Well that was close… The debt ceiling problem has finally been resolved. Now, everyone will not be happy about the way it ended or what concessions had to be make in order to make it work, but that’s a different video. Today we have to go into this week acknowledging that its passed means which means low to no interruption between the mortgage and real estate industries and the government agencies we interact with during the process of buying and refinancing homes. Thank goodness.

…

So what does that mean for mortgage rates Andy?

Mortgage rates had been headed up last week due to the numerous setbacks in the debt ceiling negotiations. Also, there has been a return in buyer appetite and the mortgage market seems to have found a sweet spot. There are people willing to still buy homes at today’s rates because they would rather be IN the market than OUT of the market. The tight sideways range of rates we’d seen just trended upwards last week and might create a new pricing zone for the type of interest rates we will see ahead.

The markets will now turn their focus on fed member sentiment and how likely The Fed is to pause at their next meeting in June, or surprise the markets with another rate hike due to inflations slowing pace not being slow enough.

…

Here’s a quick look at what we’re watching in the markets this week:

Monday, today. It is Memorial Day, banks and financial markets are closed.

Tuesday: We get Consumer confidence reading.

Wednesday: JOLTS and several Fed members are speaking

Thursday: ADP non farm payroll & ISM manufacturing PMI come out

Friday: Average Hourly earnings, non-farm employment change, and Unemployment rate hit us.

And above all, we just need to know what this debt ceiling resolution looks like so we can make any adjustments

And that’s it for this episode. Let us know how we can help you win in mortgage and real estate!

…

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

Last week was mostly a dud when it came to news except a few surprises. #1 National Home Builder Sentiment and #2 Core retail sales and retail sales

First National Home builder sentiment came in at 50 which marks it’s fifth month in a row of increase. Yup it’s been on the rise for the past 5 months. On one hand this is great news as this reading of 50 is back to Neutral on a scale of 0 – 100. On the other hand…it’s still 50 and spent way too long in the trenches of the 30s and 40s while mortgage rates got clobbered in the fall and end of 2023. Builders are finally seeing that demand has returned as buyers and real estate professionals have all come to the conclusion in lock step, that the state of the market is the state of the market, and if you want to get in a home still…you better get out there and start looking! The only thing that could make this EVEN better is for next months reading to be above 50, even if it’s just by a little bit.

As for Core retail sales and retail sales – they are starting to show cracks as the US consumer pulls back on spending in a lot of categories that economists and analysts watch. This is also happening across ALL economic levels, yes, even among the upper income earning households, spending is being curbed.

This is interesting because the Buyer resurgence in mortgage applications, open escrows of existing home sales, and new builds, suggests there is fuel in the tank when it comes to the appetite for homes. And that makes sense because we make conditional exceptions for basic human needs like food clothing and shelter. The real story here will be discretionary spending across industry and economic status. That’s really the ember people have their eyes on as it’s typically a leading indicator of overall economic trajectory when the sense of headwinds become more palpable.

…

So what does that mean for mortgage rates Andy?

Mortgage rates will continue to march sideways like they have for weeks. It’s become customary for rates to move up and down in a tight 0.25% price range when there’s no major macro direction to attach to. Expect that to be the same this week. We are also tipping into the window where all eyes and ears begin to turn towards the upcoming fed meeting Wednesday June 14^th. The markets are all grasping for any hints it can latch onto prior to the rate release and press conference. You will also begin seeing more predictions on whether there will be an additional rate hike, rate pause, change of tone, and descriptions of how the fed members are feeling about their policies.

…

Here’s a quick look at what we’re watching in the markets this week:

Tuesday: We get Flash Manufacturing PMI and Services PMI & New Home Sales

Wednesday: Federal Reserve meeting minutes will come out (there should be NO surprises here, but if there are…watch out!)

