- 7 weeks ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Andy Walden, head of mortgage and housing market research at ICE, about the spring housing market, mortgage delinquencies, mortgage rates and more.
Related to this episode:
Compare Current Mortgage Rates - HousingWire
https://www.housingwire.com/mortgage-rates/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
To learn more about Trust & Will visit trustandwill.com
Related to this episode:
Compare Current Mortgage Rates - HousingWire
https://www.housingwire.com/mortgage-rates/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
To learn more about Trust & Will visit trustandwill.com
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NewsTranscript
00:09welcome everyone i'm here today with andy walden head of mortgage and housing market research at
00:14ice to talk about what he's looking for as we head into the spring housing market before we
00:19dive in i want to say thank you to our sponsor trust and will for making this episode possible
00:25andy welcome back to the podcast thank you for having me appreciate it no this is so much fun we
00:29are here on the floor of the exhibit hall at the ice experience conference super fun so very fun we
00:37might have some background noise but that just adds to it um and i'm excited to get to talk to
00:41you of course you and i are going to be on stage later today excited about that talking about some
00:45of these economic topics but i wanted to jump in and um let's go broad first and talk about you
00:51know
00:51as we were heading into spring let's take out the last couple weeks out of it just for a minute
00:56we'll
00:56get there um let's talk about how you were feeling about heading into the spring i was feeling great
01:01i think a lot of people the vibe you're getting in this room is that a lot of people are
01:05feeling
01:05more optimistic about the market i mean interest rates are one of many reasons but if you look at
01:10what was going on with interest rate dynamics spreads have compressed mortgage rates at a five for the
01:15first time in three years affordability at its best level in four years some refinances starting to
01:20flow back through the market and so i think for a number of different reasons there's a lot more
01:24optimism about the market right now than there has been over the last few years i think i love that
01:29you brought that up especially if you look about at last spring where we are now versus then it can
01:35feel like oh you know rates are going up a little bit it's like let's remember where we right right
01:39yeah and if you look at the last couple of weeks of course oil prices up we've seen a little
01:43bit of an
01:43elevation in 10 years in mortgage rates but compared today versus today a year ago we're a half a
01:49percent below where we were last year if you look at the average homeowner out there shopping for a home
01:54they're paying five percent less for a mortgage to buy the same home as they were a year ago home
01:58prices are flatter you're seeing incomes catch up with home prices a little bit i mean there's a
02:02number of different metrics that you can look at and they all tell you the same thing that's a lot
02:06better today even with the modest uptick that we've seen in 30-year rates compared to where we were
02:11a year ago what did you see um you guys recently released your mortgage monitor right for the fourth
02:16quarter yeah um what did you see there as far as like um origination volume yeah refinance activity
02:23hit a three and a half year high in the fourth quarter so as interest rates have come down
02:26incrementally especially in the low six percent range you're picking up a lot more refinance
02:31incentive and volume that's carried through to the first quarter of this year as well and then when
02:35you look at recapture is is kind of a buzzword in the industry everybody's looking at kind of retaining
02:40and recapturing those bars that they've worked with in the past we saw that hit i believe an 11-year
02:45high in in the fourth quarter of last year so folks folks executing on that retention behavior
02:49um and activity more than they have in the last decade out there in the market as well that's so
02:55interesting so when you look at like who's buying homes who who is that how are they stronger than
03:00say this time last year yeah and it's a mix right and it's leaned more first-time home buyers in
03:05recent
03:06years for obvious reasons folks that are your established homeowners that have bought a home in
03:10the past they still suffer from that lock-in effect right so despite the fact that affordability has been
03:15a challenge you're still seeing more of those entry buyers out there that don't suffer from that lock-in
03:19effect um and and again you're you're seeing that improved buying power and that's true across
03:24demographics and across geographies as well if you look across all 50 major markets affordability
03:30improved from the same time last year and then when you look versus long-term benchmarks the
03:35midwestern region of the country has really improved and they're actually one in six markets is
03:41back to long-run averages and they're primarily in that kind of midwest along with memphis and detroit
