Renting

Apache is functioning normally

(Getty Images)

The Bank of England has kept interest rates at a 16-year high for at least another month, as governor Andrew Bailey said Threadneedle Street would not bow to political pressure to cut rates.

The BoE’s Monetary Policy Committee (MPC), announced its latest decision at midday on Thursday, opting to keep the current rate of 5.25 per cent – set last August – in a blow to those hoping for the first reduction since 2020.

High interest rates have saddled homeowners with soaring mortgage repayment costs, and are used as a tool to help bring down inflation.

While the rate of Consumer Prices Index (CPI) inflation fell to 3.2 per cent in March, experts had suggested that two key economic indicators – pay growth and services sector inflation – have remained more stubborn.

ADVERTISEMENT

In positive news, the Bank improved its forecasts on Thursday to predict that CPI inflation would fall to 2.25 per cent next year and to 1.5 per cent in 2026, and said it expected the UK economy to grow by 0.5 per cent this year and 1 per cent in 2025 – slightly higher than previous predictions.

Key Points

  • Breaking: Bank of England holds interest rates at 5.25%

  • Governor Andrew Bailey says Bank will not bow to political pressure

  • Inflation will fall to 1.5 per cent within two years, Bank forecasts

  • Pay growth and services sector inflation remain stubborn

  • Voices: Improving the economy may limit a Tory wipeout, but it won’t save Rishi Sunak

16:02 , Andy Gregory

We’re pausing updates on the liveblog for this evening, thanks for following here.

You can read our latest reporting on the Bank of England’s announcement by clicking here, or else keep scrolling to catch up on the day’s events as we reported them.

Chancellor praises ‘finely balanced’ interest rates decision

15:20 , Andy Gregory

Chancellor Jeremy Hunt said the Bank of England’s decision on rates was “finely balanced”.

Asked if he had been hoping rates would be cut ahead of the general election, Mr Hunt said: “I welcome the fact the Bank of England’s obviously thought about this very hard, they take this decision independently.

“And I would much rather that they waited until they’re absolutely sure inflation is on a downward trajectory than rush into a decision that they had to reverse at a later stage.

“What we want is sustainably low interest rates, and I think what’s encouraging is that the Bank of England governor, for the first time, has expressed real optimism that we’re on that path.”

Jeremy Hunt ((Kirsty Wigglesworth/PA))

Bank of England will not wait for US Federal Reserve to cut rates, says Bailey

14:59 , Andy Gregory

The Bank of England will not wait for the US Federal Reserve to move on interest rates before it decides to cut rates in the UK.

Andrew Bailey, governor of the Bank of England, said: “There is no law that the Fed has to go first. Moreover, we have a remit and a target that is related to domestic inflation in the UK.”

He added that the Bank will always “take the rest of the world into consideration”, but only in regard to how it affects domestic inflation.

“But there’s no law which says we can only move after the Fed moves. That is not something that ever gets discussed in the MPC.”

Bank of England ‘getting very close’ to first rate cut since 2020, says economist

14:41 , Andy Gregory

James Smith, ING developed markets economist, said: “The Bank of England is getting very close to its first rate cut. That much is clear from the latest policy statement which, while keeping rates on hold at 5.25%, has a distinctly more optimistic flair.

“It echoes recent comments from governor Andrew Bailey, who has been hammering home the message that the UK’s inflation outlook is quite different to the US.

“We’re still leaning slightly more towards an August start date for rate cuts, though it’s a close call. What isn’t in doubt is that the Bank is comfortable with moving ahead of the US Federal Reserve.”

Bank of England will not bow to political pressure to cut rates, says Bailey

14:22 , Andy Gregory

The Bank of England will not bow to increased pressure from politicians to cut interest rates, its governor has said.

Andrew Bailey said: “We are an independent central bank. We have a very clear remit. It’s our duty to exercise our duty at all times. When we are sitting in a room as the Monetary Policy Committee, we never discuss politics … It isn’t a consideration in that respect.”

It comes amid a period of heightened pressure from some MPs on the Bank to move faster on rate cuts in the run-up to a general election later this year.

When pressed on whether an upcoming election could influence how the Bank makes its decisions on rates, Mr Bailey added: “We will take the decisions at each meeting which are consistent with our remit. That’s our job and we will do our job.”

Inflation to fall before rising slightly before end of year, says Bank

14:04 , Andy Gregory

The Bank of England has predicted that lower oil and gas prices mean that inflation is likely to drop to around 2 per cent in the coming months before rising slightly before the end of the year.

Inflation could fall noticeably below target without rate cuts, says Bailey

13:52 , Andy Gregory

Here are more comments from Bank of England governor Andrew Bailey.

He told reporter: “It’s likely that we will need to cut bank rates over the coming quarters and make monetary policy somewhat less restrictive over the forecast period, possibly more so than currently priced into market rates.

“This will be consistent with ensuring that inflation does not fall noticeably below target at the end point of the forecast.”

Pound falls against the dollar

13:35 , Andy Gregory

The pound fell against the US dollar and euro after the Bank of England signalled growing support for an interest rate cut among policymakers.

Sterling fell 0.3 per cent to $1.246 and was 0.2 per cent lower at €1.161.

Financial markets more pessimistic than Bank of England, Bailey indicates

13:17 , Andy Gregory

Andrew Bailey has indicated that the financial markets are more pessimistic about the path for lowering interest rates than the Bank of England.

“With the progress we’ve made, to make sure inflation stays around the target, it is likely that we’ll need to cut bank rates in the coming quarters, possibly more so than is currently priced into markets,” he said.

The Bank governor said the committee has “no preconceptions” about how far and how fast it can lower interest rates, and it make a judgment based on the economic data it sees before each meeting.

(EPA)

Visualised: How have interest rates changed over time?

