Welcome back to iLeads Mortgage Market Minute, where we bring you the latest, most relevant news regarding the mortgage market. We hope you enjoyed last week’s edition where we talked about Are Consistently Error-Free Closings Within Reach For Lenders? This week we’re bringing you:
Study: 24% of sellers received four or more offers in 2021*
Buyers needing financing or insisting on inspection still competitive
Nearly one-quarter of U.S. home sellers received four or more offers on their home in 2021, according to Zillow’s latest consumer housing trends report.
The rise in the number of homes that received multiple offers is reflected in the increased frequency of bidding wars in 2021. Typical sellers received two offers, which is the same as the past three years.
The report, which was based off of data collected by Zillow Group Population Science through a national survey of more than 2,000 sellers, also found that the percentage of offers that fell through was slightly higher than in years past, with 56% of sellers reporting that none of the offers on their property fell through compared to 58% in 2020. The median number of offers that fell through, however, remained at zero for the fourth year in a row.
Most sellers (74%) received at least one offer on their property that was all cash or did not include a financing contingency. This is slightly higher than the number of buyers who reported purchasing a home without a mortgage (68%). This discrepancy suggests that buyers who need financing can still compete with cash offers, as long as their offer is appealing in other ways.
One such way a buyer could make their offer more appealing is by waiving an inspection. In 2021, 65% of sellers reported that they received at least one offer that waived an inspection, but 88% of successful buyers said they got an inspection prior to finalizing their home purchase. Only 16% of homes sold in 2021 underwent no inspections from potential buyers, according to the report, a clear sign that buyers who insist on an inspection are still competitive.
Mortgage Application Volume at Three-Month Low*
Mortgage applications declined by the largest margin in three months during the week ended October 1. The Mortgage Bankers Association said its Market Composite Index, a measure of mortgage application volume, decreased 6.9 percent on a seasonally adjusted basis from one week earlier. It was the biggest decline since an identical loss during the week ended June 25. On an unadjusted basis, the Index was down 7 percent compared with the previous week.
The Refinance Index accounted for the loss, dropping 10 percent compared to the previous week and was 16 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 64.5 percent of total applications from 66.4 percent the previous week.
Purchasing was also down, but to a much lower extent. Both the seasonally adjusted and the unadjusted Purchase Indices dipped by 2 percent and volume was 13 percent lower than the same week one year ago.
“Mortgage applications to refinance dropped almost 10 percent last week to the lowest level in three months, as the 30-year fixed rate increased to 3.14 percent – the highest since July. Higher rates are reducing borrowers’ incentive to refinance, as declines were seen across all loan types,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase activity also fell, driven by a drop in conventional loan applications. Government purchase applications were up over 1 percent, but that was still not enough to bring down the average loan balance of $410,000. With home-price appreciation and sales prices remaining very elevated, applications for higher balance, conventional loans still dominate the mix of activity.”
The FHA share of total applications increased to 10.5 percent from 10.4 percent the previous week, the VA share ticked up to 10.3 percent from 10.2 percent, and the USDA share was 0.5 percent compared to 0.4 percent. The average balance of loans was $338,900, down from $344,500 a week earlier. The balance of purchase loans increased to $410,500 from $410,300.
How lenders can turbocharge mortgage operations for today’s home buyers*
For lenders, the past few months have been placed a strong emphasis on purchase originations. In light of this, HousingWire sat down with Saleforce’s Global Head for Mortgage and Lending, Geoff Green, to learn how lenders can better turbocharge mortgage for today’s home buyers.
HW: What are some challenges lenders are facing when it comes to streamlining loan applications, particularly in this heavy purchase environment?
Geoff Green: Streamlining loan applications should be getting easier as more and more mortgage technology enters the marketplace, but that is not always the case. Too often we see lenders with great technology solutions for one piece of the lending journey that don’t communicate or integrate easily with another part of the borrower or loan officer’s lending experience. In this heavy purchasing environment, and really in any lending environment, it’s incredibly important to provide one consistent experience for everyone involved in the transaction. Lead management needs to meet borrower experience, and borrower experience and loan officer experience should unify in one platform. Once that alignment is in place, ongoing marketing for the customer journey and contextual cross-sell/upsell can, and should, occur.
HW: Why should providing a seamless customer experience be a top priority for lenders, and how can they make that possible?
GG: There are so many choices in the market right now from depository to non-depository, broker to banker, in-person to digital. In order to stand out, customer experience needs to be at the center of everything we do. Across the board in all industries, customer experience is fading as we get busier and spend less time face to face, but it is critical to building trust. You can’t have borrowers losing confidence that you don’t know them or have them feel like they don’t know or trust you as they make one of the largest financial decisions of their lifetime.
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