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Baby boomers who are aging and passing on over the next 10 years are not expected to help boost housing supply as much as originally thought. In fact, during that time, excess demand for housing will increase by about 25 million units each year, an update to a 2022 Mortgage Bankers Association report found. That is a turnaround from the original study by the MBA-affiliated Research Institute for Housing America, which had concluded that more than 4 million existing homes from the aging and mortality of older homeowners would come on to the market each year through 2032.At that time, sustained homebuyer demand from population growth and younger-generation households would lead to minimal excess housing supply, the first study found.The most recent report is also a far cry from the "silver tsunami" of homes coming on the market that a 2019 Zillow report predicted.The first RHIA study used data on housing, aging, and mortality up through 2015 and 2016. The update included an additional five years of statistics.Since that 2015 study, a sizable increase in the homeownership rate for those over 70 has taken place. Meanwhile, older Americans are now holding on to their homes for a longer period of time, affected not just by rising home prices for their next residence but also higher mortgage rates in the past few years.Emotions also play a role in that decision, an Opendoor study from June pointed out. About 29% of those 55 and older surveyed had a strong sentimental attachment to their current home, while 37% noted some sentimental feelings."It is evident that older households are aging in place, leading to updated predictions that show that there will be no excess supply of homes to the markets from older Americans moving or dying over the next decade," Edward Seiler, RIHA executive director, and the MBA's associate vice president, housing economics, said in a press release.The study noted that prior to 2015, typical homeownership patterns indicated those residences would have been sold, rather than held on to."While this will raise the supply of existing homes to the market more in the out years, it creates unmet demand now and allows more time for long-run demographic trends that are favorable to demand to take hold," the updated study, again authored by Gary Engelhardt, a professor at Syracuse University, said. "On net, the demand-side factors will dominate over the next decade, leading to demographically driven excess demand for homes currently owned by older Americans."The number of American homeowners between the ages of 65 and 70 increased by almost 2 million in 2022 over 2015. The cumulative number of additional homeowners rapidly increases to a peak of about 7 million more by age 85.The demographic trends in play mean not only that the U.S. has an increase of older residents, but that those who are owner-occupants of their properties are staying put for longer."It is projected that there will be just over 8 million homes supplied by older Americans as they age and die, rising to about 9 million over the next decade, of which approximately 1 million will be due to the death of older Americans," Engelhardt said. "This is almost double that projected in the original report due to the sizable rise in homeownership rates."But fewer existing homes have been placed for sale since 2015, properties that would have been marketed if age-ownership patterns had remained at the long-run levels of 2014. The divergence from historical norms contributed to the inventory shortage that has plagued the market in recent years.Thus on the demand side, the current level of 8 million homes will increase over the next decade to approximately 11 million, which Engelhardt said was also almost double from the original report.The net effect of those trends is that over the next decade, excess demand for homes for sale will arise as older homeowners age and die. "Overall, there will be no demographic dividend to the net supply of existing homes," Engelhardt said.

The National Association of Realtors (NAR) reported that the first-time home buyer share fell to a historic low of just 24%.That was down from 32% a year earlier based on transactions between July 2023 and June 2024.At the same time, the typical home buyer age reached an all-time high of 56 years old.This all speaks to a housing market that has becoming increasingly unaffordable, especially for renters and young people.But there is a silver lining; we aren’t seeing a flood of questionable home purchases as we did in the early 2000s.Improved Underwriting Standards Prevent Risky Home SalesI’ll start by saying the data is clearly negative.Those statistics from NAR certainly don’t paint a pretty picture for the housing market at the moment.The FTHB share hit a record low 24% in 2024, going all the way back to 1981. And it’s well below the historic norm of 40% prior to 2008.It’s a sign that homes have become unaffordable for most, especially those who have never owned one before.Without a large amount of sales proceeds (think repeat home buyers), it’s difficult to come up with the necessary down payment.And without a big salary, it’s near-impossible to afford the monthly payment at today’s prices.So obviously not great if you’re a young person or a renter without a parent willing to gift you a down payment.  