mortgage advice: Hopeful Rate Watch for 3/11/24
- 03/11/24 11:41 AM
Rates are coming off their best week since the most recent CPI numbers came out a month ago. Jobs were weaker than expected and the unemployment rate came in 0.2% higher (at 3.9%) than expected. Remember, we are in a "celebrate the bad news" era so the Fed can "save" us sooner. Speaking of CPI (inflation on the consumer side), we get another report this Tuesday. The markets will be weighing it heavily as it comes before the March 20th Fed meeting. I expect this report to be better simply on the fact that the market expectations are more in line with the previous month's dataset. Last time, the expectations
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mortgage advice: Rate Watch To Finish First Quarter
- 03/04/24 10:19 AM
Markets were on edge last week as they awaited the numbers from the PCE report. This is the Fed's preferred inflation data. The CPI numbers that came in a week earlier were higher than expectations (albeit they did continue their downtrend and expectations were rather aggressive) so the markets were justifiably nervous. The PCE numbers came in exactly as expected. Remember, before the CPI report the market was betting on a 75% chance of a March Fed rate cut (I was never in this camp and expect the first one to come in the summer/closer to elections). The fact that the PCE numbers came in as expected gave the
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mortgage advice: Why "Gray Divorces" matter in Real Estate
- 03/04/24 10:13 AM
According to the Wall Street Journal, AARP, and others, 11,200 people a day turn 65. A higher-than-ever percentage still work. Networth has increased for those over 75. We are all living longer. Many divorces for those over 50 are not necessarily contentious. The kids are gone, people have just changed, and those over 65 aren't "winding down." They are still gearing up. In fairly amicable "silver divorces," both parties want homes and aren't motivated by destroying the other financially. When working on the dissolution of assets, including home equity, there is frequently a place for a reverse mortgage strategy that enables
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mortgage advice: Rate Watch For President's Week
- 02/20/24 10:38 AM
Happy Tuesday! Markets reacted harshly to the consumer-led inflation data which came out last Tuesday. The market was expecting a 2.9% YoY reading and inflation came in at 3.1%. Although it was higher than the market expectations, it came in 0.3% lower than the previous month's reading. So yes, inflation continued its downtrend, but the market expectations were just a little too ambitious. After Tuesday's news report came out, markets placed their bets that there would not be a March rate cut. I've been saying this for months. It is way too soon to start cutting, but markets like to get ahead of themselves by placing
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mortgage advice: February 12th Weekly Rate Watch
- 02/12/24 02:18 PM
Fed Chairman Powell, during his speech after the Fed decided to keep rates unchanged, said how the Fed is looking for more confidence in inflation. What he's saying is that he wants to see the numbers continue coming down year over year, within expectations, and without any sudden jumps higher. I've pushed that statement further by saying that we need to see 3 months of continuous month-over-month (MoM) declines in inflation before the Fed makes any moves. However, we may be running out of time. I can see the Fed making its first round of cuts this summer. The Fed used to want to
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mortgage advice: Rate Watch 2/05/2024
- 02/05/24 12:22 PM
Last week the Fed decided to keep interest rates unchanged. During Chairman Powell's speech, he used language that took a March rate cut off the table. This shouldn't be a surprise as I've been saying a March cut is highly unlikely. Powell kept saying that the Fed needs "more confidence" that inflation is heading lower. The Fed is very encouraged by recent data but needs consistency in the numbers. My longtime readers know that I've been saying the same thing. I have always said that I wanted to see 3 consecutive months of month-over-month declines in inflation before celebrating. It sounds like Powell is in the
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mortgage advice: Reverse Mortgage Counseling - What Is It?