03:46region of the country you're actually getting back all the way to long-run averages so interesting
03:50you know you think about like we a lot of times we focus on like texas florida or coastal markets
03:55for good reason right good reason but uh interesting to see what's happening in the midwest midwest is an
04:00interesting one right and and again i think we're all trying to get back to what looks and feels more
04:05normal in the in the housing industry and the midwestern region is a good example of that
04:10that didn't see the big blow up in home prices in 2020 and 21 like they typically don't and the
04:15improving interest rates not only are you seeing more balance between supply and demand there but
04:20you're seeing more balance from a home affordability standpoint that's one of the areas that's really
04:23truly back more towards those long-run levels let's talk about some of the challenges um especially
04:30like when we when we look at insurance yeah what do you see as far as that um right now
04:34in this
04:35market yeah there's some mixed mixed messages coming out of property insurance for lack of a better
04:39word right the downside is property insurance costs hit another record high last year they were
04:44up six and a half percent so growing faster than the rate of inflation overall last year the good
04:49news from a property insurance standpoint is that six and a half percent growth is half the level
04:53that we saw in 2023 half the level that we saw in 2024 and when you look at the very
04:58end of 2025
04:59we actually saw property insurance costs come down just a hair at the end of the year signaling
05:04maybe we're starting to get towards the peak there especially in some of those really hurricane prone
05:10areas some of the more expensive areas and when you dig into those parts of the country last year as
05:14a
05:14whole costs in florida down costs in texas down costs and parts of louisiana down from the same time so
05:20you know some of that's coming from slower home price growth some of it's coming from less coverage
05:25needed but you look at the cost of insurance coverage itself and it actually improved in those areas
05:29as well so again some of those areas that we've been talking about for the past few years that are
05:33you know one out of every four dollar spent is going towards property insurance one out of every
05:37six dollars spent in parts of florida are going towards property insurance you're starting to see
05:41that come off of those recent highs which is which is great to see i feel like you know um
05:46everything
05:47we're talking about is like an improved market you know no one's like hey this is going to be
05:51gangbusters this is going to be like but but it's more back to normal it's more like hey this is
05:57we're seeing a healthier market buying and selling you know people interested people can get into some
06:02homes so i i feel like that's and i think the insurance part is part of that because the
06:08narrative has been so negative right like no one's going to be able to afford you know insurance and
06:14affordability and so just to even see that come down i mean it has more to go we would we
06:18would wish
06:19for more affordability right we'll take whatever we can get but any any improvements positive i mean
06:24there are areas california is one where you're the wake of the wildfires you're seeing property
06:28insurance costs continue to rise i think that'll be the big insurance topic of conversation over
06:32the next couple of years because of the other affordability pressures that californians are
06:36facing already but yeah i mean definitely improvement in in florida and and much needed
06:41after the last few years what are we seeing as far as inventory you're seeing it depends on where
06:46you look right so for for folks that are prospective home buyers out there in the market it
06:50depends on what area of the country you're in in the south and west we're continuing to see
06:54what's kind of categorized as oversupply right more homes than we had entering into the pandemic
06:58that's part of the reason why you're seeing softer price dynamics in those particular areas of the
07:03country midwest and northeast still facing some some deficits there you've got areas that are 30 40 50
07:09shy of where they should be in terms of supply and no surprise there that's why you're seeing firmer
07:15home price trends in those particular areas of the country nationally speaking it's it's stalled out a
07:20little bit right the the beginning stages of 2025 was a really strong growth story we're going to be
07:25back to to where we should be by the time we get the halloween and then we got to the
07:29middle stages
07:30of last year and it just kind of flattened out at a national level so still some some room to
07:34grow
07:34there in terms of overall inventory but i think that's from a home price perspective from a a price
07:41parity perspective that inventory conversation is really the key component affordability tells you where
07:45prices want to go inventory is kind of telling you whether they're going to go there or not
07:49and whether prices are going to push higher you're actually going to see some softening
07:53so i think inventory numbers are going to be a continued focus of the industry this year what