Or co-sign your mortgage.Contrast that to the early 2000s when we had similar conditions in terms of housing affordability.Back then, instead of home sales slowing, they kept rising thanks to things like stated income loans, and pay option ARMs.So while we can sit here and complain about affordability, we could also arguably be happy that home sales have slowed at a time when purchasing them might not be ideal.Sure, it’s not great for those who work in the industry nor prospective home buyers, especially first-time home buyers.But it would be even worse if sales kept chugging along when perhaps they shouldn’t.Imagine If We Just Kept Approving Everyone for a MortgageWhile fewer FTHBs are getting into homes, the typical age of home buyers has never been higher.It increased to 56 years old for all buyers, 38 for FTHBs, and 56 for repeat buyers, all record highs!In the early 2000s, we saw a ton of sales volume while home prices were close to their peak.The reason home prices kept climbing and sales kept moving along was because exotic financing was pervasive.Back then, you could get approved for a home loan with simply a credit score.It didn’t matter if you couldn’t document your income or come up with a down payment.  Or if you had no money in the bank.And once you were approved, chances are they would give you an adjustable rate mortgage that wasn’t really affordable.Or a 40-year mortgage or something else not sustainable or conducive to success as a homeowner. And after just a few months, there was a decent chance you’d already defaulted.So from that point of view, it’s a healthy and natural reaction for home sales to slow.If they kept on moving higher with affordability as bad as it is today, it’d be much more troubling. Instead, sales have been stopped in their tracks.The Housing Market Is Naturally ResettingAll the data really tells us is that the housing market is resetting. And it’s a sign that either home prices need to ease. Or mortgage rates need to come down. Or wages need to increase.Or perhaps a combination of all three.It’s OK if we see a period of slowing home sales.It tells us that something needs to change.  That not all is well in the housing market.  Or perhaps even the economy.That’s arguably better than forcing home sales to continue with creative financing. And getting ourselves into the same mess we got into more than a decade ago.I’m already reading about calls to bring back high-risk lending, including a proposal for a zero down FHA loan.It’s already only a 3.5% minimum down payment, and they want to take it down to zero.Maybe instead of that we need sellers to be more reasonable. Or perhaps we need more homes to be built.But just forcing more sales with new forms of flexible financing seems like an all too familiar path we don’t want to go down again. Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.Latest posts by Colin Robertson (see all)

Rocket Pro TPO wants to incentivize its broker partners to bring in more purchase and refinance business in the month of November via a new offering.For the next two weeks, brokers working with Rocket will automatically get a 24 basis point credit on every eligible purchase or refinance for conventional and government loans, Rocket Pro TPO announced Monday.The pricing incentive, dubbed 24 takeoff, is not valid on jumbo, home equity or bank statement loans. It also cannot be retroactively applied to previously closed or locked loans, a Rocket press person added."November will be your month to unlock untapped business potential," said Mike Fawaz, executive vice president of wholesale at Rocket, said in a Youtube video announcing the incentive. Brokers can qualify for the pricing offer from Nov. 5 to Nov. 17.The announcement comes as interest rates begin to rise again, approaching the 7% range and adding pressure on origination activity.The 30-year fixed-rate mortgage averaged 6.72% as of Oct. 31, up 18 basis points from last week's 6.54%, the Freddie Mac Primary Mortgage Market Survey reported.The conditions could negatively impact shops that are refinance heavy, such as Rocket, a research note from Keefe, Bruyette and Woods predicts."We continue to believe this backdrop is particularly negative for refi volume-sensitive names within our coverage [primarily Rocket]," wrote analysts, using the lender's stock symbol. "We prefer names which typically benefit more on a relative basis from higher purchase volumes."KBW pointed to Pennymac Financial Services and United Wholesale Mortgage as purchase market beneficiaries.Nonetheless, executives at Rocket have hefty origination aspirations in the years to come. During its investor day in September, Rocket announced plans to get 8% of all purchase loans and 20% of refinancings by 2027; the latter is up from its current share of 12.5%.Brian Brown, chief financial officer, says he sees the TPO channel as one of the opportunities to grow market share on the purchase side."We really believe we have a superpower here to help the brokers that work with Rocket, and the reason we believe that is because what we're doing is we're taking the technology and we're taking the 40 years of experience, team members and process that we had in the direct-to-consumer space, and we're starting to extend that to the broker community," Brown said. "So we're sort of supercharging them with the tools and learnings and processes we have over the years in the direct-to-consumer space."

