DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1525460
63 August 2024 J O U R N A L » Net underwriting gains rose to $9.7 billion in Q4 of 2023, rebounding from $3.7 billion in losses reported in the same quarter one year earlier. » The combined ratio improved from 103.0% in Q4 of 2022 to 96.8% in the same period this year. "Despite only one U.S. landfalling hurricane in 2023, we saw elevated catastrophe activity. Severe convective storms were a key driver of underwrit- ing results for the year, particularly in homeowners," said Saurabh Khemka, Co-President of Underwriting Solutions at Verisk. "On the premium side, the hard market and steady exposure growth have eased some of the pressures in commercial lines. However, even with another year of double-digit rate increas- es, rate adequacy continues to be a major challenge for personal auto driven by inflation, supply chain shortages, and labor shortages." HOME PRICE GROWTH MAY SOON STALL A ccording to new Redfin research, a buyer on a $3,000 monthly budget may purchase a $447,750 house with a 6.85% mortgage rate, which is the daily average as of July 11. Since mortgage rates peaked five months ago in April, when they could have purchased a $425,500 property at an average rate of 7.5%, the buyer's purchas- ing power has increased by $22,500. With the stock of properties for sale increasing and mortgage rates at their lowest point since March in Thursday's inflation report, buyers have a great op- portunity before competition heats up. An alternative measure of affordabil- ity is the monthly mortgage payment of $2,647 at the current 6.85% rate on the av- erage U.S. home, which is approximately $400,000 in cost. That is less than $200 from $2,814 at a 7.5% interest rate. Mortgage rates dropped due to the most recent CPI (Consumer Price Index) data, which increased the likelihood that the Fed will lower interest rates by September and revealed that inflation is declining faster than anticipated. Mortgage rates are probably going to keep going down a little bit ahead of the anticipated interest rate decreases, but it's unlikely that they'll go below 6% before the year is over. Sale prices are still at record highs and overall housing expenditures are historically high, despite mortgage rates dropping. It is unlikely that prices will decrease significantly very soon. "Now is a good time—at least com- pared to the recent past—for serious house hunters to get under contract on a home," said Daryl Fairweather, Chief Economist at Redfin. "The combination of declining mortgage rates, rising sup- ply, and a lot of inventory growing stale means buyers have a window where they have more purchasing power than earlier in the year and more homes to choose from. But it's hard to say how long the window will last." More Good News for Buyers: More Homes to Shop Around Growing inventory is encouraging for purchasers as well: The number of properties for sale is almost at its highest point since late 2020, with new listings up 7% year over year. A growing number of homeowners, many of whom are tied into extremely low mortgage rates, are listing more properties on the market because they are fed up with waiting for rates to plummet before doing so. For almost two years, rates have been at twice the levels seen before the epidemic, and homeown- ers are accepting that they could have to wait a few years if they hold off on selling and moving into their next property until rates fall to 3% or 4%. The current small decline in rates may encourage more potential sellers to come off the sidelines. Additionally, homes are being listed for longer than normal. Compared to 50% two years prior, over 60% of prop- erties advertised in May had been on the market for at least 30 days without entering into a deal. Compared to 28% two years prior, 40% of the residences on the market had been listed for at least two months without receiving a contract. Many of the less desirable homes on the market are struggling to find a buyer as a result of the increase in homes for "Now is a good time— at least compared to the recent past— for serious house hunters to get under contract on a home." —Daryl Fairweather, Chief Economist, Redfin