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Housing Market Recap (excerpted from Gate House’s weekly note to clients) May 17, 2023

The Wall Street Journal reports that after the average city office occupancy rates surpassed 50% earlier this year for the first time since the pandemic began, “many landlords viewed this milestone as a sign that employees were finally resuming their former work habits.” Office usage rates have barely budged since, as most companies have settled into a hybrid work strategy “that shows little sign of fading,” the Journal wrote.

Meanwhile, total consumer debt hit $17.05 trillion, an increase of nearly $150 billion, or 0.9% during the January-to-March period, the New York Federal Reserve reported Monday, up about $2.9 trillion from the pre-Covid period ended in 2019, though the level of those taking on new housing-related debt dropped sharply, the New York Fed said.

The Fed said Thursday its emergency lending to banks rose to $92.4 billion in the week ended May 10, from $81.1 billion last week. Bank borrowing from the Fed peaked at $164.8 billion in mid-March. Bank loans from the Fed’s emergency Bank Term Funding Program totaled $83.1 billion, up from $75.8 billion in the prior week. Banks borrowing from the Fed’s traditional discount window rose to $9.3 billion from $5.3 billion last week.

The Mortgage Bankers Association (MBA) is urging the Federal Housing Finance Agency to delay implementing proposed changes to the Enterprise Regulatory Capital Framework, saying they “oppose strongly” any risk-weighting of re-securitizations issued by one of the GSEs that contain securities issued by the other GSE. In a letter to FHFA MBA said they support the changes in the proposal that would reduce the risk weight and credit conversion factor for commingled securities form 20% and 100% to 5% and 50%, respectively.”  MBA says “The existing 20% risk weighting resulted in the implementation of a 50-basis-point commingling fee last year.”

MBA also expressed concerns that implementing a change to capital framework “ahead of the transition to the bi-merge credit report requirement could artificially raise scores for some borrowers.” It then recommends that FHFA delay implementing the change and perform additional analysis, and then report any findings “as part of the new credit score implementation process.”

Last week FHFA announced a rescission of the controversial LLPA charge for DTI ratios over 40%.  Yesterday, FHFA also issued an RFI seeking feedback on the single-family guarantee fee and LLPA pricing framework. Comments are due by August 14.

May 17, 2023
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