Volatile rates led to losses in mortgage servicing rights by the end of the last quarter and then a rapid turnaround, and there was a bright spot in the non-QM segment, according to a new report.    Depending on individual portfolio characteristics, MSR values fell between 4 to 10 basis points from July to September, Mortgage Capital Trading said in its latest monthly report. The declines contributed to an overall loss for the MSR trading segment, driven down by a rapid drop in interest rates of almost 80 basis points toward the end of the quarter. Yet almost as quickly, the MSR market showed signs of recovery as interest rates jumped back to midsummer levels within the space of a few weeks in October. They are expected to remain near those marks through the end of the year, MCT said.The trading platform's researchers estimated that MSR values should recover at least 50% of the value they lost at the end of the third quarter. Service release premiums are currently between 12 to 17 points above fair value, with the spread widening in the latter part of October. "Demand for MSR remains robust, and MSR prices are competitive across all products and vintages," MCT said in its November report. "Low MSR supply and persistent low production volume have kept MSR values at very competitive levels and should remain so in the near future."Researchers highlighted both the non-QM market as well as home equity lines of credit as holding potential for favorable returns. Originations for HELOCs and second mortgages grew at a pace of more than 20% quarter over quarter. Non-QM originations increased, largely thanks to interest from institutional investors. MSR fair values for non-QM products generally run at a multiple between 3.65 and 4.125 of servicing fees. "We anticipate this growth in these product segments to continue for the rest of 2024 and throughout 2025," MCT said.DSCR, or debt service coverage ratio, loans, in particular, have become highly sought-after within non-QM thanks to the potential for higher yields and better performance, as institutional investors behind much of the latest interest. "Many insurance companies are actively adding non-QM whole loans to their portfolios," MCT said.Bulk MSR trading volumes declined in the third quarter compared to the first half of the year. Market values, though, remained strong and should continue to offer favorable returns with loan production expected to be subdued if rates stay near current levels.With levels of loan production uncertain in the near future, potential sellers are hesitant to sell MSRs, preferring to hang on to them for holdings fee income that to maintain operations, MCT suggested.  The number of mortgage prepayments also ticked upward across all vintages but still stands at historically low levels. A majority of prepayments in the third-quarter rate resulted from the recent rate drop and was concentrated among loan originations from 2022 and 2023. 

Providing adequate housing in America has been a social priority for decades. The 1949 Housing Act called for "...a decent home and suitable living environment for every American," expanding the government's role to address housing shortage. The act passed largely because of the housing crisis that came after World War II, with an emphasis placed on new construction – the legislation aimed to reduce housing costs and aid cities to rebuild across the nation. That act passed 75 years ago, and today, housing affordability remains a barrier to Americans striving to achieve a better life through homeownership. In January 2022, U.S. housing market inventory totaled 860,000 units – the lowest we've seen in over four decades, raising home prices and pricing out millions. Inventory grew in 2023, but housing affordability issues persisted with 34% of non-homeowners reporting that they didn't own a home simply because they didn't have the resources to save for a down payment. Administration largely influences the politics of housing and research shows that homeownership influences political participation on a national and local level. Fundamentally, the interests and perspectives between those that own and those that don't differ vastly. Research shows that homeowners are motivated to pay attention, participate, and influence local politics, showing a 35% increase in turnout compared to non-homeowners. Research also shows that the stimulation of participation on a local level creates a spillover effect that boosts participation on a national level. Both parties have proposed plans to address housing affordability – each of them focusses on driving the production of affordable housing. In an ideal world solely addressing this part of the issue could provide relief but in reality, regulations that restrict the housing supply are imposed on state and local levels. That means the U.S. president can't change the state and local regulations that prevent the production of new construction, and their proposed plans may have low impact.The mortgage industry is intrinsically tied to the success of homeownership. With 10 years under my belt, I have a firm understanding of mortgage costs that keep homeownership out of reach. Title insurance, homeowners' insurance, and appraisals are some of the biggest culprits. I challenge the administration to look for areas to pass savings back to homebuyers which could translate into homebuying power for those on the brink of accomplishing their goals. Increasing housing supply would address part of the issue, but nothing changes if it's still unaffordable for the average American to get a mortgage. Homebuyers can expect to pay up to 1% of their purchase price on title insurance, according to Fannie Mae. Through the Federal Housing Finance Agency, government sponsored entities including Fannie Mae and Freddie