Remember last week when Andy said that there were two big, REALLY BIG things happening?….Jerome Powell AND Jobs!

First off, Jerome Powell testified in front of the Senate Banking committee Tuesday March 7th and Wednesday March 8th . He pretty much sounded like he was reading off the same set of notes from the last Fed Press Conference. He said things like – We will have to hold rates higher than initially expected, for longer than expected and sustain them until we see inflation returning to the 2% target…I mean how many months in a row is this going to continue?!?! I get it, they’re not making traction in the ways they need to, and he’s not gonna reveal any new secrets prior to the meeting coming up next week, but man, the repeated canned commentary is just not helping inspire confidence that we’re heading in the right direction.

Second was Labor and Jobs

  • JOLTS continues to be bipolar month after month. North of 11 million one month, then below 11 million the next…then north of 11 million again, and back below 11 million…In my opinion, It’s way too unpredictable to continue as a major variable in Fed policy moving forward. {shrug} But what do I know?….maybe they have a job opening coming up 😉
  • ADP Non-Farm Payroll came in super-hot, well above the forecast and even the previous moniths number. So even though we want there to be more job growth like this is indicating, the Fed wants more UNEMPLOYMENT in order to squash demand so that people will stop spending money at these elevated levels. It’s the ONLY WAY inflation has a chance at returning to their target.
  • Unemployment wes higher/lower than expected. Again, this reading has the Fed’s attention as it relates to the future because of the aforementioned “demand destruction” strategy.
  • average hourly earnings were better/worse than expected but what’s most important is the long term readings COMPARED to inflation. If hourly pay can keep up with the elevated costs, then the problems for the Fed persist as wage earners are able to cope with sustained high prices.

This week, the most important things happening are all coming at us like a firehose. THIS IS the week before the next Big Fed meeting and rate announcement, so this data will all be considered vital leading up to the March 22nd Fed Rate announcement.

Tuesday starts us off with: Month over month CPI, year over year CPI and the Fed favorite – Core CPI

Wednesday we get month over month PPI, month over month CORE PPI,  month over month CORE retail sales, and month over month retail sales…But wait! how could there be more?  The Empire state manufacturing index ALSO comes out, which we thought wasn’t a big deal last month but turned out to be a really bad sign for the markets. Wednesday is a big one.

Thursday we’re watching Building permits and housing starts closely hoping for positive readings in BOTH of those. Unemployment also comes out and has been pretty erratic lately and in contrast to what the Fed wants to see happening.

Finally, Friday we have preliminary consumer sentiment, and preliminary inflation expectations readings. It sure would be nice for both of these to reflect some sort of positivity coming into the week before the fed rate announcement. The markets and the economy at large could use some good news right about now.

So what does all this mean for mortgage rates Brian? You can expect mortgage rates to be flying around all over the place this week. With SO MUCH data coming out AND it being the week before the big fed announcement, you should not expect this week to be smooth sailing.

Weeks like this are where your preparation, communication, and execution all work in your favor. If you have a lock a loan this week, you should stick REAL close to your loan officer and be ready to strike IF and WHEN rates take a midday nosedive.

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 Mortgage Heroes Podcast Episode 10 – Equity declines $2.3 Trillion after reaching all time high

A recent report estimated the national residential home equity total was $47.7 trillion in June 2022, but but the end of 2022 that total declined to $45.3 trillion. There’s no reason to freak out though! In this episode we talk about what’s going on, why this is happening, and what people should do!

Monday Mortgage Minute – Jerome Powell & Jobs take the stage this week

As I mentioned, last week was going to be a bit light, yet there are still a few things we need to keep aware of:

Monday February 27th Pending Home Sales had a pretty low forecast of 0.9%, but came in REALLY hot at 8.1%. This is a great print on the surface, and we’re going to want to see more of this month after month in order to generate confidence that there is a trajectory change in this report through the rest of the year. And remember, this is just 1 great reading…we’ll need to string these together for a while to really make our confidence concrete.

