Monday Mortgage Minute – FINALLY something went right!
The best news last week came on Wednesday when the DTI Loan Level Price Adjustments, or LLPAs were rescinded!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 1st 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 This credit score loan level price adjustment is equally as unpopular at the DTI LLPA that just got rescinded (if not more so).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 We’re watching this story develop in the event that it might get rescinded as well even though it would have to be done retroactively.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.
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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.
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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!
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