Interest rates

With long-term interest rates at historic lows, mortgage refinancing is coming on strong. But that additional revenue may not be enough to offset net interest margin pressures and lost servicing income.

The Federal Reserve reduced short-term rates for the first time in years, and accelerated its plan to stop shrinking the Fed’s balance sheet by rolling maturing mortgage-backed securities into Treasuries.

An important traditional tool of monetary policy has been diminished and may even become counterproductive in the future.

The Mortgage Bankers Association created a template for originators to notify new borrowers when their adjustable-rate mortgage switches to a different index once publication of the London interbank offered rate discontinues.

Although Libor will will not be phased out until at least 2021, Randal Quarles said making the switch early is "consistent with prudent risk management."

Mortgage prepayment speeds may rise with the strong U.S. rate rally, and that may be cause for alarm for mortgage investors.

The development of a replacement index for the London interbank offered rate brought back memories for one secondary market participant of the technology disaster worries many had at the turn of the century.

Mortgage applications decreased 4.3% from one week earlier although concerns over the global economy resulted in falling interest rates, according to the Mortgage Bankers Association.

Historically, rising interest rates have enabled banks to earn more, but this time around in the banking industry, like much else, things are a little different.

JPMorgan Chase's banner quarter didn't stop executives from warning that the pause in rate hikes could crimp profits, or from hinting that the bank might downsize its mammoth mortgage operation.

The Federal Reserve will roll its maturing holdings of mortgage-backed securities into Treasuries starting after September, capping it at $20 billion per month.

While the London interbank offered rate won't go dark until 2021, the commercial real estate finance industry should start preparing for the transition now, says the Mortgage Bankers Association.

An effort to increase awareness of the transition to a new benchmark rate, and nudge banks to start preparing, is expected to intensify in 2019.

The industry could see a boost in mortgage lending from regulatory changes, but other factors may slow growth.

Ordinarily, declining property sales will cool the costs for housing. But existing-home sales have been underperforming their potential for 40 straight months and property values are still on the rise, according to First American Financial Corp.

Sentiment among homebuilders fell in December to the lowest level since 2015, missing all forecasts and signaling that the industry's struggles are intensifying amid elevated prices and higher borrowing costs.

If the predictions prove correct, the benchmark rate would reach 3.50% by the end of next year.

Confidence among homebuilders plummeted by the most since 2014 as the highest borrowing costs in eight years restrain demand, adding to signs of a cooling housing market that will weigh on the Federal Reserve's debate over how far to raise interest rates.

The end of one-party rule in Washington could move the needle on efforts to devise a new housing finance framework.

Rising mortgage interest rates not only will continue to constrain banks' once-robust revenue from this business, they will also affect existing borrower credit quality, a report from Moody's said.