Tuesday February 28th consumer confidence came out well below what was expected. It was 102.9, and anything over 100 is considered good. In this case the expectation was 108.5, so a 102 print isn’t that great, but not all hope is lost…quite yet.

Wednesday March 1st the ISM Manufacturing PMI came in just about as expected and made very little difference in the markets this week only because it was already struggling to begin with, and the continued struggle isn’t BREAKING NEWS. I would expect that this will gain more weight overall once this figure heads north of 50 once again, which is a sign of expansion and anything below 50 is a signal of contraction.

Thursday March 2nd unemployment was pretty much the same as the previous week, pretty low, and a non-issue EXCEPT FOR THE FACT THAT THE FED NEEDS TO SEE MORE UNEMPLOYMENT AND IT’S NOT HAPPENING!!! They’re totally going to raise rates again, especially because the labor market isn’t softening like they need it to.

Friday March 3rd the ISM Services PMI came out pretty quietly and it’s not SO VOLATILE that people are talking about it. Among all the other major headliners when it comes to the economy right now, this one is a lightweight until it becomes a REAL PROBLEM. That day could still come, but for now it may have found some footing.

This week is a BIG DEAL for a few key reasons.

#1 Jerome Powell will be testifying before the senate banking committee Tuesday March 7th and Wednesday March 8th. EVERYONE CONNECTED TO THE MARKETS AND FINANCE WILL BE LISTENING TO WHAT HE SAYS AS WE NEAR THE NEXT FED MEETING THIS MONTH. The markets will be volatile and most likely experience wild swings as tuned in ears are jockey-ing for position on what it could all mean moving forward.

If you’re listening to anything that could be a cue for what the next fed meeting will be like, listen for Jerome to say things about prices becoming “entrenched” and that their upwards trajectory for rates to sustain until they are confident their work is done. If you hear those 2 things or anything that remotely sounds like those 2 things…that confirms they’re worried inflation is here to stay.

#2 Labor and Jobs are in the spotlight Big Time! We have JOLTS, ADP Non-Farm Payroll, unemployment, and average hourly earnings all on deck to give us a very well-rounded look at how the labor markets are performing, where there are more pain points lifting up their heads, and possibly what the next shoe to drop will be.

This week is going to be a really good week for gauging the economic horizon.

So what does all this mean for mortgage rates?

Well everything I just mentioned coming up this week is going to impact mortgage rates as money moves INTO or OUT OF the mortgage backed security market. As we’ve been teaching you the more money that comes in, the lower the rates will go and the more money that leaves the market creates scarcity which causes rates to increase.

With the next fed meeting only a few weeks away, this is the week that could have the most volatile reaction between now and the next fed rate announcement. Expect rates to go up or down by as much as 0.25% or 0.3875% of a percent on any given day. Anything LESS volatile than that on a week like this will be very welcomed.

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 Mortgage Heroes Podcast Episode 9 – The Big Headlines Developing in 2023

It’s hard to believe we’re already 2 months into the new year. There’s already been a LOT of chatter about mortgage and real estate, but we have A LOT OF YEAR LEFT TO GO. This week we talk about the topics most likely to be atop the conversation!

Monday Mortgage Minute – Not ALL Fed Members Support More Rate Hikes

As I mentioned, last week was packed with economic data

Tuesday, we got Flash PMI which came out a bit better than expected, which was nice to see.

Wednesday Fed Meeting Minutes came out – which is what I was really waiting for – and most of the attention was put on an interesting statement in the notes. The statement wat that “almost all fed members supported the rate hike”….ALMOST ALL…NOT definitively all.

That might sound like I’m splitting hairs, but when it comes to public releases like this…the word selection matters and is purposeful. So when things like this come out we can look at that piece and establish that someone, or “someones,” are starting to feel that the end could be near. However, there’s a problem. The problem is that all the data the Fed references as justification for their decisions is contradicting the idea that their rate hikes are over.

