Rising rates have all but eliminated the incentive to refinance a mortgage.

That’s because of the continued effect of rising interest rates on refinance candidates, or homeowners with mortgages who would realize a minimum of 0.75 percent rate reduction from a refinance, according to Mortgage Report Monitor from the data and analytics division of Black Knight Inc.

"Due to rising rates, some 6.5 million homeowners that previously could have benefited from refinancing their mortgages have missed that opportunity," said Ben Graboske, executive vice president of Black Knight's Data and Analytics division. "On average, these homeowners had a 22-month window to refinance. All told, that amounts to an aggregate of $1.5 billion in lost savings every month for these borrowers.

The following provides the statistical underpinnings for that trend are the following:

• After flattening through most of the summer, the 30-year fixed interest rate has climbed 0.35 percent over the past two months, and is now up 0.85 percent year-to-date.
• Just 1.86 million mortgage holders have an interest rate incentive to refinance, a 56 percent decrease from January.
• An estimated 6.5 million homeowners have now missed their opportunity to refinance their mortgages due to rising rates, for an aggregate of $1.5 billion in missed savings per month.
• Interest rates continue to put pressure on home affordability as well, with the monthly principal and interest payment on the average-priced home rising 18 percent so far in 2018.
• At the national level, it now takes 23.6 percent of median income to make the monthly payment on the average-priced home, as compared to the long-term benchmark (1995-2003) of 25.1 percent.
• Even if home prices were to stay flat, another 0.50 percent increase in interest rates would make homes less affordable at the national level than those long-term norms.
• 10 states are already less affordable than their respective long-term norms, with another six within one percent of those benchmarks.

This year alone, 2.2 million borrowers had the opportunity to see a 0.75 percent reduction on their first mortgage rates but did not take advantage of the reduced rates before increases to the 30-year fixed rate removed their incentive.

In 2018, the average 30-year fixed mortgage rate is up 0.85 percent--with 0.35 percent of that rise coming over the last two months after remaining flat for much of the summer. The result is that the refinance population has been cut by more than half--56 percent--since the start of the year.

And, the financial prowess to afford a home has moved beyond the grasp of  more borrowers since January.

It now takes 23.6 percent of the median income to make monthly payments on the average-priced home, making housing the least affordable it's been in nearly a decade.

"The rise in interest rates continues to impact home affordability as well,” said  Graboske. “The monthly principal and interest payment needed to purchase the average-priced home has seen a $190 per month increase since the beginning of 2018, an 18 percent jump.”

(ML's Factoid Report condenses some key points from a company's quarterly earnings conference call with analysts.)

A focus of new business for Ellie Mae are some of the largest lenders and correspondent investors, who are now interested in working with the company. “And that is because we have gotten to a place of so much share coming from Encompass lenders that sell to other investors that those investors are now coming to the table and showing genuine interest, serious interest, for Encompass,” said Jonathan Corr, CEO of Ellie Mae, during the company’s third-quarter earnings call.

Corr discounted the possibility of a stock buy-back, saying “We have a stock repurchase out there. And we've used it in the past, but we're also always looking at the best use of cash and that includes (mergers and acquisitions) that we're always considering,” said Corr. “So, it’s something we'll consider, we have a plan out there and we just (have) to balance the best use of proceeds.”

Ellie Mae didn’t experience a significant change in its historical churn rate of 1 to 1.5 percent per quarter, “which is very low, obviously (we have) very high retention rates,” despite the decrease in originations the industry experienced, said Corr.

Contracted revenue increased 25% to $88.6 million and represented 72% of total revenue. Contracted revenue are subscription revenue streams that are fixed by the terms of a contract and professional services revenues, representing 7% of revenue.

Although the volume of originations could drop 5 percent, Ellie’s Corr said increase market share (and earnings) will be realized through lenders that use more products, new clients, and offering additional products. In addition, some clients that were added, haven’t generated volume so far. Big lenders, such as TD Bank, big lenders like PenFed Credit Union are not fully ramped out, and that’s true of other lenders that we've sold. Ellie has a market share of 35 percent. Despite challenges, Ellie Mae’s long-term target growth rate remains at 20%

There is a market for every house—even haunted ones.

Haunted doesn’t mean deal killer to 33 percent of buyers, especially Millennials, if there was something to sweeten the deal, according to the annual Haunted Real Estate Report from Realtor.com. What’s more, 18 percent of respondents said that a haunted home wouldn’t affect their decision at all.

For many, the decision comes down to price.