Mac may waive the traditional title insurance requirement and take on the title risk themselves. While the cost savings will vary from borrower to borrower, the average cost of a home in 2024 is $412,300, which would be $4,123 in savings on closing costs. That money could be put back into the pockets of aspiring homeowners and open the door for some that may have previously been priced out. A pilot is currently available by Fannie Mae for certain refinance loans but should be expanded to purchase loans which could substantially cut down the cost of taking out a mortgage for many.Homeowners insurance isn't required by law, but it's required for homebuyers to take out a mortgage. It's an additional cost for homebuyers and homeowners – and they're avoiding it. One in thirteen homeowners across the U.S. are uninsured, equivalent to 6.1 million homeowners. Freddie Mac found that the average borrower paid an annual premium of $1,522 in 2023 which was 10.8% higher than the cost in 2022 and 40.8% higher than 2018 making homeowners insurance increasingly unaffordable.  Adding this monthly cost to the average mortgage payment of $2,057 as of August 2024, homeowners would pay $3,579 on their monthly mortgage payment and homeowners insurance costs alone. It could provide relief both to current and prospective homeowners to make homeowners insurance tax-deductible. Not only would this give money back to homeowners each year, but it could also create a ripple effect and encourage homeowners to get insured.Investing in technology to broaden the usage of digital appraisals is a small change that could make an impact on housing affordability. Currently, appraisals must follow the Uniform Standards of Professional Appraisal Practice which requires an appraiser to physically visit a property to assess its value. Recent data shows that the typical cost to complete an appraisal is $500. By leveraging aerial technology, automated valuation models, or hybrid appraisals, the cost of an appraisal could be cut down to less than a quarter of that cost, saving homebuyers hundreds of dollars on their appraisal.Increasing the housing supply in America is important, but alone, it's not enough to solve the housing crisis we're currently facing. There are thousands of dollars to be saved by lowering costs associated with a mortgage, making homeownership more affordable and therefore more attainable across the country. 

Onity improved results during the third quarter, dodging the kind of markdowns in mortgage servicing rights seen at some peers, but a shift in pricing hurt margins in one loan channel.The $21 million in net income or $2.72 in earnings per share reported under generally accepted accounting principals was up from $11 million the previous quarter and $8 million a year earlier. The S&P Capital IQ consensus estimate had been that Onity would generate $1.60 per share.Onity's $35 million in adjusted pretax income was the highest it's been in three years, according to CEO Glen Messina. Adjusted EPS, at $3.41, beat an earlier $1.74 estimate, according to Standard & Poor's Capital IQ."Our MSR hedge performed very well, effectively offsetting the impact of declining interest rates," Messina said during the company's earnings call.Onity has a particularly high conservative hedge ratio that has fluctuated between 90% and 110%. Management has been using it with the aim of lowering MSR volatility, analysts at Keefe Bruyette & Woods noted in a first-take report on the company's earnings.Revenue came in at $265.70 million. The consensus estimate for it had been $258.40 million.One factor fueling the company's quarterly gains was $53 million in adjusted pretax income from servicing, which compared to $50 million in the second quarter and $10 million a year ago.The unpaid principal balance of its servicing portfolio inched down to $299 billion from $304 billion the previous quarter, but was up slightly from $296 a year earlier.Another contributor to earnings was $10.2 million in adjusted pretax income from originations, which compared to $9.7 million the second quarter and $2 million loss a year ago.Origination volume overall was up during the quarter at $8.5 billion but margins in the business-to-business channel suffered due to a sudden pricing change by influential government-related secondary market buyers Fannie Mae and Freddie Mac.Onity's reduction in B2B pretax income occurred despite the fact that production volumes in this channel rose to $8.1 billion from $6.6 billion in the second quarter.Adjusted pretax income fell to $5.8 million from $9.5 million in the B2B channel from the previous quarter due in part to the pricing volatility.However, the regulator of Fannie and Freddie has since directed them to mitigate this kind of concern with notifications for future, large guarantee fee changes."They'll be more thoughtful about price changes going forward, and will do better to pre announce changes so people can adjust their pipeline position and not get caught with loans that haven't been sold forward," Messina said.As previously announced, Onity moved ahead with capital restructuring in line with plans to sell a stake in its servicing joint venture during the third quarter. It later confirmed it had followed through on with a related senior note offering.The JV's restructuring is on track to close in the fourth quarter, pending regulatory approvals, according to Chief Financial Officer Sean O'Neil. The company also had announced an agreement to buy $55 million in reverse-mortgage servicing assets during the quarter. That transaction closed last week, O'Neil said during the earnings call.Onity's shares had opened at $32.17, up from from the previous day's close at $30.13, but they later vacillated and at deadline they were trading at levels around $31.50.

