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Mortgage demand rises 2.2% as interest rates decline slightly

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Mortgage demand up as rates dip for second week in a row
Mortgage applications rose 2.2% last week compared with the previous week, prompted by a slight decline in interest rates, according to the Mortgage Bankers Association’s seasonally adjusted index.

Refinance applications, which are usually most sensitive to weekly rate moves, rose 2% for the week but were still 86% lower than the same week one year ago. Even with interest rates now back from their recent high of 7.16% a month ago, there are precious few who can still benefit from a refinance — just 220,000, according to real estate data firm Black Knight.

Mortgage applications to purchase a home rose 3% for the week, but they were down 41% from a year ago. Some potential buyers may now be venturing back in, hearing that there is less competition and more negotiating power, but there is still a shortage of homes for sale and prices have not come down significantly.

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A home, available for sale, is shown on August 12, 2021 in Houston, Texas.

Brandon Bell | Getty Images

Rates are still twice what they were at the beginning of the year, but they eased somewhat last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.67% from 6.90%, with points increasing to 0.68 from 0.56 (including the origination fee) for loans with a 20% down payment.

“The decrease in mortgage rates should improve the purchasing power of prospective homebuyers, who have been largely sidelined as mortgage rates have more than doubled in the past year,” Joel Kan, an MBA economist, said in a release. “With the decline in rates, the ARM share [adjustable-rate] of applications also decreased to 8.8% of loans last week, down from the range of 10% and 12% during the past two months.”

Mortgage rates haven’t moved at all this week, as the upcoming Thanksgiving holiday tends to weigh on volumes.

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“It’s not that things aren’t moving. They just aren’t moving like normal,” said Matthew Graham, chief operating officer at Mortgage News Daily. “Expect things to get back closer to normal next week, but for the market to continue to wait until December 13 and 14 for the biggest moves.”

That’s when the government releases its next major report on inflation and the Federal Reserve announces its next move on interest rates.



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Cramer’s lightning round: AGNC Investment is not a buy

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Paramount Global: “Too cheap to believe. … I don’t know where it bottoms, but it sure isn’t close to the top.”

Hasbro Inc: “I don’t like the earnings, and I think that Mattel‘s actually cheaper.”

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Citigroup Inc: “The book value is so different from where the common stock is, the price. Something is very wrong there.”

Cramer's lightning round: AGNC Investment is not a buy

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Click here to download Jim Cramer’s Guide to Investing at no cost to help you build long-term wealth and invest smarter.



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Jim Cramer says not to fear bearish economic talk from bank CEOs – there’s no ‘financial apocalypse’

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Jim Cramer says not to fear bearish economic talk from bank CEOs
CNBC’s Jim Cramer on Wednesday told investors that they should take gloomy economic commentary from bank executives with a grain of salt. 

“Don’t panic the next time you hear one of these bank CEOs say something terrifying — they don’t know the impact of their words,” he said, adding, “Sure, we’ve got plenty of problems, but they’re not financial apocalypse problems.”

The S&P 500 slipped for a fifth trading session on Wednesday as investors mulled the possibility of a recession.

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Adding to investors’ worries, JPMorgan Chase CEO Jamie Dimon said on Tuesday that inflation is eating away at consumers’ pocketbooks and could create a recession. 

The chief executives of Bank of America and Wells Fargo also warned that the economy is slowing down as Americans cut back on spending.

“Memo to America’s bankers: Don’t try to frighten us. Don’t try to get us to sell everything,” Cramer said. “Don’t be Grinches telling us a hurricane could be coming.”

He urged the chief executives to remind investors of what’s going right in the Fed’s fight against inflation, and gave an example of what he believes one of the CEOs should have said: 

“There will come a day when the Fed will be done tightening, although that may be when the S&P 500 is a good bit lower. But I don’t know if I want to take the chance of possibly missing the [next] big rally. Hey, maybe buy small,” he said.

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Disclaimer: Cramer’s Charitable Trust owns shares of Wells Fargo.

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Mortgage demand falls again even as rates sink further

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A “For Sale” sign in front of a home in Sacramento, California, on Monday, Dec. 5, 2022.

David Paul Morris | Bloomberg | Getty Images

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Lower mortgage rates are pulling some current homeowners back to the refinance market, but not enough to offset the drop in demand from homebuyers.

Mortgage application volume fell 1.9% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.41% from 6.49%, with points decreasing to 0.63 from 0.68 (including the origination fee) for loans with a 20% down payment. That is 73 basis points lower than it was a month ago but still more than three full percentage points higher than it was a year ago.

Applications to refinance a home loan rose 5% for the week but were still 86% lower than the same week one year ago. There are still precious few current borrowers who can benefit from a refinance at today’s higher interest rates. The refinance share of mortgage activity increased to 28.7% of total applications from 26.1% the previous week.

Housing has a fair amount of room to fall, says Morgan Stanley's Egan

Mortgage applications to purchase a home fell 3% for the week and were 40% lower than the same week one year ago.

“Purchase activity slowed last week, with a drop in conventional purchase applications partially offset by an increase in FHA and USDA loan applications,” noted Joel Kan, an MBA economist in a release.

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The average loan size for homebuyer applications decreased to $387,300 — its lowest level since January 2021, which is consistent with slightly stronger government applications and a rapidly cooling home-price environment, according to Kan.

Mortgage rates haven’t moved much this week, with no significant economic news making headlines. The next big shift will likely come next week, with the much-anticipated monthly read on inflation.



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