The markets seemed to have looked past the notes and are wagering that there will be another hike in March cause we’re no where near the fed desired inflation target and in their own words the labor market “remained very tight, contributing to continuing upward pressures on wages and prices.” Also know as the wage price spiral, Prices go up and cause wages to go up while wages going up cause prices to go up.

Thursday, we got Preliminary GDP reading that came in lower than expected, which does make us wonder where the easing is coming from, because the prior reading had a heavy dose of government spending packed into it. So are we to assume the same for this most recent reading that’s lower?…if that IS the case…then slowing in both the PUBLIC sector and PRIVATE sectors is slowing as it should be.

We got unemployment on Thursday which was better than expected putting more pressure on the Fed. They will need to cause more pain in the labor market to force less spending in the economy to stand a chance at returning to 2% inflation.

Friday, we get Core PCE which was another Whammy to the Fed. It was expected to come in at 0.4% and came in at 0.6%. Now that seems like a small difference; but it’s not… 0.6 is 0.2 higher than 0.4….but 0.2 is HALF of 0.4 which means that a 0.6% print is a 50% higher reading than was projected – AND REMEMBER this is still a positive number with A + sign in front of it….meaning that we’re still overall experiencing higher prices compared to the previous reading.

This week is pretty slow actually.

Monday will bring us Pending Home Sales with a pretty low forecast, kind of par for the course right now when it comes to readings related to mortgage and real estate. On this show AND the podcast, we’ve been talking about inventory shortages which are helping keep home process relatively high still and with mortgage rates still elevated too pending home sales have really become a trouble spot.

Tuesday we’ll get consumer confidence which is going to be really interesting cause sometimes the data we talk about contradicts the elevated optimism among consumers which can distort or even cover up some innerworkings of the overall economy. We’ll see how “Confident” the consumer really is.

Wednesday, we get ISM Manufacturing PMI which has been in contraction for months and we’re expecting that to still be the case this week.

Thursday unemployment will roll out and Friday the ISM Services PMI comes out, which had a surprising optimistic reading last month so it’s up for grabs this week whether it will be more good news OR swing back into the bad news category.

So what does all this mean for mortgage rates?

Mortgage rates have come under heavy pressure recently with the data supporting the assumption that the Fed will have to continue raising rates until they achieve optimal pain in their plan. Until then there is no reason for the market to assume that we will see rates returning back to historic lows or even going in that direction for long periods of time. It is certainly clear that the mortgage market is going to continue struggling without the Feds involvement in buying mortgage-backed securities. As that is the case it puts additional pressure on mortgage-backed security investors to hold the line and build a tough stomach over the course of these upcoming months of fed rate hikes and policy changes. Rates will ebb and flow in response to money coming into the mortgage-backed security market or money coming out of the mortgage backed security market.

As we have been teaching you, the more money that comes in, the lower the rates will go and vice versa money that leaves the market creates more scarcity which causes rates to increase.

We are also at the point in the cycle where we’re getting closer and closer to the next Fed meeting and everyone’s antennae are up looking and listening for any cues that could signal change that impacts the rate market directly.

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 Mortgage Heroes Podcast Episode 8 – The Seamless Loan Experience

This week Ximena Munoz, our amazing Loan Processor, joins the show to discuss what it takes to have a seamless loan experience. Memo, Brian, and Ximena share practical steps and best practices you can put in place to give yourself the best chance at a smooth closing!

Monday Mortgage Minute – Everything is working against The Fed

As I mentioned, last week was packed with economic data

MoM CPI, YoY CPI, CORE CPI all came at or higher than expected which is a clear sign that we are still NOT where the Fed wants to be.

Retail sales and Core Retail Sales BOTH came in higher than expected, which seems great on the surface, but is also evidence that on paper the consumer seems able to keep up with these elevated prices…remember that when I come back to “entrenched” inflation.

The Empire State Manufacturing Index was still negative as expected – not a good sign!

