Mortgage Rates Hit 15-Year Highs—a Chart That Says It All

Mortgage rates are at their highest point since the Great Recession as housing affordability continues to decline, according to Freddie Mac (OTC:FMCC) data.

The 30 year fixed increased from 5.66 percent to 5.89 percent. The long-term rate hasn't been this high since November 2008, shortly after the Great Recession was triggered by the collapse of the housing market.

In 2021, the 30 year fixed was 2.88 percent. The typical rate on 15 year fixed mortgages increased from 4.98 percent to 5.16 percent last week. The rate at this time last year was 2.19 percent.

Rates decreased in July and the first few days of August as recession fears mounted. Rates reversed higher after hawkish remarks made by Fed Chairman Jerome Powell at the central bank's conference in Jackson Hole last month; investors' attention was once again drawn to the Fed's efforts to bring inflation down which is floating around 40 year highs.

Potential Buyers Lose Interest

“Home touring activity took a nosedive, and the share of sellers dropping their price remained near a record high,” wrote Redfin Corp. (NASDAQ:RDFN) in a Thursday press release.

Sales of existing homes in the U.S. have fallen for six straight months, according to the National Association of Realtors.

Fewer people searched for “homes for sale” on Google. In fact, searches during the week ending Sept. 3 were down 25 percent from a year earlier.
  • Touring activity as of Sept. 4 was down 38 percent from the start of the year at Redfin, compared to a 3 percent increase at the same time last year.
  • Mortgage purchase applications were down 1 percent week over week, seasonally adjusted, and were down 23 percent from a year earlier during the week ending Sept. 2

Lenders Affected

Mortgage lender Home Point Financial, a subsidiary of Home Point Capital Inc. (NASDAQ:HMPT) announced plans to lay off 526 staff members beginning Nov. 1, due to decreased demand in homes.

Mortgage originator Rocket Companies Inc. (NYSE:RKT) spent $61 million in the second quarter in voluntary buyouts to 8 percent of Rocket’s operations team and other groups in its Amrock title and valuation business. Rocket issued a second, smaller voluntary buyout to an undisclosed number of employees across its multiple businesses in August.

Re/Max Holdings Inc. (NYSE:RMAX) said early in July that is planned to cut 17 percent, or 120 staff members affecting the company’s technology workers, including operators of the “book” platform, its customer relationship management software for brokers and agents.

Industry Consolidates

Two direct-to-consumer lenders AmeriSave Wholesale Mortgage Solutions, and Suburban Mortgage Inc. abruptly shut down in late August.

First Guaranty Mortgage Corp. (NASDAQ:FGBI) and Sprout Mortgage, in addition real estate fintech Reali announced plans to close its door on Sept. 2.

With consolidation in the industry, and less wholesale lenders to contend with, companies like UWM Holdings Corp. (NYSE:UWMC) may benefit as there are a finite number of mortgages to originate.

UWMC could gain market share with each shop that closes its doors.

by AJ Fabino Image: Pixabay