- 01/30/24 04:34 PM
To be approved for a home equity conversion mortgage (HECM), borrowers need to undergo mandatory reverse mortgage counseling from an approved, independent counselor. Some private lenders have this stipulation, too. The requirement was established to make sure borrowers understand all aspects of the loan and their obligations to stay in good standing. Counseling also ensures that homeowners have the financial means to meet the loan obligations, such as paying homeowner’s insurance, property taxes, and homeowners association (HOA) fees. All persons listed on the deed must go through reverse mortgage counseling. “Reverse mortgages are wonderful financial tools for certain seniors. Still, it’s a very complex financial decision,” says Jackie Boies,
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mortgage advice: Rate Watch - We made it through January!
- 01/29/24 03:24 PM
We have a very busy week and this issue may take a little longer than usual to cover it. The most important event to take place is the Fed meeting on interest rate policy. I, along with 97.9% of the market, believe that the Fed will have another pause on rate hikes (2.1% are voting for a 25bp cut). Since that is what the market is expecting, it is already priced into current interest rates. So the question isn't what is the Fed going to do Wednesday, but what are they going to do in the coming months? This is why the markets will be weighing every word
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mortgage advice: Rate Watch - Off and Running
- 01/22/24 03:09 PM
Last week we saw some home builder data come in, better than expected. Housing starts, building permits, and homebuilder confidence were all higher than expectations. It seems that December's rate drop got the whole industry excited. In January we have seen a little bit of a snap back to reality. Remember, nothing runs forever without taking a breather. I said that as we climbed to above 5% on the 10-year yield and again with the massive drop afterward. The markets are still trying to figure out what the Fed will be doing after Chairman Powell's extremely dovish speech in December. On the one hand,
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mortgage advice: Rate Watch For The Short Week
- 01/16/24 11:02 AM
Last week we saw inflation data come in slightly higher than expectations on some gauges and in line with others. Here is the data below. Core = excluding food and energy from the data calculations. The Fed prefers core measurements. CPI month over month increased by 0.3% when the market was expecting 0.2%. This was higher than the previous month's 0.1% increase. Core CPI MoM was unchanged and came in at expectations of 0.3%. CPI year over year increased by 3.4%, 0.2% higher than expectations and 0.3% higher than the previous month. Core CPI YoY came in at 3.9%, 0.1% above expectations but a 0.1% decrease
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mortgage advice: Who Likes Reverse Mortgages
- 12/22/23 10:17 AM
Reverse mortgages have not always had the best reputation. Back when they were created there were some negative aspects including shared equity that no longer exist. We now have to overcome some old ideas to help people use their equity to secure their retirement. The people who do not need to be convinced are people who have used a reverse mortgage in the past. We just received the most recent numbers from the CFPB that reinforce our actual experience. Fact 2: Reverse Mortgage Borrowers Have Fewer Complaints Reverse mortgage complaints to the Consumer Financial Protection Bureau (CFPB) were less than 1% of 32,000 mortgage–related complaints
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mortgage advice: Rate Watch - Holiday Version
- 12/18/23 02:05 PM
Inflation numbers came in last week and they all flirted with being in line with expectations, although PPI came in on the lower side. This continues the trend of lower year-over-year inflation. For me to declare victory in the battle, I want to see 3 consecutive month-over-month declines. We have yet to get that. The Fed kept rates unchanged, as expected. They used language such as "proceed cautiously," "prepared to hike more," and "data dependent,"...as expected. However, what caught markets off guard was Fed Chairman Powell's speech. Powell dropped the hawk act and gave markets hope for 2024. He said how the Fed
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mortgage advice: Rate Watch - Progress Stalled
- 12/11/23 03:27 PM
Labor market numbers came in last Friday and were stronger than expected. The economy added 199k jobs vs a 190k estimate. The unemployment rate came in at 3.7%, lower than the expected 3.9%. The markets entered a mini panic mode as the Fed has publicly stated multiple times that they would like to see more weakness in the labor markets. The labor numbers put a damper on the fantastic run that mortgage rates were having. Today started with slightly higher rates too as the markets are waiting to see what the data holds. This week is a big one. We have inflation (CPI and PPI) data and
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mortgage advice: Rate Watch - Welcome to December!