PPI and Core PPI BOTH came in higher than expected, which is all but the proverbial nail in the coffin for any argument of a “Fed PIVOT”…I wish people on TV never started talking about that…it’s NOT A THING! And last week is all the explanation you need for why this was a silly concept to go out there trying to sell the audiences on

Unemployment came in lower than expect – again, opposite of what the Fed Needs to happen!!!

building permits and housing starts came in just a sliver short of their projected numbers, but this one is really telling about the future of home prices this year.

If we consider the weight of the economic information, I just shared we can start to clearly see that rates are going to remain elevated in housing through the rest of this year. I mean we’re already 11 months past the initial interest rate hikes in March 2022, and we’re STILL NOT SEEING the necessary impacts the Fed wants…so it’s reasonable to expect that fed rate hikes this month, next month, and likely in May will also take just as long to see their way through the markets.

So expect slight dips in prices as sellers make concessions so they can move onto the next thing they have in their life, And expect rates to stay between the high 5s and high 6s depending on the loan program you are in and the qualifications you bring to the table. At this point there’s just no other way to slice it.

Now this week is very mild comparatively.

Monday is a bank holiday (President’s Day) the markets are also closed.

Tuesday we get Flash PMI – which could be interesting certainly not as important as all the data we just reviewed.

Wednesday Fed Meeting Minutes – This is what I’m really looking out for because it will indicate and new change of tone and give us insight to their meeting minutes and sentiment about how they came to those conclusions and any forward guidance that might show us what is coming up ahead in March and into the summer.

Thursday we get Preliminary GDP reading, that we’re hoping will match up with the most recent announcement, but some of you might remember that topline came in at 2.9%, but if wee strip out government spending and inventory replenishment…it was actually 0.2%….so this reading we’ll be looking for any notable changes that indicate a more realistic reading of the overall health of the economy.

We also get unemployment on Thursday as well….

Friday we get Core PCE. We’re hoping for 0.3% target, but anything below that would be a VERY WELCOME reading so that we can get a sense that the Fed’s efforts might actually be driving this number down. BUT don’t get your hopes up cause you just heard what I said about CPI and PPI right?  Right?

Remember with Core PCE, ZERO would mean no increase in costs, and a negative number would mean costs are reversing and going back down. So 0.3% projection isn’t too hot, and ANYTHING, literally ANYTHING lower than that will be a very welcome sign!

So what’s all this mean for mortgage rates?

Mortgage rates going to head sideways this week. And every week that we get closer and closer to the next Fed meeting, the more and more that anticipation will impact market rates. In the meantime, we can expect that normal fluctuations and day by day changes in rates will continue.

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 Mortgage Heroes Podcast Episode 7 – What will make rates decrease?

What do spending money, market liquidity, and inventory have to do with rates decreasing? In this packed episode we talk about it, in addition to:

  • Important things that have changed since the Fed meeting on February 1
  • Why we can’t use seasonal employment when qualifying loan applicants
  • How the mortgage market must to become more creative in generating solutions for homebuyers and homeowners.

Monday Mortgage Minute – Most important week of 2023!?!

Last week Jerome Powell spoke at the economic club of Washington D.C. – and as was expected, no big deal no new news. Same went for Fed Member John Williams when he was interviewed at the Wall Street Journal’s CFO Network Summit. More of the same, but that’s cause for concern because the Fed is all but admitting that they’re not done yet.

The real surprise last week was on Friday when the Preliminary Consumer Sentiment came in higher than expected and has been increasing through the months that we believed were going to be the most challenging, November, December and January.

All markets were pretty choppy last week. Nothing really rattled the cages of the hands that hold the money, but for those who were paying attention, we DID HAVE 3 straight days of household name layoff announcements: Zoom is cutting 1300 jobs, Disney 7000 jobs, and Yahoo 1600 jobs by end of year which for Yahoo is 20% of their workforce. Take a step back from that and think about what is going on at these companies’ accounting departments that they have to lay off these proportionately big numbers of workers. That’s a lot of spending to cut. And, there will be a lot more of this, it’s just getting momentum.

