Monday Mortgage Minute – The Fed is up to bat


How are we already at the end of the month? January is already gone and vanished…and what a month it’s been.

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Remember last week when I said it’s blackout week?…The week BEFORE the fed’s rate decision and press conference?…it’s SUPPOSED to be calm and quiet. It kinda was, but kinda wasn’t. Let me explain.

The Advanced reading on the GDP came out at 2.9% which was better than expected but this is not as good as the headline might suggest. It was largely driven by increases in inventory investments, consumer spending, government spending, and business investments that were partly offset by decreases in housing investment and exports. Real Final Sales to Private Domestic purchases – which strips our things like trade and inventories – generates a far worse number of just 0.2% in Q4…which is the lowest print since the *Cough Cough “crash” in Spring of 2020.

Think about that for a second, we’re going to cling on to a 2.9% print, but in realistically the expansion of the economy was more like the paltry 0.2%. We could go as far as to say that this might be helping the Fed achieve their goals, since a slowing economy leads to a softer labor market…and what did we see last week?…more tech layoffs! Google, Amazon were the big 2, but that’s on top of other cracks starting to reveal themselves, like Bed Bath & beyond missing credit payments AFTER having warned they would be closing over 100 stores last year.

So take a step back real quick…realize that THIS is what we’ve been talking about here for months. This was expected. This is what they need to happen in order to combat inflation. The next few months will serve as confirmation that what was evidence and projection just a few short months ago, is the reality we’re facing this year as the Fed might actually accomplish their goals, but at the expense of some breakage along the way.

Want to know why I’m so confident in this? Core PCE Personal Consumption expenditure. At the end of last week we got confirmation that the December year over year reading was lower than the November year over year reading. NOW THIS IS REALLY IMPORTANT INFORMATION TO THE FED AND YOU SHOULD EXPECT JEROME POWELL TO MENTION THIS SPECIFICLALY IN HIS PRESS CONFERENCE ON WEEDNESDAY. With that, Let’s quickly review what to expect this week.


Really everything this week is about the Fed. So if you wanna know what’s happening and what could be around the corner, take note of what is said, and NOT said on the Wednesday Press Conference. It really is all about The Fed, The Fed, The Fed. Expect Jerome Powell to remain pretty clear. They are focused on price stability, A softer jobs market, 2% inflation target. Other bullet points that will catapult us forward into the next round of their decisions will be the following;

Wednesday – ADP and JOLTS Both come out before the Fed Announcement and Press Conference. You can be sure they will already have this information in hand before we, the public, does

Thursday – Unemployment Claims

Friday – Average hourly earnings, Non farm employment, Unemployment rate and ISM Services PMI


So what’s all this mean for mortgage rates?

This will be a big week for the mortgage market. However, I want to caution you that we’re not completely out of the woods yet. This first quarter of 2023 is really going to set the pace for where rates go through the rest of the year. The more time passes the more we see the direct and indirect impacts of fed policy, so look for silver linings among the mess, but make the right decision that suits the needs of YOU and your FAMILY.

Look, the Fed, the Economy, the Government will always be in the mix of what you do and don’t do when it comes to your mortgage and real estate choices. Ultimately, find a place you love, and neighborhood that fits your needs, and payment that fits your budget. I mean, even if you’re renting right now, you’re likely paying the mortgage of that landlord…so you’re technically making a mortgage payment and only calling it “rent”. So to make that next right step in mortgage and real estate in 2023, it’s imperative you get started now.

Days on Market are going up, listings are having to compete with one another to vy for buyers interest and offers. Sellers are issuing concessions in a variety of ways like closings costs, 2-1 buy down, and other benefits for choosing their home. There’s a LOT less buyer competition in this market, and if inventory holds steady, there will be slim pickins, 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.


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