Bloomberg News WASHINGTON — As voters head to the polls on Election Day, a number of issues that matter to bankers — including Federal Reserve policy, inflation and regulation — are indirectly on the ballot. While the campaign between Vice President Kamala Harris and former President Donald Trump has made little mention of banking or financial regulatory policy, the result will shape the way that banks interact with Washington for years to come — including personnel choices in bank regulatory positions, economic policies or the tone either candidate would set for the country going forward. But the action is not limited to the top of the ticket. The results of several key House and Senate races could also influence the contours of financial policy in Washington. Sen. Sherrod Brown, D-Ohio, the current Senate Banking Committee chairman, faces one of the tightest races in the country, as does fellow Democrat and banking moderate Sen. Jon Tester, D-Mont. The result of those races could decide the fate of the Senate, which will determine the chairmanship of the committee and control over the confirmation of key bank regulatory positions. The results of the race could tee up intraparty struggles as well. Rep. Adam Schiff, D-Calif. — one of the most crypto and fintech friendly Democrats on Capitol Hill — appears poised to win a Senate seat, setting up conflicts between himself and a crypto-skeptical progressive wing of the Democratic faction of the Senate Banking Committee. And the results could shuffle the deck of key committee assignments on Capitol Hill, including familiar faces in important positions. While most anticipate that the House will flip to Democratic control while the Senate will be grabbed by Republicans, the margins in either chamber will likely be tight. Should the conventional wisdom prevail, Jaret Seiberg, a financial services and housing policy analyst for TD Cowen, said that Rep. Maxine Waters, D-Calif., would likely return to take the gavel of the House Financial Services Committee. Sen. Tim Scott, R-S.C., would likely become the chair of the Senate Banking Committee if Republicans prevail in the upper chamber, though he may also be offered a post in the Trump administration. "Where it gets interesting is if the conventional wisdom is wrong and the Dems keep the Senate and the Republicans keep the House," Seiberg said. "At that point we're looking at the possibility that Elizabeth Warren chairs the banking committee, and we have a pretty contested fight for the gavel in House Financial Services." A new crop of bank-savvy lawmakers could also soon make their way to Congress. Notable among them is SunWest CEO Eric Hovde, who is running to unseat Sen. Tammy Baldwin, D-Wis., and who is outperforming expectations in that race.Ultimately, though, much of the direction on bank and financial policy will be directed by the person who is elected to the presidency — or at least by the people they appoint to critical roles, including the head of the Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., Federal Reserve and the Office of the Comptroller of the Currency. "Like most presidents, neither Harris nor Trump have very strong views on financial regulation that we're aware of," said Ian Katz, managing director at Capital Alpha. "So that means most policy will depend on who exactly the regulators are." Harris is expected to consider both progressive and moderate choices for these key roles, he said. "But we probably get more moderates because she would want to get some of the key ones confirmed by the Senate, and not just in acting roles," Katz said. "With Trump it's possible we could get some agency heads who are unconventional and somewhat populist." Katz said that most of Trump's picks would most likely be more traditional Republican choices, such as the regulators he put in place during his first term."But the truth is that we just don't know," he said. "There could be big surprises." For Trump's policies, most of the more dramatic policy differences between his last term and a potential second term fall into the macroeconomic sphere, such as raising tariffs on all imported goods and taking a more active role in setting interest rates. By contrast, he has made little mention of a change in attitude on financial regulatory policy."Trump is somewhat of a known quantity from a financial regulatory perspective. So I think we kind of know what's going to go on," said Isaac Boltansky, managing director and director of policy research at BTIG. "So to me, it's the bigger macro questions." Some of those topics could have a large impact on bankers, he said. "I think the questions that bankers have are the questions that we all have," Boltansky said. "What are tariffs going to do to the economy? What would a global trade war do to supply chains? How would the combination of tariffs and increased border enforcement impact inflation?" Some of Trump's other ideas could present headwinds for financial companies, Seiberg said. "The Trump of 2024 is far more populist than the Trump of 2016, and we've seen with his call for a 10% cap on interest rates, we've seen that in his push for tariffs," he said. "And then, you know, his idea of deporting upwards of 20 million people is also an inflation and interest rate risk for the banks as that could exacerbate the employment shortage." That said, there are some predictions about the kinds of changes that either candidate could make on banking and financial policy. "For financial companies, this election is really about whether you believe what the candidates are saying, or if you believe what the candidates have done," Seiberg said. "If you believe what they're saying, Harris is the better pick because some of Trump's plans would be quite negative for the financial sector. By contrast, if you believe what they've done, Trump's record in his first term of lower taxes and less regulation, is music to the ears of the financial services sector." On Harris' end, her participation in Biden-era policies that target the financial sector could also be tipping financial industry support of her candidacy. "The concern with Harris really is that she's been part of a Biden administration where the CFPB has been extraordinarily aggressive, and I think the worry is that she would continue on that same path, and that she could even retain some of the existing regulators," he said. 

