Mortgage credit availability loosened in December, even as house hunters continue to face higher prices that are hampering affordability, according to the Mortgage Bankers Association.

MBA’s Mortgage Credit Availability Index posted its highest reading since May 2021. However, credit availability is still 30% below pre-pandemic levels.

“Credit supply increased in December, with growth across both conventional and government segments of the market,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a news release. “December’s growth was driven by more ARM and lower credit score loan programs, which was likely due to a combination of the rising rate environment and affordability challenges. Lenders expanded offerings to qualified borrowers who were the most impacted by these market conditions. Additionally, there was an increase in government streamline refinance programs to aid borrowers still looking to refinance before rates rise even more.”

The MBA report also notes a 34% increase in jumbo credit availability.

Home prices continue to rise. The median existing-home price for all housing types in November was $353,900, up 13.9% compared to a year earlier, the National Association of REALTORS® reports.

As home prices press higher, so is the amount that home buyers are borrowing to pay for a house. The average amount borrowed to finance a home purchase climbed to $414,115 in November, according to MBA.

The Federal Housing Administration doubled its exclusive listing period on certain HUD single-family and real estate-owned homes that will give owner-occupant buyers more time to bid on the properties ahead of investor competition. HUD-approved nonprofit organizations and government entities also will be able to submit bids to purchase the homes before they’re eligible to buy from investors.

The agency’s extended exclusive period is an effort to make more HUD-owned properties available to owner-occupants and non-profit organizations, according to a HUD press release.

The extended exclusive listing period for bids will begin on March 1. Individuals, families, HUD-approved nonprofit organizations, and government entities will then have 30 days to review new listings of single-family homes on HUD’s REO sale site, HUD HomeStore. That is up from a 15-day exclusive period that is currently in place.

The homes must be listed as “insured” or “insured with escrow” to qualify. The exclusive listing period applies to one-to-four family real estate-owned properties eligible for financing under the Federal Housing Administration’s 203(b) program. The program typically finances up to $10,000 in renovations unrelated to the home’s structure.

“By extending the time frame individuals have to bid on an REO property, we are offering families a better chance to purchase a quality HUD-owned home to live in, build equity, and create generational wealth,” says Lopa P. Lolluri, principal deputy assistant secretary for housing and the Federal Housing Administration.

The housing market has faced a limited number of lower priced properties in the hot housing market. Investors and buyers have gone head-to-head for the limited pool of properties. Foreclosures are also drying up, limiting opportunities even more. Read more: ‘Foreclosure Tsunami’ Fears Unfounded, New Data Shows

With moratoriums in place, foreclosures were nearly non-existent last year. Even as pandemic protections have lifted, a foreclosure wave—which was an industry concern—has not occurred.

“The COVID-19 foreclosure tsunami that some people had anticipated is clearly not happening,” says Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. “Government and mortgage industry efforts have prevented millions of unnecessary foreclosures, and while it’s likely that we’ll see a slight increase in the first quarter, we probably won’t see foreclosure activity back to normal levels before the end of 2022.”

Foreclosure starts also were at a record low nationwide in 2021, according to the ATTOM Data Solutions report. The states that saw the largest declines in foreclosure starts compared to the previous year were Maryland (down 81%), Oklahoma (down 70%), Idaho (down 64%), Nebraska (down 63%), and Connecticut (down 60%).

“The government’s foreclosure moratorium, the mortgage forbearance program, and the mortgage servicing guidelines enacted by the CFPB in August have kept foreclosure starts artificially low over the past year,” Sharga says. “While the recovering economy should prevent a huge increase in defaults, we should see a gradual increase in foreclosure activity as these programs expire, and servicers exhaust all loan modification options for delinquent borrowers.”

Inflation continues to press on mortgage rates. The 30-year fixed-rate mortgage averaged 3.45% this week, up from last week’s 3.22% average, Freddie Mac reports.

“Mortgage rates rose across all mortgage loan types, with the 30-year fixed-rate mortgage increasing by almost a quarter of a percent from last week,” says Sam Khater, Freddie Mac’s chief economist. “This was driven by the prospect of a faster than expected tightening of monetary policy in response to continued inflation exacerbated by uncertainty in labor and supply chains. The rise in mortgage rates so far this year has not yet affected purchase demand, but given the fast pace of home price growth, it will likely dampen demand in the near future.”

Despite rising mortgage rates, owning a home remains more affordable than renting, the National Association of REALTORS® reports. The monthly mortgage for owning a median-priced home is $1,260 compared to the average rent of $1,540, NAR notes on its Economists’ Outlook blog.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 13:

• 30-year fixed-rate mortgages: averaged 3.45%, with an average 0.7 points, rising from last week’s 3.22% average. Last year at this time, 30-year rates averaged 2.79%.
• 15-year fixed-rate mortgages: averaged 2.62, with an average 0.7 points, increasing from last week’s 2.43% average. A year ago, 15-year rates averaged 2.23%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.57%, with an average 0.3 points, rising from last week’s 2.41% average. A year ago, 5-year ARMs averaged 3.12%.

Freddie Mac reports average points along with commitment rates to better reflect the total upfront cost of obtaining the mortgage.

A pleasant neighbor can make homeowners happier, studies have found. But do certain cities and towns tend to be more neighborly than others? StorageCafe, a storage unit search site, surveyed nearly 11,000 Americans to gauge neighborliness across the country. They factored in satisfaction with neighbors, sense of community, involvement in community activities, and willingness to recommend the neighborhood to others.

Nationally, nearly half of Americans say they feel a strong sense of community, and 67% are happy with their neighbors.

Most Common Complaints About Neighbors

But in some locales, residents are happier with their neighbors than in other places. Indianapolis topped the list as the most neighborly place in the U.S., according to the survey. More than half of residents surveyed in Indy say they’d recommend their neighborhood to other people. Columbus, Ohio; Houston; and Nashville, Tenn., also ranked high for their strong sense of community.

Friendly neighbors aside, Americans say the following are the five features they love most about their neighborhoods:

• Location: 36%
• Quiet environment: 26%
• Parks and recreation areas: 14%
• Local infrastructure and services: 12%
• Schools: 10%

The housing market doesn’t appear to be following its typical seasonal slowdown this winter. Home buyers appeared in a rush last week, with economists crediting rising mortgage rates.

Mortgage rates moved to their highest level in more than a year, the Mortgage Bankers Association reports. Buyers who are already facing higher home prices are watching mortgage rates closely as they affect what shoppers can afford.

Mortgage purchase loan applications increased 2% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Purchase applications, however, are 17% lower than the same week a year ago, but real estate pros say that is primarily due to low inventories of homes for sale. They reported to CNBC anecdotally higher-than-normal activity in early January from home shoppers.

The MBA reports that the average contract interest rate for a 30-year fixed-rate mortgage for conforming loan balances rose to 3.52%, up from 3.33% the previous week. That marks the highest contract rate since March 2020.

“Mortgage rates increased significantly across all loan types last week as the Federal Reserve’s signaling of tighter policy ahead pushed U.S. Treasury yields higher,” says Joel Kan, an MBA economist. “The housing market started 2022 on a strong note. Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9%, and VA applications increasing more than 5%.”