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Vaultedge Newsletter - Measuring Nonbank Health, Labor Day

Vaultedge Newsletter - Measuring Nonbank Health, Labor Day
By Sanat from Vaultedge • Issue #54 • View online
I was at the Founder500 conference here in Austin. This was a gathering of almost 100 SaaS founders, most of them with $500,000+ in revenue. My experience was extremely insightful. I mean you get to learn from people who are as enthusiastic as yourself about how to pursue your objectives, make wise strategic alterations, build strong cohesive team culture, learn about the mistakes that SaaS founders usually make, and how to avoid them. And hearing the founders’ stories made me realize a very important thing- there isn’t an end to learning. 
This week I decided to tap into my writer’s side and wrote a few (well more than 2000) words for an article that talks about escalating mortgage interest rates and their dire effects on the housing market. The collective impact of higher mortgage rates, rising home prices, and dread of recession, has created a substantial dent in the housing-market activity. A few economists have predicted that sluggish demand will likely continue throughout the third quarter of this year. This will be characterized by year-over-year drops in home sales as well as a slowing of home price growth on a year-over-year basis. More price reductions will be detected too, partly due to seasonality, but also as sellers contend with the reality of slower buyer demand. _________________________________________
Mortgage rates are reportedly higher as the Federal Reserve aims to keep inflation under control, but with investors having mixed speculations about a possible recession, the economy may remain stable for a while. The 30-year fixed mortgage rate averaged 5.56% on Aug. 29, an increase of 12 basis points from a week before, Zillow claims. The rates have been above 5% since April, in contrast to being as low as 2.65% last year. The average percentage rate for the 15-year fixed rate rose to 4.86%, while the average rate on a five-year adjustable-rate mortgage rose to 5.19%. The increased mortgage rates are a sign of an expanding economy, but the latest economic reports were not encouraging enough to push it upward. As a result, the housing market is cooling off.
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There’s no one perfect way to determine a company’s financial health, let alone sustainability, despite investors’ best efforts. Besides share price, another parameter of health is the value of a company’s debt. Currently, five of the six members of the IPO class of 2020-2021 have outstanding debt issuances, with prices ranging from 58 cents on the dollar to 92 cents. The worst performer in terms of the share price is loanDepot, whose stock now sells for just $1.69, an ugly 88% haircut to its IPO.
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The Federal Housing Agency (FHFA) has announced that it will be conducting a review of the Federal Home Loan Bank (FHLBank) System to ensure they remain a “critical source of liquidity.” According to Sandra Thompson, Director, FHFA, the function of the banks and its other regulated entities – Fannie Mae and Freddie Mac are a reliable source of liquidity and funding for housing finance and community investment. She added that as the FHL banks near their centennial, FHFA will conduct a review to assess whether these monetary bodies are suitable to meet the needs of the current times or not.
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Home Point Capital Inc. is letting go around 217 people in November in its Ann Arbor offices. The increased interest rates have swallowed the opportunities for refinancing, leaving greater competition around home purchases in a low-inventory environment. A few lenders across the nation and locally have taken actions to reduce their workforces that grew because of the booming number of originations just months ago.
Two of the nation’s lenders, AmeriSave Wholesale Mortgage Solutions (AWMS) and Phoenix-based, Suburban Mortgage Inc.abruptly closed their shutters. AWMS announced its closing on Facebook. In a message posted Thursday to a mortgage loan officer group, the company stated it is “closing its doors effective immediately.” Suburban Mortgage Inc’s website can no longer be reached, and according to published reports employee emails have been disabled.
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Bank of America is launching a mortgage with no down payment or closing costs that aims to promote homeownership in minority communities in five U.S. cities. The new program is aimed at first-time homebuyers, including in designated neighborhoods in Charlotte, Dallas, Detroit, Los Angeles, and Miami. Bank of America said the program will not consider a borrower’s credit score when applying for a home loan. Instead, creditworthiness will be based on such factors as timely payment of rent as well as phone, auto insurance, and utility bills.
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Monday, Sep 5th was Labor Day. I am sure that most of us had begun the festivities on the weekend itself. I won’t get into the history of this historic day. Hope everyone had a great Labor Day! 
Happy Reading!

Rising Interest Rates and their Effect on the Housing Market
Mortgage Rates Are Flirting With 6%, Making Life More Difficult for Homebuyers Despite Some Relief in Home Prices
Measuring Nonbank Health by Stock and Debt
Expanded-Credit Lending Holds Up in Tough 2Q22
FHFA opens probe into FHLBanks system
Homepoint lays off 217 in Ann Arbor, more elsewhere amid shrinking mortgage market
Bank of America offers zero-down mortgage in minority communities Z
AmeriSave Wholesale, Suburban Mortgage Close
How stressful is it to buy a home for the first time? | Mortgage Professional
Wish you all a Happy Labor Day! (Image Source: Vecteezy)
Wish you all a Happy Labor Day! (Image Source: Vecteezy)
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Sanat from Vaultedge

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