07:57are some other things that you're focused on oh man we're a little bit of everywhere as you know
08:02we've got our hands in every aspect of of the industry so obviously property insurance costs are
08:07a big one we have a climate team here at ice and you're hearing more and more conversations
08:11around that and really tying in some of that property insurance data to downstream mortgage
08:16performance is that impacting homeowners ability to make mortgage payments is it impacting their
08:20decisions so we're certainly seeing that activity from a default perspective you're hearing more and
08:26more about default mortgage servicing and getting more out of the same number of ftes improving your
08:31default servicing flows and especially with some of the rises you've seen in seriously delinquent
08:36loan populations over the last couple of months i think that's a bigger topic of conversation a bigger
08:41focal point for the industry um and i'm happy to dive way deeper into that if you want to uh
08:48but
08:48that's certainly a focal point as we enter this year what are we going to see this year from
08:51foreclosure activity is there any broader concern in terms of homeowners ability to make their mortgage
08:56payments let's dive in a little bit okay um so you know i so i talked to marina walsh at
09:01mba servicing
09:02we talked a little bit about this topic where's the trend going is what i'd like to know about
09:07foreclosures specifically fha yeah you know delinquencies let's talk about that that's where
09:12the focal point is right it's on that fha side and it goes back to the k-shaped economy that
09:16we're
09:16seeing everywhere else you look at gse performance you look at whole loans held on banks portfolios
09:21they're still performing very well it's the the lower end of the credit spectrum higher dti lower
09:27down payment which tends to kind of funnel into that fha world what i what i see right now when
09:31i look
09:31at data is overall mortgage performance remains pretty strong right 3.7 delinquency rate
09:37add in a half a percent of foreclosures so you're talking 4.2 percent of mortgage holders that are
09:41past due on payments that's still below where we were in 2019 and if you would have asked either one
09:46of us how mortgage performance was back then we would say it's pretty good right so overall not
09:52not massive concerns where your eyes go right now is 90 plus day delinquencies are up by about 175 000
09:59or about 25 over the last four months so there's been this very sharp uptrend really since the third
10:04quarter of last year in seriously delinquent loan populations that's eye-catching right that's
10:10that's something that you kind of have to double click on when you look underneath that at what's
10:14driving that sharp rise in serious delinquencies the good news is it's not a material increase in
10:19inflow of new delinquencies or stronger roll rates from borrowers that are marginally past due to seriously
10:25past due which would be more concerning it's a reduction in cure activity out there in the market it's
10:31a shift in the way that loans are flowing through loss mitigation processes forbearance activity
10:35those types of things you're seeing less of that seriously delinquent back to cure current cure
10:40activity that's that's that that troubled kind of uh churn out there in the market there's less of that
10:47and it's allowing those seriously delinquent loan populations to grow so could that be a a near-term
10:53risk to default in foreclosure activity i think potentially right and i think that's where a lot of
10:57the conversations are is it a sign of a more troubled economy out there that's going to lead to
11:02stronger default rates overall maybe not quite as much right so i think that's where the conversation
11:07is now you know expect to see some increase in foreclosure activity we're already seeing that over
11:12the last year or so it's up 20 to 25 percent from the same time last year so we're coming
11:16off of those
11:17record lows we're still historically low but we're seeing gradual growth i think you'll continue to see
11:21that here in 2026 but not massive signs of underlying stress in the mortgage market and we've had a
11:29regulatory change there right so yeah part part of that could just be like yeah you can't stick them
11:33back into that absolutely right there's a shift from an 18-month rule to a 24-month rule you're seeing
11:39one of the big shifts that we saw late last year was an increased reliance on forbearance especially
11:43in that fha space we're seeing a heavier reliance that we've seen there since kind of the you know
11:4921 22 time frame when we were coming out of that coveted pandemic and so there's a shift in in
11:54the
11:54piping there for lack of a better word in terms of how loans are flowing through that default cycle
11:58and what options homeowners have available to them and so there's going to be this feeling out period
12:02over the next six months or so to really understand all right what do new cure rates look like what
12:06what
12:07is the new pipeline flow and then i think we'll get a better feel for what that's going to look
12:11like
12:11let's talk about the last couple of weeks you know nothing like exciting times for people who are
