Ellie Mae released its Origination Insight Report revealing that closing rates in October rose to their highest percentage in 2018. Closing rates for all loans rose to 72.2% in October, the highest this year, up from 71.7% in September. Closing rates on refinanced loans remained at 76.4%. In addition, the percentage of borrowers using adjustable rate mortgages rose 8.2% in October, up from 7.2% in September. “As interest rates continue to rise, the percentage of adjustable rate mortgages is increasing as homebuyers are looking to take advantage of the best rates from their lenders,” said Jonathan Corr, president and CEO of Ellie Mae.
Mortgage debt has been steadily increasing over the past year and is set to rise above totals from 10 years ago, right before the housing crash. The Federal Reserve reports that total outstanding mortgage debt rose to $10.2 trillion in the second quarter of 2018, up 2.7% from the same period in 2017. Non-mortgage related debt has also been rising for loans such as borrowing money for new cars and to pay college tuition with student loans. Non-mortgage related debt rose 6.4% from the second quarter of 2017. Total combined household debt was at an all-time high of $15.7 trillion in the second quarter of 2018.
Fannie Mae released its November 2018 Economic and Housing outlook last week revealing that while economic growth has increased slightly, a strong labor market is not enough to boost housing. Fannie Mae forecasts 3.1% Gross Domestic Product for the full year 2018, up a tenth from the last forecast in October. Fannie Mae predicts that economic growth to slow to 2.3% in 2019. Fannie Mae reports, "The housing sector is also expected to continue to face challenges despite the strong economy and job market. Ongoing affordability constraints stemming from further home price appreciation and a lack of for-sale inventory will likely remain headwinds for housing through 2018 and into 2019."
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