The fiery comments of disdain over the new Fannie Mae and Freddie Mac fee structure continued into last week as we are now at the May 1st juncture where these new fees will take place on all conventional loans. In case you missed it, there are new higher fees imposed on borrowers with credit scores of 680 and higher, and lower fees imposed on borrowers with credit scores of 680 and below.
This is an effort to even out the cost to borrowers, at least on paper, but what its doing mathematically is charging higher credit worthy borrowers MORE than those with less than stellar credit. Yes, borrowers still have to qualify in underwriting in order to purchase or refinance a home, and now once you do you will get fee-ed accordingly.
The only hope for this to reverse course is for it to suffer such scathing public backlash that they have their arm twisted to roll it back. Unless there’s enough political pressure or public uprising, it will land in the hands of the industry on it’s own – whom are already up in arms and loudly, very loudly, telling the FHFA how BAD of an idea this is. There’s already petitions circulating around the internet calling for the reversal of this fee structure, but as for now, we’re rolling…and until people really start to see the inverse impact it makes, the powers that be don’t have to do anything about it. Great!!!
Last week consumer confidence was lower than projected but fine, Core PCE came it exactly as expected so no surprise for the better or worse there…but the Biggie was Advanced GDP…this came in VERY weak at 1.1% vs. 2.0% projected. This is evidence of market pain upon us. Please remember, the Fed said we needed to see “below trend” growth in order to know they’re making progress in their fight against inflation. So now, after 13 months of raising rates, there’s become ENOUGH pressure to make GDP slump to a figure low enough to make them now calculate how much longer to leave their current rate in place where it’s at before ratcheting it back down.
Watch, just watch, at the next fed meeting and press conference this Wednesday, May 3rd you’ll hear Jerome Powell mention “below trend” GDP as a reason for them to come to a pause soon, even if they don’t actually pause this week. With that being said, keep your eyes open for a possible rate hike of 0.25% this week in what could be the finale to the fed tightening we’ve all been experiencing since March of 2022. Next they will turn our attention to unemployment – remember that needs to get to 4.5%, and then they’ll tell us about price stability again. These are all the hallmarks of driving down inflation back to 2% by 2025. Yup, they’re still calling for it it 2025.
Here’s what to look for this week.
This week is really all about the Fed. Yes, we will have job openings data, employment change unemployment rate and all that, but let’s be real – EVERYONE’S WATCHING THE FED OKAY!?! Wednesday May 3rd the Fed Funds rate will be announced and it’s only gonna be 1 of 2 things: a quarter percent 0.25% rate hike, or a pause. That’s it. There will be NO rate cut this meeting.
So what does this all mean for mortgage rates Andy?
Mortgage rates continue to bounce around while we digest a lot of jobs and employment data, but what will really move the markets this week is Jerome Powell’s prepared statement at the Press Conference, and the answers he gives reporters during the open Q & A. If you’re locking your loan this week I recommend you see what happens Wednesday during the press conference and then go from there. You’re likely to see a lot of neutrality prior to that meeting and my bet is that rates will be better 1 of the days near the end of the week and most likely sputter around otherwise.
And that’s it for this week. let us know how we can help you win in mortgage and real estate!
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