12:18watching these things um i think the interesting thing to me is like how do business people plan
12:24when there's so much volatility right we've seen a lot of volatility in different ways over the last
12:28year but in in the last say three weeks there's been this volatility and if you're out there and
12:33you're you're trying to run your mortgage business how do you think about like what information do people
12:38need to know like bottom line what are you looking at i think you prepare for all scenarios right i
12:43think
12:43there's always a base case of hey here's what we think the most likely outcome is and then you prepare
12:48for the unexpected if you asked either one of us two months ago if we're going to be talking about
12:53the straight-of-form moves and oil prices at information exchange i mean ice experience
12:59neither one of us would have had that on our bingo card right so i think you prepare for the
13:03the
13:04base case there and then you have you know what's an optimistic outlook of what what could we see in
13:09terms of
13:09volume if rates come down by a half a percent and what could we see in terms of uh volume
13:14if rates
13:14back up by 50 basis points i don't think you know when you when you look at interest rate dynamics
13:19in
13:20the market right now they're up a quarter of a percent we're still in a decent spot from a home
13:24affordability standpoint i don't think this has massively changed the overall purchase side of the
13:29market from where we were a couple of weeks ago we'll see where we go over the next couple of
13:33weeks
13:33there's still a lot of uncertainty out there we're still sitting low six percent rate six and an eighth
13:37the six and a quarter is where loans were flowing through our encompass platform yesterday so from
13:43a a home buying standpoint we're still in a good good spot there's a lot of sensitivity from a refinance
13:48perspective when you get in that low six percent range just given where borrowers have taken out
13:54mortgage rates in recent years the heaviest concentrations are at the high end of the six percent
13:58range so you know when you look at what it takes for those bars to be in the money for
14:02a refinance
14:03it's kind of in that pocket right now is where the largest sensitivities are so you can see some
14:08moves in and out we'll see you know we certainly saw some some strong up push over the last couple
14:13of weeks the last couple of days it settled back down a little bit so we'll see what's on the
14:17horizon
14:17here but again going back to your original question i think it's planning for a base scenario which rarely
14:23ever happens in the mortgage industry anyway i mean if you look at historical rate forecasts they're very
14:27rarely even even close to right and then preparing for those outlier situations you know the other
14:34thing is and i bring this up on the podcast quite a bit is that it's so unusual because our
14:39industry
14:39sometimes if things are going bad economically that's right i mean you're gonna have rates go
14:44down which then everybody does more business because of the homeowners generally speaking yeah this
14:49other stuff's happening but they're really rate sensitive right so for instance um you know if if
14:55things continue to go in in a certain way with like oil prices whatever we could see we could
15:01see rates go down even yeah i mean it gets into a much deeper conversation about what's driving rates
15:06right now and there are uh probably three factors that are pulling them up and a couple that are
15:11countering those those trends as well so if you look at what's been driving the up pull it's it's oil
15:16costs right and and the impact that that has on broader inflation out there in the market and the cost
15:20of a potential war out there as well that makes you question all right how much bond issuance are
15:25we going to see in the future if we see an increased bond issuance that that increases uh interest rates
15:31out there um as well along with just uncertainty uncertainty is never really good for the market
15:35because you know mortgage markets tend to price that in more than others because they have negative
15:40convexity out there and a number of different factors but when you have that uncertainty it tends to
15:44push rates up all of those things have been contributing to the rise to your point there are some
15:49things pushing the other way as well right when you look at potential slowing overall in gdp that
15:56can have a downward pull on mortgage rates um and and along with a number of different factors like a
16:01movement of bonds for uh for safety right and to your point if we see those start to out overpower
16:07if
16:07we see oil settle but a little bit more of a move over to the bond safety then then absolutely
16:13we could
16:13see some downward pull in rates and so i think that's what a lot of folks in the industry are
16:16watching
16:16right now is you've got these five plus competing forces out there you know which one's going to
16:21overpower which over the next few months and there's there's certainly the opportunity that
16:24we could see things move in the opposite direction and come lower and then you get into a deeper