Al Drago/Bloomberg Fluctuating interest rates, the sting of inflation and geopolitical turmoil have been snuffing out loan production, but many bank executives say the biggest factor dampening borrower pipelines is uncertainty about the outcome of Tuesday's election.No matter who wins the U.S. presidential election — Vice President Kamala Harris or former President Donald Trump — bank leaders expect debt origination to start picking back up, if only at a creep, once the results are clear.Phil Green, chairman and CEO of Cullen/Frost Bankers, said in an interview after the Texas bank's earnings call last week that most of his company's business clients are anticipating strong performance in 2025, regardless of which way the election goes."If there was one thing that people said that was affecting their business today, it wasn't labor, it wasn't supply chain, it wasn't interest rates, it was the election," Green said. "People are waiting until it's over. I don't know that there's any empirical reason for that. I think it's a human reaction to uncertainty."D.A. Davidson analysts wrote in a Monday note that although they would see a Trump victory as a benefit to near-term bank stock trading, their longer-term outlook is positive for the industry no matter who is in the Oval Office."Presuming lower rates and a sound economy, we would expect loan growth to improve regardless of the next White House inhabitant, as many banks have suggested election uncertainty, along with still elevated interest rates, is the current sticking point for customers," the note said. "In many cases, clarity on the future landscape may trump (pun intended) the election outcome."In early October, the D.A. Davidson analysts forecasted 2025 loan growth of 6.5% across the banks they cover. In the second quarter of this year, year-over-year loan growth was just 3.0%, the analysts wrote.Still, even after the votes are counted, bankers aren't expecting a sudden boom in loans. Though economic factors have started to fall into place as interest rates have begun to come down, most bank executives say the response from clients won't be immediate.Mary Katherine Dubose, head of Commercial Banking Specialized Industries at Wells Fargo, said that when the outlook of financial policies are in flux, it's difficult for businesses to gauge what levers they can afford to pull."I think probably with some level of uncertainty out there around the outcome of the election, it's been more challenging for businesses to plan," she said.Nearly half of commercial businesses listed election uncertainty as a top concern in the third quarter, according to a Wells Fargo Commercial Business Sentiment report, a 14-percentage point increase from the previous quarter.Fifth Third Bancorp CEO Tim Spence said in an interview last month that his bank's clients were wrestling with how to make plans that could be dashed by potential policy changes on tax rates and tariffs. Trump has campaigned on reducing corporate taxes, while Harris has run on the opposite. Increasing tariffs is also key to Trump's economic platform."The byproduct of that is [clients] tend to want to take a wait-and-see to get through the election," Spence said. "We'll have clarity on who won and what the breakdown between the executive branch and Congress is. You get a bit of a view into what the governing platform is going to look like."He added that until there's more confidence in the path of interest rates and in the political environment, businesses won't know "the rules and costs" of borrowing.When businesses struggle to plan, so too do their lenders.Dominic Ng, chairman, president and CEO of East West Bancorp, said on the company's third-quarter earnings call it would be "unwise" to offer predictions regarding the result of the election, or even if that result will be immediately known. Loan growth has been unusually tepid for the Southern California-based bank, Ng added, but East West has a strong capital cushion.When the bank gets the call for loans from its customers, it will respond, Ng said."But if for some reason, the economic condition is still a little bit muddy, and it makes it difficult for customers to function and make capital investments and try to accelerate growth, we naturally will slow down a bit," he said.James Brogden, president at Simmons First National Corp., said on the company's recent earnings call that he was trying to give a "balanced" view of 2025, noting that economic green shoots the bank has seen haven't translated into loan demand yet."We lean optimistic, but that optimism hasn't started to firm up yet," Brogden said. "We hope that it does, and we're going to be ready for it. And our appetite for it will be strong when it gets there."Cautious optimism was a theme across the industry during