- 12/06/23 09:57 AM
The economy has seen a continuous 3-week increase in mortgage applications. This is coming in off the heels of a few weeks of decreased interest rates. The market has placed their bets: The Fed is done with rate hikes. Also, the market believes that there is now an 18% chance of a rate cut in January with a total of 5-6 coming in 2024. Now, I doubt we will see a rate cut next month or in the few months that follow. Any rate cut must be incredibly strategically designed. The Fed must consider many factors, but ultimately I believe it will be the balancing
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mortgage advice: New Loan Limits for 2024 have been announced!
- 11/28/23 11:27 AM
The new maximum loan limits were announced by the Federal Housing Finance Agency for conforming loans. Loan limits will vary depending on the county, but for most of the United States, the 2024 maximum loan limit for one-unit properties will be $766,550, an increase from $726,200 (2023 limit). Conforming Loan Limits refers to the maximum loan amounts that Fannie Mae and Freddie Mac will allow for financing one, two, three, and four-unit properties. Contact us to learn more about how this impacts your buying power. Effective January 1, 2024, the maximum conforming loan limits for San Diego County finally topped $1M and will be
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mortgage advice: Rates Are Finally Headed Down!
- 11/13/23 09:50 AM
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased last week to 7.61% from 7.86% Applications to refinance a home loan increased 2% for the week and were 7% lower than the same week one year ago. Mortgage rates saw the biggest one-week drop in over a year last week, causing the first increase in mortgage demand in a month. Total mortgage application volume rose 2.5% last week, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming
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mortgage advice: Rate Watch - Finally Down!
- 11/06/23 01:52 PM
Finally, we see some positive market reaction to the Fed's policy meeting. Rates have come down over half of a point following last Wednesday's announcement. A week ago rates were over 8% for a 30 yr Fixed and as of last Friday, they dropped to below 7.4%.
Rates also saw some easing last Friday when the jobs report came in on the softer side. Unemployment ticked up to 3.9%. Remember, the Fed has said that it wants to see a softer labor market (in so many words) in order to see an easing in inflation. I knew the Fed wasn't going to raise rates and should
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mortgage advice: Scary Rate Watch for Halloween
- 10/30/23 08:11 AM
As we enter the last two months of the year, we are spending ourselves personally and politically into unsustainable debt. Moving forward. PCE reports (Personal consumption expenditures)came out and core PCE (the Fed's preferred inflation gauge) hit the lowest year-over-year level in over 2 years.
This is crucial as we head into the Fed meeting this week. The Fed has been firm on their 2% inflation goal and seeing core PCE trending lower is a positive development for the economy and the future rate decisions. GDP also came in roaring. It came in at 4.9%, beating expectations and more than doubling the previous quarter's numbers. This helped silence
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mortgage advice: Rate Watch - War Watch
- 10/23/23 09:50 AM
This week we get some housing data but all eyes will be on Friday's PCE inflation report. This report/method is the Fed's preferred measurement of inflation and it is the last report of any significance before the Fed's policy meeting next week. The Fed meeting starts Tuesday and commences Wednesday which is when will hear from Chairman Powell. We will also get Q3 GDP numbers on Thursday. The market is expecting 4.5% growth which is a large increase from the previous quarter's 2.1%. The Fed has reported in the past that the consumer and economy remain strong and resilient. They want to see weakness in the consumer to relieve
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mortgage advice: Government Shutdown Implications for the Mortgage Industry
- 09/29/23 01:34 PM
As Congress continues to negotiate appropriations bills and/or a continuing resolution to fund the United States government for FY 2024, Federal agencies are preparing for the possibility of a government shutdown when the current appropriations expire in just two weeks on Saturday, September 30. While we are hopeful that Congress and the President will come to an agreement that keeps the government operating, there is a strong possibility that a lapse in funding will occur. A shutdown would necessitate a furlough of certain federal employees and significant curtailment of agency operations. Employees exempted from a furlough include those performing emergency services protecting
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