MReport September 2020

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50 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Home Prices Grow Despite Pandemic- Perpetuated Recession However, an increasing number of housing markets will likely see home prices at risk of falling. T he latest CoreLogic HPI has just been released, and it is revealing just how much an impact the current pandemic has had on the housing market trends. The initial onslaught of the pan- demic arrived fast on the heels of the longest, steady periods of economic growth in America. Unsurprisingly, the economy immediately began to decline, and a recession ensued. However, this recession, we find ourselves within (four months in and running), is bucking the usual trends regarding how it affects the housing market. Typically, home prices fall. But we are seeing home prices grow—a trend which, according to data gleaned from the CoreLogic HPI forecast, experts believe will continue well through the first quarter of 2021. These statistics and pre- dictions are, of course, tar- geted for home price trends on a national scale, across the board on average. Time and again, we have seen that national trends don't always reflect exactly what is occurring on a smaller scale within some local markets. For this reason, it is not surprising to see that in many places across the U.S., home prices can and will fall, even when the nation's HPI is rising. For example, as price tags for American residents have continued to consistently climb in 2020, data does reveal that there are a num- ber of metro areas in the nation that report home price declines from their tag costs just one year prior. The specific percentage of these metro areas where this buck in the trend occurred was a whopping 14% in May, mark- ing the highest rate of home price declines since that start of 2013. In light of this, experts expect our current recession will cause more and more housing markets where home prices are subject to falling to crop up. Based on data gleaned from the May 2020 CoreLogic Market Risk Indicators—a study that helps predict the probability of a home price decline over a 12-month pe- riod for 392 metro areas—there was a range of probabilities predicted based on locale for lowering prices through June 2021. Specifically, percentages ranged from 19% (St. Joseph, Missouri) to an incredible 98% (Kahului, Hawaii). These pre- dictions were based upon criteria including unemployment rates, income, distressed loans, and new construction, among others. Bottom line: CoreLogic predicts that nearly one-third (29%) of the 392 metro regions studied have a 65% or greater probability of price decline during the next year. Cities Where Homeowners Could Save the Most from Refinancing Mortgage rates have reached record lows, sparking an opportunity for homeowners to ease the strain on their wallets. R efinancing could spare some an average of almost $23,000 over the life of their loan. Who doesn't like to salt away money? Nope, don't exactly see a flurry of hands shoot up among homeowners. In 50 of the nation's largest cities, on average, refinancing could save borrowers an average of almost $23,000 over the life of their loan, Lending Tree found. In Boston, that could mean almost $27,000, and $18,000 in Columbus, Ohio. Boston, Pittsburgh, at $26,249, and Philadelphia, $25,833, are the three largest cities where refinance borrowers can preserve the most cash. Meantime, when they price compare—in the cities of Pittsburgh, Greensboro, North Carolina, and Oklahoma City— refinance borrowers can see the widest margin in APRs. In these three areas, the average index is 0.57. Average lifetime interest savings of $24,255 are yielded by this spread. What's more, in cities where potential savings are lowest— Columbus, Ohio, for instance—by checking their options, refinance borrowers can still save $18,442 over the life of their loan. A Mortgage Rate Competition Index, created by LendingTree, will abet the efforts of consumers to understand how much they might save. The Index measures the basis-point spread between high and low annual percentage rates or APRs the LendingTree platforms offer users through the second quarter of the year. On a monthly and annual basis, shoring the total interest paid over the lifetime of a loan can culminate in meaningful savings. Refinance borrowers, for instance, can keep around $64 monthly in their pocket, or $766 yearly. Last June, mortgage rates were creeping toward a two-year low, according to what was then Freddie Mac's Primary Mortgage Market Survey data, according to MReport. The survey found the 30-year fixed-rate mortgage rate dropped to 3.82% recording the sixth con- secutive week of decline. It was its lowest since September 2017. According to Sam Khater, Vice President and Chief Economist at Freddie Mac, while the low rates indicate a prime opportunity for borrowers to save on mortgage, Freddie Mac research has found that there can be a "wide disper- sion among mortgage offers." "By shopping around and getting a single additional mortgage rate quote, a borrower can save an average of $1,500," Khater said. A Lending Tree study at the time found a wide distribution of mortgage fees for borrowers, making a stronger-than-ever case for shopping around to save. The study considered a total of 300,000 loan offers on the Lending Tree platform. In the first quarter, mortgage fees had a median of $2,059 for purchase loans and $1,807 for refinancing, indicated the study. That said, the greater number of offers a borrower received, the more inclined they were to save on mortgage fees. For people receiving five offers, for example, the median between the highest and lowest fees offered was $2,045. CoreLogic predicts that nearly one-third (29%) of the 392 metro regions studied have a 65% or greater probability of price decline during the next year.

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