Mortgage rates got better (sort of) and The Fed is “not confident”…WHAT!?!
The agent lawsuit drama didn’t calm down at all last week, in fact it might have actually heated up. The conversation about the verdict turned its attention to FHA and VA borrowers. Which of course are both important to us as a VA mortgage focused lender. Some of you watching this might know that seller concessions for VA borrowers are capped at 4% of the home purchase price or appraised value and can also cover some closing costs including the VA funding fee and prepaid taxes. But the VA rules prohibit VA borrowers from paying real estate commissions – So does this mean that active duty and veterans are going to find themselves on the outside looking in when the dust settles from the fallout of the lawsuit? Is there unintended consequences here that inadvertently harm or make it more difficult for FHA and VA buyers to obtain homeownership? Yes I know these questions on the surface seem simple and they are not answerable right now but there will be a solution for this, it just may not just be pretty. What we would really like to see is terminology that allows for commissions to still be built into the purchase price which allows VA borrowers to still use any concessions towards closing fees and third party costs during closing on a real estate transaction. It’s already that way now because buyer commission is baked into the price of the sale.
Also last week mortgage rates plunged and demand inched back just a little bit. Before you get too excited we’re talking about rates going to the mid sevens and low sevens again only briefly and we’re still not anywhere close to being back in the fives but it is notable because relative to where rates peaked out at 8% just a few short weeks ago any news for the better will still take as better. in general though the consensus is that mortgage rates will continue to be in this range for some time because that is exactly the same terminology we’re getting from Jerome Powell and the Federal Reserve. “We will have keep rates elevated higher for longer and remain there for some time” Those of you looking to buy a home in 2024 get a head start right now by getting a full financial assessment and knowing what your affordability is prior to hitting the streets looking for homes. Those of you looking to tap into your home equity with a home equity line of credit or a cash out the time is now to close your transaction before the end of the calendar year and get any tax benefits that could come from doing so.
Last week Jerome Powell said the Fed is not confident it has done enough to bring down inflation at the International Monetary Fund conference in Washington DC. Jerome Powell admitted that more work could be done ahead in the battle against high prices. He said the Federal Open Market committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring down inflation to 2% overtime. We are not confident that we have achieved such a stance. I’m sorry, you’re not confident? Why are you saying that now? If we’re going to stay well above where the Fed hoped we would have rates while also describing your policy stands as significantly restrictive, then it really sounds like you are preparing us for an end of year rate hike coming up on December 13th. Is that what’s going on here Jerome?
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So with that, let’s take a quick look at what’s coming up in the markets this week. Inflation, Jobs, and Housing are in focus
Tuesday: We get CPI and CORE CPI month over month, and CPI year over year. These are going to be really important readings, ESPECIALLY because last week Jerome Powell said the Fed is “not confident” it has done enough to bring down inflation.
Wednesday: Then on Wednesday we will get PPI and Core PPI month over month, Retail Sales and Core Retail Sales month over month and the Empire State Manufacturing Index. Again, super important if the Fed’s confidence is on the line.
Thursday: Unemployment claims come out, the National Association of Home Builders Market Index is released and we get the Philly Manufacturing Index
Friday: Finally on Friday we get Building permits and Housing starts
And for the sake of wanting to see some good news heading into Thanksgiving season…I really hope we get some good housing data in this week.
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