third-quarter earnings calls, as bank executives commented that getting past the hump of the election could help loan growth. Regions Financial Chief Financial Officer David Turner said that the decreasing ambiguity going into next year should move the needle on commercial borrowing.During the third quarter, Regions' total loans were down 2% from the previous year. The company is expecting year-end average growth to be in line with or slightly below its 2023 level."We obviously are in great markets, and we think we can take advantage of those when a little bit of this uncertainty … dissipates a bit, and get on the growth trajectory in 2025," Turner said.Moving in parallel with their clients, banks expect to see a benefit from the additional certainty that election results should bring.Green said that San Antonio-based Cullen/Frost has been handling unknowns with caution, maintaining both capital and balance sheet flexibility to deal with potential economic shifts."We've kept our powder dry because we're not sure where interest rates are going to go, how soon they'll get there," Green said. "In a sense, we're just like those businesses I've been talking about, who are waiting to see how things break. And then we'll make some decisions."Kevin Wack contributed to this story.

American homeowners hold a large amount of potentially tappable home equity but usage rates remain low due to consumer reluctance, data from ICE Mortgage Technology found.Its Mortgage Monitor report noted that while in the third quarter homeowner equity withdrawals through a second lien or cash-out refinance hit a two-year high, increased valuations translated to just 0.42% of the available tappable amount.Today's rate is less than half of the 0.92% average extraction rate for the decade prior to the latest round of Federal Open Market Committee rate increases, noted Andy Walden, ICE vice president of research and analytics, in a press release. The FOMC ended the over two-year tightening cycle at its September meeting with a 50 basis point cut. "Second-lien withdrawal rates are currently running more than a quarter below 'normal' and cash-out refi withdrawals are still down almost 70%," Walden continued.Over the past 10 quarters, homeowners have extracted $476 billion in equity, which is exactly half of what was expected in more normal circumstances."That equates to nearly a half a trillion untapped dollars that hasn't flowed back through the broader economy," he said.But some observers might consider it a good thing that homeowners are staying away from going into their equity given the overutilization that was a contributing cause to the Great Financial Crisis.At the end of the third quarter, U.S. homeowners had $17.2 trillion of total equity in their properties. Of that, $11.2 trillion was considered to be tappable; that is if the property owner elected to turn some of that into cash, their equity position would still be at least 20%."On average, that works out to roughly $207,000 in tappable equity per homeowner," Walden said. "And we did see a bump in equity withdrawals in Q3, with cash-out refi extractions rising on what had been downwardly trending 30-year rates and second-lien home equity products getting a boost from rate cuts late in the quarter."Total equity at the end of the second quarter was $17.6 trillion, with $11.5 trillion considered to be tappable.But since the September FOMC meeting, mortgage rates — along with the 10-year Treasury yield — have climbed.The Fed's 50 basis point short-term rate cut had a more positive effect on HELOCs given that interest rates for the two are more closely aligned."Since the Fed began its latest cycle of rate hikes, the monthly payment needed to withdraw $50,000 via a HELOC more than doubled, from as low as $167 per month back in March 2022 to $413 in January of this year," Walden said.Investors are currently pricing in another 1.5 percentage points of Fed cuts through the end of 2025."If that comes to fruition, and current spreads hold, it'll have positive implications for both new equity lending as well as for consumers with existing HELOCs, with the payment on a $50,000 withdrawal falling back down below $300 per month, he said, pointing out that is a 25% reduction from the recent high but still above the 20-year average of $210."Given borrowers' recent sensitivity to even slight rate drops, this could serve to entice additional HELOC utilization, especially with mortgage holders sitting on record stockpiles of equity and locked into their current homes via low first lien rates," Walden predicted.Meanwhile, the report also includes an update to its First Look data that reinforces the early figures by showing that about 350,000 borrowers affected by Hurricane Helene were having trouble making their mortgage payments