Now brace up, this week has a LOT of important data coming out:

Tuesday is all about CPI. We get Month over month CPI, Year over Year CPI, and Core CPI all coming out at the same time. This is going to have a LOT of eyeballs on it because this reading weighs heavily into market sentiment and the mix of how the Fed comes to their hike conclusions. With the March 22 meeting still off in the distance, you can bet that THIS DATA will be key to helping them determine what they should do next.

Wednesday we get Retail sales and Core Retail Sales report. These are both interesting to me because of what Jerome Powell said at the last press conference. They’re seeing dis-inflationary pressure in certain segments of the economy, but the longer inflation persists the more concerned they are that inflation will become entrenched….soooooo retail sales and core retail sales are a really good indication of whether or not we as consumers are still spending nonchalantly, or if price pressures are finally starting to weigh us down.

And also Wednesday we get the Empire State Manufacturing Index. Remember last month when we got surprised with the extremely terrible reading of -32.9?!? It was projected to be -8 which is bad in its own right, because anything below ZERO signals worsening conditions….so -32.9 was a super bad indicator that got everyone’s attention. This week I’m looking to see if it’s any better than -32.9, but my money’s on it still being negative by a healthy margin.

Thursday we get PPI and Core PPI which I will zero in on as leading indicators of what future costs are going to make their way to the consumers, which the CPI report from 2 days prior is evidence of. So just like CPI, these readings of PPI will be critical for the Fed to digest in the upcoming weeks prior to the next rate decision on March 22. But wait there’s more!

We will also get Unemployment, building permits and housing starts. I’m really really interested in building permits and housing starts. We are in desperate need of more inventory, and there’s a lot of chatter going around that builders and developers can sandbag the markets and keep prices high by building slower so that the markets don’t get oversaturated with supply which drives down prices, but at the same time literally everything connected to building these days is more expensive and is more entrenched (not transitory)…honestly, what are they to do!?!?! It’s a real problem and its consequences are being felt in the real estate and mortgage markets. Just look at how many ADU’s are going up, garage conversions are underway, and attachments are being added on to homes right now…THAT’s all evidence that we need more space for people and MORE residential construction can’t come soon enough!

Each of elements I just reviewed is important in their own right, but to have ALL OF THIS TOGETHER IN ONE WEEK is honestly a TON of insight into the overall health of our economy. Expect a lot of jostling around in the financial markets, and rates will likely get knocked around day by day since there are so many heavyweights stepping to the plate throughout the whole week. This one is gonna be entertaining.

So what’s all this mean for mortgage rates?

In general mortgage rates are trending sideways. Certain market activities are going to make money come INTO and OUT OF the mortgage markets, which BOTH impact rates going up or down. And what we’re starting to see a lot more of is companies coming up with alternative methods for properties to change hands more readily: like assumable loan solutions, loan servicers are creating new ways to help struggling home owners figure out re-payment methods that are accommodating so they don’t have to take a home back through foreclosure, and even lenders are working to close the gap between current market products and more appetizing solutions to encourage buyer appetite.

Like I said last week, Days on Market are going up, listings are having to compete with one another to vie for buyers interest and offers. Sellers are issuing concessions in a variety of ways like covering  closings costs, 2-1 buy downs, and other benefits for a buyer choosing their home.

There’s a LOT less buyer competition in this market, and if inventory holds steady, there will be slim pickings, but also less fighting over homes.

Lastly, if you find yourself in a tough spot and you already own a home, reach out to us before the situation is un-fixable. There’s a lot we can do BEFORE financial hardship completely takes root, so if you are privately in that situation and need someone to talk to, reach out to your loan officer, send us a DM, text or email us so we can help you out.

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 Mortgage Heroes Podcast Episode 6 – What the Fed just said!

Jerome Powell and the Fed just raised the Fed Funds rate again, this time by 0.25% as expected. But more important than that was what Jerome had to say about it. In this episode we break down some of the repeated comments along with some new ones as we call out double speak and what lies ahead!