"If a house is commensurately priced, or has desirable features, the fact that it may be haunted seems to matter less,” said Danielle Hale, chief economist for Realtor.com. “This report shows that, for those looking for a good deal, a lower price, better neighborhood, or larger kitchen can balance out a few spooky happenings." The survey of 1,067 people across the United States was conducted in early October by Harris Interactive completed the survey of 1,067 people across the U.S. through online interviews in early October.

When asked to decide between purchasing a haunted, or non-haunted home, respondents fell into the following three categories:

• I'll buy, but I need a something more: Fully 33% of the respondents were willing to take a chance on a haunted home if it came with additional features. Topping the wish list was a cheaper home price (15 percent), followed by a tie between a larger kitchen and better neighborhood (9 percent). A lower price was most likely to persuade Millennials, with 17 percent reporting that might be enough for them to purchase a haunted house.
• Nothing else required: Surprisingly, 18 percent of people wouldn't require any additional features to choose a haunted home over a non-haunted home. Almost 25 percent of those aged 35-54, reported they wouldn't be affected by the haunted nature of the home while making a purchase decision.
• Would not buy, not for anything: For the remaining 49 percent, there's no price low enough or kitchen large enough to make them purchase a haunted home. The older generation of home buyers is the most reluctant to move into a haunted house, with 61 percent of those over 55 insisting that they would never buy a haunted home as opposed to 41 percent of Millennials and Generation X.

Living in a haunted home is more common than one would imagine, and not necessarily a surprise to the occupants. Almost two in five people believe they have lived in a haunted (or possibly haunted) house, and 44 percent of them either suspected, or were fully aware it was haunted, before moving in. In fact, the majority of people under 55 years old suspected — or were sure — their home was haunted before they moved in, a decision possibly incentivized by a lower home price or better neighborhood. Hearing strange noises (54 percent) topped the list of most common spooky behaviors, followed by odd feelings in certain rooms (45 percent) and erratic pet behavior (34 percent).

Most sellers, at least 66 percent, reported they would not voluntarily tell buyers the house was haunted, as follows:

• Only when asked: In second place, 27 percent of people would choose the less risky route and divulge details only when asked.
• Mum(my)'s the word: Saying absolutely nothing is the third most popular approach for hypothetical sellers, with 22 percent preferring to stay quiet. This is a strategy preferred by 25 percent of those over 35 years old.
• No details please: The least popular selling strategy, at 17 percent, is to admit that the house was haunted but not provide details.
• Yes, tell them everything: The most popular approach is full transparency, with 34 percent of people saying they would tell interested buyers everything. Men and Millennials are the most likely to divulge all the details to buyers.

After spending more than 20 years in the Navy and reserves, Ken Bates retired from the service in 2014. Today he serves as the Veterans Administration chairman for NAMB and is a passionate believer that our veterans have earned their VA benefits and works to ensure they receive them.

[caption id="attachment_7246" align="alignleft" width="150"] Ken Bates[/caption]

ML spoke with Bates, founder and branch manager of San Diego-based Military Home Loans, about new legislation in Congress that would affect VA loans if it were passed.

Is it possible that VA loan limits could be eliminated?

Yes, legislation in the House of Representatives (HR-815) would eliminate VA loan limits.  If that happened, veterans that are entitled, could receive 100% financing without county limits, meaning they could buy a $2 million home with no money down. Current VA county limits are set by the Federal Housing Finance Agency’s limits, which today are capped at $679,650. There are parts of the country, where the county limits place housing beyond their reach because they live in a high-cost area.

Could you give some examples?

For example, in San Francisco the median home price is $1.5 million.  A starter two-bedroom, two-bath house, located in a less-desirable neighborhood, costs more than $800,000. Over 25,000 veterans live in San Francisco, but there are only 206 active VA loans there. In contrast, in nearby San Joaquin county there are just over 35,000 veterans, but they have more than 3,400 active VA loans.

What would the effect be on veterans?

For veterans in high-cost areas, the impact could be massive. That’s especially true in the 66 counties in 12 states that saw their maximum entitlement slashed in 2015. Over 1.75 million veterans, 8 percent of all veterans, live in those counties and will have increased access to their VA benefit thanks to this bill.

California has 11 super high-cost counties with more than 680,000 veterans living there, including Alameda, Contra Costa, Los Angeles, Marin, Napa, Orange, San Benito, San Francisco, San Mateo, Santa Clara, and Santa Cruz.

With the current rule, crossing a county line can mean a significant decrease in buying power: A veteran who's buying near Pomona, needs to know if the home's in Los Angeles County ($679,650 limit) or San Bernardino County ($453,100 limit). With this change, that same veteran wouldn’t need to worry about the county he's  in, and could focus on other more critical matters to his family.