in September.Approximately 4.9 million mortgage borrowers owing a total unpaid principal balance of $1 trillion were in the path of either Helene or Hurricane Milton; almost 429,000 homes were hit by both natural disasters.That is in addition to the roughly 1.2 million borrowers impacted by Hurricane Beryl in early July. A little but more than 1% of those consumers, almost 13,000 mortgage borrowers, fell behind in payments after that earlier storm.As ICE previously noted, the full impact of the two latest storms will not be felt in the mortgage ecosystem until the October or November payment cycle.But a look at the ICE McDash Flash daily mortgage performance data for October found the share of people who hadn't yet made their payment by the 15th spiked 2.8 percentage points in Buncombe County (the Asheville area), North Carolina. That equates to 5% of all the mortgage properties in that location.ICE also found increases of between 1.4 and 2.1 percentage points in and around the Tampa Bay, Florida region municipalities of Tampa, Bradenton, and St. Petersburg.The First Look report found the total delinquency rate for September was 3.48%, up 14 basis points from August and 19 basis points year-over-year.

Senator Elizabeth Warren, a Democrat from Massachusetts.Al Drago/Bloomberg Democrats on Capitol Hill are calling for another big interest rate cut from the Federal Reserve this week to reduce housing costs.In a letter to Federal Reserve Chair Jerome Powell, Sens. Elizabeth Warren, D-Mass., and John Hickenlooper, D-Colo., urged the Federal Open Market Committee to reduce its policy rate by half a percentage point during its meeting on Thursday. Warren and Hickenlooper praised the FOMC's September decision to reduce the target range of the federal funds rate by 50 basis points — double the typical 25 basis point policy movement interval — as a "good first step," but noted that additional steep cuts would be necessary to deliver "much-needed relief from high borrowing costs to American families."The senators say recent economic data show that price growth has largely stabilized while recent employment trends indicate a potential softening in the labor market. "Given the Fed's confidence in inflation moving towards its target of 2%, now is the time to lift its restrictive policies and proceed with additional rate cuts," Warren and Hickenlooper wrote. In the letter, the senators reference the headline personal consumption expenditures, or PCE, index in September, which showed overall prices increasing 2.1% year over year. The Fed's preferred measure of inflation is core PCE, which factors out commodity-based price categories such as food and energy. Core PCE came in at 2.7%, the same as it was in August.Fed officials have shared mixed interpretations about recent inflation trends. Some have been encouraged by the downward trajectory of inflation and the measure's proximity to the central bank's 2% target. Fed Gov. Michelle Bowman, the lone dissenting vote against the September cut, characterized the figure as "uncomfortably" high during a speech shortly after the last FOMC meeting.With the effective federal funds rate at 4.83%, Warren and Hickenlooper said the Fed's policy rate remains "restrictive," meaning it encourages companies and consumers to save their funds rather than spend or borrow. Typically, interest rates are viewed as restrictive when they are meaningfully above the rate of inflation. To get rates into neutral territory, the senators argued, the Fed must lower its target range by more than 1.25 percentage points and should do so quickly. They noted that elevated borrowing costs have not only made it harder for consumers to finance home purchases, but they have also restricted the development of new housing supply."If the Fed moves forward with more rate cuts, housing prices and mortgage rates would thus also likely drop, allowing more families to achieve the American dream," they wrote.The federal funds rate directly impacts short-term interest rates. Typically, 30-year mortgages are more closely correlated to long-term instruments, such as 10-year Treasury bills, which are influenced by factors such as employment, overall economic growth and long-term monetary policy expectations.After lowering its benchmark interest rate in September, the FOMC indicated that more cuts would be coming this year and throughout 2025, though officials have been noncommittal about the pace of those cuts. The vast majority of market participants are expecting the Fed to lower its policy rate by 25 basis points, according to CME group's Fedwatch tool. Based on 30-day Fed funds rate futures prices, more than 99% of traders are underwriting a single rate cut, with the rest expecting the FOMC to hold the target range steady between 4.75% and 5%.