Rocket’s New Home Loan Program: A Lifeline for Homebuyers
In a bold move to make homeownership more accessible, Rocket Mortgage has rolled out a conventional 1% down home loan program. This innovative program is designed to help homebuyers who are struggling with the current high home prices and tight lending conditions. The program, dubbed Rocket ONE+, allows borrowers to put down just 1% of the home’s purchase price, with Rocket Mortgage covering an additional 2% down payment, effectively giving homebuyers a 3% equity at closing. This is a significant development in the mortgage industry, as it provides a lifeline to potential homebuyers who have been priced out of the market due to skyrocketing home prices.
The 5% Mortgage Rate: A New Homeowner’s Dream
In another interesting development, Yahoo Finance reports that homebuyers can now secure a 5% mortgage rate if they opt to buy a newly built home. This is due to a new initiative by the Federal Reserve Bank (FRB) aimed at stimulating the construction industry and addressing the housing shortage crisis. The FRB’s pilot program allows banks to offer lower rates to buyers of newly constructed homes, which could be a game-changer for many potential homeowners. However, it’s important to note that this program is still in its pilot phase, and its long-term impact on the housing market remains to be seen.
The Mortgage Industry’s Mixed Bag
The mortgage industry is a complex beast, and this week’s Pipeline Press opinion piece provides a comprehensive overview of the current state of affairs. From the impact of inflation and the Federal Reserve’s monetary policy on mortgage rates, to the challenges and opportunities presented by technology and automation, the article offers a wealth of insights. The key takeaway is that the mortgage industry is in a state of flux, with various factors at play that could significantly impact its future trajectory.
The Cost of Origination: A Tough Pill to Swallow
In a sobering revelation, HousingWire reports that the average independent mortgage bank (IMB) lost $1,972 per loan in Q1 of 2023. Despite a marked improvement from Q4 of 2022, the cost to originate a loan climbed to a record-high $13,171 in Q1. This highlights the extraordinary challenges facing the industry, with four consecutive quarters of production losses and nine consecutive quarters of volume declines. However, there’s a silver lining: the Mortgage Bankers Association expects mortgage origination volume to rise in Q2, and the 30-year fixed mortgage rate to trend down to an average of 5.5% by the fourth quarter of 2023.
The Debt Ceiling Battle: A Threat to Mortgage Rates
Finally, the ongoing debt ceiling battle in the U.S. is causing uncertainties within the mortgage market, leading to an increase in mortgage rates. The 30-year fixed-rate mortgage averaged 6.39% this week, up from last week’s 6.35%. This increase, coupled with rising home prices, is posing affordability challenges for first-time homebuyers. However, some borrowers are adapting to the landscape and continuing to pursue homeownership. The debt ceiling impasse, if not resolved soon, could potentially lead to higher interest rates, affecting households already burdened by high prices.
Closing Out the Third Week of May 2023
This week’s Mortgage Monday has been a rollercoaster ride, with exciting developments, sobering revelations, and looming uncertainties. As we navigate these turbulent waters, it’s crucial to stay informed and adaptable. After all, the only constant in the mortgage industry is change. Stay tuned for next week’s Mortgage Mondays for more insights and updates.
