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Red-Hot Housing Market Fuels Mortgage Borrowing Record

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Americans borrowed more than ever to buy homes in 2021.

Mortgage lenders issued $1.61 trillion in purchase loans in 2021, according to estimates by the Mortgage Bankers Association. That is up slightly from $1.48 trillion in 2020 and above the previous record of $1.51 trillion in 2005.

The mortgage boom reflects a thriving housing market and the corresponding run-up in prices over the past year. Many of the forces that pushed Americans into the housing market in the early months of the pandemic—low interest rates and a desire for bigger homes—continue to drive up prices and mortgage balances. What’s more, many Americans got raises and built up savings during the pandemic, giving them the means to buy.

“All of that extra income goes somewhere, and a lot of it went into housing,” said Taylor Marr, deputy chief economist at Redfin Corp., a real-estate brokerage.

The rate of home-price growth has slowed in recent months but remains near record levels. Home prices rose 19.1% in the year that ended in October. Sales of existing homes in 2021 were expected to reach their highest level since 2006.

A strong labor market and pay increases across a range of industries have spurred some potential home buyers to hit the housing market. Wages for all private-sector workers grew 4.6% year over year in the third quarter, according to the Bureau of Labor Statistics.

The U.S. mortgage market involves some key players that play important roles in the process. Here’s what investors should understand and what risks they take when investing in the industry. WSJ’s Telis Demos explains. Photo: Getty Images/Martin Barraud

“Buying a home is really a statement of confidence in your job situation, your financial situation, your family situation,” said

Mike Fratantoni,

chief economist at the MBA.

Neel Kumar started looking for a home this summer after accepting a new job with a substantial salary increase. He found one in a community of homes under construction about 30 miles outside his hometown of Austin, Texas. Without the raise, Mr. Kumar said he wouldn’t have been able to afford payments on the $405,000 home.

Younger buyers like Mr. Kumar, 27, have helped supercharge the housing market in recent years. Millennials, who were born in the early-1980s to mid-90s, submitted 67% of all first-time mortgage applications in the first eight months of 2021, according to CoreLogic.

Mr. Kumar got the keys to his home in late December.

“It was a pretty crazy feeling,” he said. “Like, holy crap, this is actually happening.”

The growth in purchase mortgages partly offset a decline in refinances, which fell to an estimated $2.3 trillion in 2021 from $2.6 trillion a year earlier. Total originations fell to an estimated $3.9 trillion from their 2020 record of $4.1 trillion.

Rising mortgage rates have slowed the wave of refinances that drove the boom in mortgage lending since the spring of 2020. When rates go up, fewer homeowners can lower their monthly payments by refinancing. The Federal Reserve is expected to raise rates three times in 2022, which would push up mortgage rates even more.

About 59% of the $3.9 trillion in mortgages issued in 2021 were refinances, down from 64% in 2020. The refinance share is expected to fall to 27% by 2023, and volume is expected to fall by about 63% in 2022.

Economists don’t expect rate increases to turn off potential home buyers. The average rate on a 30-year fixed mortgage is still hovering around 3%, low by historical standards.

Still, the surge in home prices outweighed rising incomes and low interest rates to push homeownership out of reach for many Americans.

Mortgages are less affordable relative to income than at any time since 2008, according to the Federal Reserve Bank of Atlanta. In early 2021, Americans needed about 29% of their income to cover a mortgage payment on a median-priced home, the Atlanta Fed estimated. That rose to 33% by October.

Write to Orla McCaffrey at orla.mccaffrey@wsj.com

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Teladoc Tumbled 38% After Big First-Quarter Loss. Is It Just a Pandemic Play?

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After pandemic drop, Canada’s detention of immigrants rises again By Reuters

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© Reuters. FILE PHOTO: Two closed Canadian border checkpoints are seen after it was announced that the border would close to “non-essential traffic” to combat the spread of novel coronavirus disease (COVID-19) at the U.S.-Canada border crossing at the Thousand Isla

By Anna Mehler Paperny

TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.

Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.

Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.

The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.

A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.

A lawyer told Reuters her detained clients have been in Canada for years.

In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.

The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.

Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.

The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.

FEW NO-SHOWS AS DETENTIONS DROPPED

Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.

The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.

No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.

Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.

“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.

He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.

Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.

“Their position is that COVID is not a factor that should weigh in favor of release,” she said.

“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”

The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.

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Nasdaq futures rise as market attempts comeback from April sell-off, Meta shares soar

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Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.

Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.

The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.

“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”

The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.

In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.

Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.

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