Thursday: We get Preliminary GDP – which has been a crap shoot as of late and also unemployment comes out. There is a bit of controversy around this little GDP topic because there’s a mostly unknown trend of reporting GREAT numbers on the day they’re supposed to be released and then quietly issuing the revisions afterwards when almost no one’s looking….oh, and the revisions are terrible by the way, they’ve been way worse than initially reported, but don’t get made at me for reading numbers on a report, they’re the ones fudging the figures.

Friday: Core PCE (The feds favorite measurement of inflation), Personal income and personal spending…all of which kind of mix together and paint a picture of how the consumer is doing when it comes to income vs. spending. If anything has a chance at stirring up optimism or dashing peoples hopes this week, Friday will be the day.

And that’s it for this episode. Let us know how we can help you win in mortgage and real estate!

…

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

The best news last week came on Wednesday when the DTI Loan Level Price Adjustments, or LLPAs were rescinded! The FHFA had a rule in place that was due to start August 1st 2023 that would issue loan level price adjustments an all loans delivered to Fannie Mae and Freddie Mac with debt to income ratios higher than 40%, which let’s be honest is the majority of conventional loans submitted these days. This DTI LLPA was actually supposed to be released earlier in the year, but was delayed due to severe industry and political pushback once it was announced months ago.

Put this into context, this would have come at the heels of the May 1^st credit score loan level price adjustments that just went into place. It is possible that the credit score LLPAs could suffer the same fate? Absolutely. Why is that? This credit score loan level price adjustment is equally as unpopular at the DTI LLPA that just got rescinded (if not more so). Additionally, there is still some doubt that it was brought to the market in the appropriate manner in order to be made a rule, but that will have to be left to the lawyers. We’re watching this story develop in the event that it might get rescinded as well even though it would have to be done retroactively.

Also last week the year-over-year CPI (consumer price index) came in at 4.9% just below the projected rate of 5%. The month over month CORE CPI came in at 0.4% just over forecasted 0.3%. IN summary, the short-term reading came in just a tad higher and the long-term reading came in a tad lower. Does this mean that inflation has finally met its match? or does this mean that there is still more room for the Fed to increase their key interest rate at the next meeting and then take yet another pause?  If we look back at the last Federal Reserve press conference on May 3rd, Jerome Powell said their future decisions would be “data dependent,” and these two measurements right here are two of the measurements they will be depending on for sure.

…

So what does that mean for mortgage rates Andy?

Mortgage rates this week trended sideways as we have been telling you they would during times of uncertainty and lack of definitive direction in rates. The highs and lows this week in rates were very close together and there were no volatile swings to the high end or the low end on any day of the trading week and it should be no different this coming week.

In the local marketplace we have seen the resurgence of buyer interest, buyers outbidding one another, sellers pulling back their concessions – and we even had a client this week whose offer was accepted over 30 other buyers. Which means there are still 29 remaining buyers just in this one instance out looking for homes. This kind of demand is always contingent on the price of the home, neighborhood, amenities, etc. however, the point here is that the buyer leverage that we saw at the end of 2022 and beginning of 2023 is all but gone and the market sentiment has flipped back to sellers having the upper hand. We’re staring to see deals come together where sellers do not have to offer concessions in order to sweeten the deal for potential buyers, and now buyers are back to resetting their expectations on how to get their offer accepted above all others.

…

Here’s a quick look at what we’re watching in the markets this week:

Monday: Empire state manufacturing index

Tuesday: Core retail sales / retail sales

Wednesday: Building permits and Housing starts

Thursday: Unemployment claims

Friday: Fed Chair Jerome Powell Speaks

We should also note that the remaining fed members are speaking throughout the week at various events, and it should mostly be the same prepared commentary and remarks about the economy and banking stability that we’ve been hearing as of late.

Since there are no policy decisions expected or earth shattering, it could actually be a calm week.

And that’s it for this episode. Let us know how we can help you win in mortgage and real estate!

…

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!

