Fed researchers show that, when interest rates increase, refinances decline, but alternative forms of household borrowing increase proportionally. This borrowing substitution diminishes the value of refinances as a path for monetary policy.

Regional differences in mortgage closing costs largely explain the seemingly irrational “failure to refinance” of some borrowers when rates fall.

An increase in the number of borrowers with non-traditional income sources has led more lenders to consider automated and AI-based underwriting practices, according to Ocrolus, a tech vendor.

Lenders gravitated toward lower loan-to-value ratios and higher credit scores with their deliveries to the GSEs in the third quarter.

Increased screening during underwriting helped mortgage fraud risk decline 3.1% compared to last year, according to CoreLogic.

California had more than double the amount of originations by nonbanks in 2022 compared with any other state. The refi share of originations by nonbanks in California was also elevated. (Includes data chart.)

Mr. Cooper’s servicing portfolio is expanding while the number of employees in the nonbank’s call center is declining. Investment in technology is helping to reduce costs and fuel servicing growth.

Warehouse bankers advise lenders to stay in contact with their funders as the market deals with low inventory and volatile interest rates.

FHFA proposed adjusting the capital framework that applies to the GSEs to incorporate planned changes in the usage of credit scores. Lenders want more data before any changes are implemented.

Denial rates on applications for purchase mortgages in the conventional-conforming market held steady in 2022, while refi rejections jumped as interest rates increased during the year, according to HMDA data. (Includes data chart.)