Mortgage Rates Continue to get Better Heading into the Holidays

It’s a short week this week but did you see that mortgage rates we’re down again last week? Yeah hard to believe but mortgage rates were trending down for their third straight week and the timeliness of this being Thanksgiving week definitely gives us something to be thankful for. Although we can’t claim that we are heading toward the fives or even the low sixes yet, this dramatic change in market sentiment is very much welcomed and has created a lot of new mortgage demand during a time of year where things are traditionally cooling off. And remember how I’ve been telling you about the 10 year yield? Well, typically the gap between the 10 year treasury yield and the 30 year fixed rate is around 1.8% difference but the current 30 year mortgage rate is approximately 2.8% higher than the bond yield which some are arguing means there could be room for further declines. Whether that happens will be will remain to be seen but at least for this week coming into Thanksgiving we are definitely grateful to be able to help more people than we were just a few weeks ago.

And turning our focus to the National Association of Realtors, their chief economist Lawrence Yun forecasted that existing home sales will rise by 15% in 2024. He also believes that mortgage rates will stay between 6% and 7% by spring of 2024 and expects more sellers to enter the market as they adapt to prolonged higher rates. Additionally, he mentioned that he expects home builders to ramp up new construction as a reaction to housing inventory being the tightest it has been in decades. All of this leads us to believe that home prices are going to stay stable or maybe even increase in 2024. As crazy as that might sound with so much pent up demand still ready to enter the market and mortgage rates coming off of their highs, if supply shows up you can bet your bottom dollar that those houses are going to get swept up very quickly.

The future of real estate commissions is definitely up in the air. The fallout of the Sitzer Burnett Commission lawsuit is dominating the talking points in the mortgage and real estate industry, and will eventually lead to material change in the transactions of buyers and sellers. Although the appeal will not be heard until spring of 2024 there are a wide range of opinions right now that are shaping what the outcome could eventually look like. The majority of Realtors surveyed are very unhappy that they’re industry is being compared to non sales professions such as accountants, lawyers and other pay by the hour industries. The irony here is that the massive case was won by plaintiff representation that supposedly will have a 30% payout of the $1.8 billion settlement. So the question I’m asking is how mad are the sellers in this class action lawsuit that so much money is going to the attorneys? I mean 30% sure is a heck of a lot more than 6% now isn’t it? They’re whole argument was that realtors Fix prices….watchout lawyers there’s a growing group of people starting to think that the going rate of 30% is feeling oddly fixed….

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So with that, let’s take a quick look at what’s coming up in the markets this week. It’s a short week in the markets, but there’s some really important things happening.

Tuesday:  Existing Home Sales & the FOMC Meeting Minutes are released. Even though this is a holiday week and a short week in the markets…THIS ONE is gonna really tell the story about the Fed’s chatter regarding inflation, employment, and interest rates moving forward. Like always…lets see how close their public comments 3 weeks ago match their notes that come out this week.

Wednesday: Unemployment claims, Revised Consumer sentiment and revised inflation expectations come out. Let’s see how the sentiment correlates to unemployment coming into the shopping season. Remember this data is lagging, but will maybe clue us in on what to expect this Black Friday and into December.

Thursday: is a Bank Holiday – Happy Thanksgiving everyone!!!

Friday: Flash manufacturing PMI & Flash Services PMI come out.

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