Mortgage Rates and the price of Mortgaged-Backed Securities worsened again this week, maintaining the July trend. Oil prices continue to dominate the rate/inflation conversation. Mortgage rates are now similar to where they were one year ago, essentially the highest levels we have seen in the previous year.
New Home Sales – signed contracts on new homes rose 1.6% in June to a seasonally adjusted rate of 628,000. Most of these sales were driven by lower priced homes, which caused the median price to drop by 3.3%. This shows that there continues to be demand for new homes, especially at a lower price point, despite the rate environment.
Home Equity – Cotality released their Q1 Homeowner Equity Insights Report which showed equity for folks with a mortgage is up to $18T (total equity is roughly $34T). Most American homeowners have a comfortable cushion with the average borrower at $311,000 in home equity. Of mortgaged homes, 1.9% are underwater (negative equity) or a little over 1M homes. In 2009 this peaked at 26%.
Oil Prices surged to $91 a barrel, the highest since June. The price increase is driven by Houthi attacks and US threats of escalation in Iran.
Mortgage Applications to purchase homes rose 6% and are flat year over year. Refinances fell 2% last week and are up 7% year over year.