By Edward J. Pinto | Tobias Peter | Sissi Li

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Key takeaways:

• The median purchase rate rose 1/8 ppts. to 7 5/8% in week 42, setting a new series record.
• Mortgage News Daily reported a daily avg. 30-year rate of 7.90% on October 24^th.
• Purchase volume was down 46% from the same week in 2019 and down 31% YTD compared to 2019.
• Y-o-y HPA was 4.8% in September 2023, up from 4.6% in August 2023 but down from 8.9% in September 2022. It is projected to remain around 5% for October and November 2023.
• Despite the subdued rate of purchase activity and historically high rates, y-o-y HPA has begun to accelerate. This is because buyers are well-qualified and highly motivated by a historically tight supply. Cooling, yet still strong job numbers, low levels of foreclosures in most areas, work from home, and continued home price arbitrage opportunities provide further support for robust HPA.
• As interest rates have moved sharply higher since mid-2022, no cash-out volume has disappeared almost entirely. Cash-out volume has also contracted sharply due to higher rates, but has hovered between 30,000 to 42,0000 loans since November 2022. This is down over 80% from a peak of 250,000 loans in October 2021.
• Up until recently, purchase volume had been less affected by mortgage rate changes but had also shown a clear seasonal pattern over the last 10 years. With the exception of the pandemic disruptions of 2020, volume consistently peaks in June with a trough in January.
• For the mortgage industry, things will almost certainly get worse before they get better. We are expecting the total agency loan volume (refi and purchase loans combined) to decrease to 125,000-150,000 by January 2024. This would be a 15%-30% decline from the series low (combined volume of 175,000) set in January 2023.

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