Last weeks Fed rate hike decision and press conference was mostly what we were expecting. Jerome Powell and the Federal Reserve increased their key interest rate by 1/4 percent which takes their new target range to 5.00% to 5.25%, which is in line with exactly what they said their average terminal rate of 5.1% would be in 2023…this essentially gets us there.

After issuing their decision and prepared statements Jerome Powell took several questions from reporters. A few instances he was talking out of both sides of his mouth saying that he believes there is still the possibility of a soft landing, while at the same time stating that the risk of inflation continuing at the same time unemployment rising is still a threat to the plan. The problem with answering one question a certain way to a reporter, and then answering that same question a different way with another reporter just a few minutes later causes confusion, and uncertainty which leaves us all feeling a little bit directionless. And that’s exactly the main takeaway from last week’s Federal Reserve press conference: I think they’re directionless.

You can’t come out and say the banking system is “strong and resilient” 2 days after another massive bank failure (First Republic Bank), then admit you had to make exceptions of current rules in place in order for JP Morgan Chase to acquire them. And it all happened over the weekend, so that on the reopening of business on the following Monday, depositers could access their accounts. (Noticing a pattern here?). Oh, and also, “Strong and resilient” isn’t how I would describe the system that the FDIC, the Fed, and the Treasury have all had to step in an assist, change rules for, and make back room deals with, in the face of imminent failure of really large banks. But sure keep telling the public “Strong and resilient” …sounds to me like this term will be the new “transitory”…where’d that theory go?…

At least they admitted that they have seen substantial slowing in the business and personal credit sectors, including real estate. This brings into question what will happen at the next meeting, and the meeting after that? The industry at large is left to sift through any clues and hints of what might be next day by day, and week by week, until there is a defined direction set forth by the markets as a result of fed policy making.

…

So what does that mean for mortgage rates Andy?

The Fed being directionless, means that the mortgage industry could probably become directionless for the duration of 2023. Will we see more strict lending, or an ease in lending? Will the Fed’s next meeting help or hurt the rate markets? Outside of an actual need to move, where will more listing inventory come from? Can we avoid mass foreclosures since homeowners can sell their house and access their equity if they are in personal financial duress? Doesn’t the resurgence of homebuying that we’re regionally seeing indicate that the price correction has run it’s course? There’s a lot of questions up in the air right now. Yes, these are always questions that we ask ourselves in mortgage and real estate; However, when there is so much broad uncertainty at the macro level these types of things become much more localized and hypersensitive in the micro markets of major cities, and San Diego is no exception.

And what about interest rates? You already know they’ve left us to our own devices since they stopped purchasing billions of dollars of mortgage backed securities that were keeping rates at historic lows for a very long time. Since they backed off their buying program, you all have seen rates, they rose and rose and rose, then stopped, came down from their most recent highs in the summer and fall of 2022, but have mostly sputtered around in 2023. And that’s what we should expect between now and the Next Fed meeting in June. Rates will continue to react positively or negatively within a tight range while we remain generally “directionless” economically. Just last week alone, rates declined Tuesday the day before the Fed meeting, declined Wednesday the day of the Fed meeting, wrestled around sorta stuck in place on Thursday, and BACK up again on Friday to where the whole week began. Which essentially leaves us exactly where we started off – AND ON A FED RATE DECISION WEEK. As a little dose of extra nerdiness, this week’s 10y yield (which mortgage rates closely follow) traded in the EXACT same price range as it did the week of the PREVIOUS Fed Meeting back on March 22. Interesting…)

…

If you are looking for any hints in the marketplace this week keep your eye on CPI that comes out on Wednesday and PPI that comes out on Thursday. Both readings will give us a sense of the most recent month over month and year over year inflation readings and it’s expected that they come in at or below their forecasted numbers. There is no big surprise if they do, but given how big last week was due to the Fed meeting, this week will be light on impactful news, at least for now. That being said we always keep our eyes on the markets and watch for anything unexpected that could cause disruption. Right now it’s BOTH eyes open…ALL THE TIME!

 

…

Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!