Groves Capital

Mortgage Broker Serving all of AZ, CA, OR, WA

We deliver the absolute best lending experience through knowledge, communication, and passion for the home ownership experience.

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At Groves Capital we deliver the absolute best lending experience through knowledge, communication, and passion for the home ownership experience. 
Our mission supports the growth and strength of our communities and provides a pathway to the dream of home ownership.

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Mortgage News

Lowest Builder Confidence Since 2014

August 15 2022

What a difference 4 months make!  In April, the National Association of Homebuilders (NAHB) recorded a Housing Market Index (aka "builder confidence") of 77.0.  While that was off the recent peak, it was still higher than anything else before the pandemic going all the way back to 1998, and the 2nd highest pre-pandemic level since record keeping began in the mid 80's.  Homebuilding headwinds are well known at this point.  They include things like shortages of materials and labor, but those factors alone weren't enough to put much of a dent in confidence.  It wasn't until they were joined by a rapidly rising rate environment colliding with 2 years of record-setting price appreciation that confidence really began to plummet. In and of itself, price appreciation isn't necessarily a bad thing for homebuilding.  If it's moderate and stable, it can actually contribute in a positive way.  But 2 straight years of 20% price appreciation had already taken a toll on affordability even before 2022's rate spike.  When rates jumped at one of the fastest paces on record in the first half of the year, it added up to rapid cooling of what had been an arguably unhealthy frenzy of homebuying demand.  A vast majority of builders cited the rate spike as having the biggest impact on buyer demand. Unsurprisingly, the portion of the homebuilder confidence index tracking present-day buyer traffic is leading the way to long-term lows.  Whereas the overall headline (which includes things like the 6 month outlook and present level of home sales) is still more than 4 points above 2014's lows, the buyer traffic component is only 1 point higher--effectively back to 2012's levels.

Refinancing Picks Up Slightly. Overall Volume Still Flat

August 10 2022

Mortgage applications rose slightly for the second week, driven by an increase in refinancing. The Mortgage Bankers Association (MBA) said its Market Composite Index for the week ended August 5 increased 0.2 percent on a seasonally adjusted basis. The Refinance Index was up 3.5 percent from the previous week, its largest gain since early June, but was 82 percent lower than the same week in 2021 . Refinance applications constituted to 32.0 percent of the total received during the week. The share was 30.8 percent the prior week. [refiappschart] Purchase applications declined 1 percent week-over-week on a seasonally adjusted bases and 2 percent before adjustment. That index was 19 percent lower than the same week one year ago. [purchaseappschart] “Mortgage rates remained volatile last week – after drops in the previous two weeks, mortgage rates ended up rising four basis points. Mortgage applications were relatively flat, with a decline in purchase activity offset by an increase in refinance applications,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The purchase market continues to experience a slowdown, despite the strong job market. Activity has now fallen in five of the last six weeks, as buyers remain on the sidelines due to still-challenging affordability conditions and doubts about the strength of the economy .” Added Kan, “Refinance applications increased over three percent but remained more than 80 percent lower than a year ago in this higher rate environment.”

Record Drop in Price Growth - Mortgage Monitor

August 08 2022

It will be a few weeks before we get the next installment of the bellwether home price indices (Case Shiller and FHFA), but today's Mortgage Monitor from Black Knight has an earlier look at June's results.   Much like FHFA and Case Shiller, Black Knight's data for May had shown year-over-year appreciation that still looked reluctant to move too far under 20%.  19.3% was the official tally (Case Shiller was still over 20% and FHFA had fallen to 18.3%).   Today's release shows a much sharper deceleration in June with the annual pace falling to 17.3%.  While that's by far and away the largest decline since record-keeping began in the 1970s, there is at least one incredibly important caveat.  Simply put, the price growth leading up to these declines also set records.  As such, any remotely quick return to normalcy will end up producing huge declines. Moreover, let's not overlook the fact that 17.3% is still a staggeringly high year-over-year appreciation rate. It didn't even break above 15% during the housing boom in the mid 2000s that contributed to the financial crisis. Of course this is just the national average.  Results vary widely by metro area, with several already more than 10% off their recent peak annual growth rate. The price decline speaks to the broader issues of affordability, both due to rampant post-pandemic appreciation and the abrupt surge toward higher mortgage rates in 2022.  The net affect, unsurprisingly, is noticeable shift in inventory levels in certain metro areas.  Some are back to 2017-2019 levels while the national average is still down more than 50%.

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