16:28conversation of all right how much lower do you really want them to go because you don't want to
16:32see too much weakness in the broader economy you still want a strong labor market you still want
16:36folks to be employed that can they can qualify for a mortgage but you also want them to get a
16:39low rate so
16:40you know i think there's some truth to there being a goldilocks zone in the high five low six
16:45percent range where you've got affordability you've got that pocket of refinance incentive out there
16:49that we've all been looking for but you still have a strongly employed market and a stronger economy
16:54out there that is the backdrop for all of that i i think about how many you talked about these
17:00five
17:00factors and it's like and they're not straightforward factors because part of it is like this could happen
17:05what's the market reaction going to be to that and we've seen like i mean in many ways we should
17:09be
17:09higher than we are now like the the market hasn't reacted maybe the way a lot of people thought it
17:14would
17:14already as far as like you know bond buying so you go how do you figure that out how do
17:19you figure that
17:20love to know that we we rely on our fids group a lot right so part of the beauty of
17:26imt is we're
17:27backed by this larger ice organization that has the new york stock exchange that has a fixed income data
17:33service and so anytime we see volatility it's interesting because oil is the ball of the component
17:39right now and we kind of we're born out of a an energy trading platform so this is kind of
17:44a an
17:45interesting kind of cross-section of our businesses but we rely heavily on our fixed income data group
17:50we've got mortgage rate futures folks that that look at where mortgage rate futures are trading we look at
17:55you know mbs purchase activity and demand out there in the market and so we're we're blessed in that
18:00way that we kind of have a strong fids background that we can bounce ideas off of those folks hear
18:04what
18:04they're hearing from the street that then translates over into the mortgage world as well do you have
18:09a time frame where you're like if it goes beyond this you know that that's when we start to worry
18:14about um bigger volatility yeah i think that's the market at large not only with oil prices but just the
18:21cost of of the war in general and what that would mean for bond issuance i think folks are generally
18:26comfortable with you know you've heard the administration come out and kind of give a six-week time frame
18:31we'll we'll see if if that comes to fruition or not you can tell by oil price futures and just
18:36overall 10-year treasury yields that concerns have settled a little bit over the last couple of days
18:41but we'll we'll see how this all plays out right there's still a lot of uncertainty about what the
18:45exit strategy is here you know how long it would take to reach that exit strategy and what that means
18:50for oil prices and uh and futures prices as we get there you know everything can change in between here
18:56when you and i get on stage in a few minutes you know i constantly refresh my phone all the
19:01time
19:01to figure all right where where rates right now we're at 10 years right now i mean it's it's a
19:05wild but that's the mortgage market right i mean it it comes into a spotlight right now because we're
19:11here and we're talking about in real time but there's constant movement um in that realm and that's
19:15why you know you look at hedging strategies and futures as a hedging platform and all of those
19:21components for the secondary and capital markets that just come to the forefront in times like this where
19:26there is volatility and uncertainty having those hedging mechanisms having different scenario
19:31outputs where you can you know look at the outstanding population of mortgages and say okay
19:35if rates land here here's how many folks are in the money you know having all of that at your
19:39fingertips to kind of understand all of the potential scenarios and outcomes and making sure you're
19:44protected is is more important now than ever so okay we are doing we are recording this on tuesday
19:50tomorrow is fed day right we have to put something tomorrow's fed day any expectations of something
19:56that could move markets tomorrow from fed meeting i think it's very unlikely um i think it's it's going
20:03to be another one of those fed meetings where the expectation is the fed holds fat right i think that's
20:08the overwhelming majority expectation is they don't do anything i think it's another one of those fed
20:12meetings where it's it's not what they do it's what they say and kind of list i'm sure there'll be
20:16a lot
20:17of questions around iran and does that change their uh outlook for their fed path you've already seen
20:22kind of a move from probably two cuts this year to maybe now one cut this year so you're already
20:27seeing some tea leaf reading going on even before the fed speaks but i think it's going to be more
20:32what they say than what they do tomorrow okay we heard it here first thank you so much as always
20:38love having you on thanks appreciate the invite yeah
20:49you
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