12:58 , Andy Gregory

The below graph shows how interest rates have changed over the past decade:

(Bank of England)

Bank has not ruled out cutting rates next month, says governor

12:49 , Andy Gregory

The Bank of England has not ruled out cutting rates at its next Monetary Policy Committee decision.

Andrew Bailey, governor of the Bank, said that upcoming economic data would be key to helping the MPC decide whether to cut rates on 20 June.

He said: “Before our next meeting in June, we will have two full sets of data – for inflation, activity and the labour market – that will help us in making that judgement afresh.

“But, let me be clear, a change in bank rate in June is neither ruled out nor a fait accompli.”

Full report: Bank of England holds base rate for ninth consecutive month

12:20 , Andy Gregory

The Bank of England has kept interest rates on hold at 5.25 per cent for the ninth month in a row.

My colleague Jane Dalton has more in this report:

Bank of England holds interest rates at 5.25% despite hopes of cut

Inflation will fall to 1.5 per cent within two years, Bank of England forecasts

12:14 , Andy Gregory

The Bank of England has projected that inflation will fall more than previously thought over the coming years – dropping below its 2 per cent target to 1.5 per cent in 2026.

Headline CPI inflation is expected to fall below the Bank’s 2 per cent target between April and June, but rise again to 2.6 per cent in the second half of this year as the impact of recent drops in energy prices fades.

In the longer term, the Bank dropped its projections for CPI inflation to 2.25 per cent for 2025 and 1.5 per cent in 2026, down 0.25 and 0.5 percentage points respectively on the Bank’s February estimates.

The projection came in the Bank’s May Monetary Policy Committee (MPC) report, which signalled optimism from recent falls in retail inflation. The report said persistently high interest rates had helped push headline inflation down.

Bailey signals optimism that Bank could soon cut rates

12:10 , Andy Gregory

Governor Andrew Bailey has signalled optimism that the Bank of England could soon cut rates.

The Bank’s Monetary Policy Committee voted by a majority of seven to two to keep rates unchanged – with members Dave Ramsden and Swati Dhingra voting to cut rates by 0.25 percentage points.

Mr Bailey said: “We’ve had encouraging news on inflation and we think it will fall close to our 2 per cent target in the next couple of months.

“We need to see more evidence that inflation will stay low before we can cut interest rates. I’m optimistic that things are moving in the right direction.”

The MPC indicated it is still looking for more progress on factors including services inflation and wage growth, which have remained persistently high at about 6 per cent, before cutting rates.

Andrew Bailey, governor of the Bank of England, said there had been encouraging news on inflation (Justin Tallis/PA)

Bank of England expects economy to grow by 0.5% this year

12:08 , Andy Gregory

The Bank of England said it expects the UK economy to grow by 0.5 per cent this year and 1 per cent in 2025 – slightly higher than previous predictions.

Breaking: Bank of England holds rates at 5.25 per cent

12:01 , Andy Gregory

The Bank of England has opted to keep interest rates at a 16-year high of 5.25 per cent – confounding hopes of the first base rate cut since 2020.

We’ll bring you more updates here as we get them.

BoE chief unlikely to give clear signal on when interest rate cut could come, economist predicts

11:08 , Andy Gregory

Bank of England chief Andrew Bailey is unlikely to give a clear signal on exactly when the bank’s first interest rate cut since 2020 might come – but focus will be on what guidance he does give and if more than one member of the Bank’s Monetary Policy Committee votes for a cut this time around, according to Pimco economist Peder Beck-Friis.

“We know from history that policy meetings may create some volatility,” Mr Beck-Friis said.

“What is also interesting is that we have come from a few years where monetary policy has been very correlated globally … but as the pandemic shocks fade I think it is natural that we see some divergence,” he added – pointing to how Sweden and Switzerland had already cut rates while the US may need to wait longer.

Pound falls against US dollar

09:23 , Andy Gregory

The pound edged lower against the US dollar this morning ahead of the Bank of England’s policy meeting, with the central bank expected to hold rates steady but flag when it intends to lower the cost of borrowing.

According to LSEG data, money markets are pricing in an almost 95 per cent chance that the Bank will hold its benchmark interest rate at 5.25 per cent – the highest since 2008. But investors will be watching for signs of when the first interest rate cut in four years will come as inflation falls.

Markets now see a 56 per cent chance of such move in June – when the European Central Bank has already signalled it will reduce borrowing costs, and a greater chance of 72 per cent of a BoE rate cut in August.

London stocks waver ahead of Bank of England announcement

08:40 , Andy Gregory

London stocks wavered this morning as investors turned cautious ahead of the Bank of England’s interest rate decision – while energy shares gave a boost to the benchmark index.

As of 7:17am, the blue-chip FTSE 100 edged up 0.1 per cent at 8,357.85, hovering below its record high of 8,365.28 points. The mid-cap FTSE 250 edged lower by 0.1 per cent.

The pound slipped against the US dollar and the UK’s benchmark 10-year gilt yield was at 4.155 per cent ahead of the decision.

Investors avoided big bets ahead of Threadneedle Street’s interest rate decision due at 11am, where the central bank is widely expected to keep borrowing costs steady.

Bank of England to shed more light on its predictions for the economy today

06:00 , Maryam Zakir-Hussain

The Bank of England will shed more light on its predictions for the economy and the path of interest rates when it publishes the latest Monetary Policy Report alongside the rates decision today.

Meanwhile, the central bank in the US, the Federal Reserve, said on Wednesday it was keeping its key interest rate at the same level and noted a “lack of further progress” towards lowering inflation.

It means rates could stay higher for longer until there is firmer evidence of price rises easing, its chairman Jerome Powell suggested.

04:00 , Maryam Zakir-Hussain

Andrew Goodwin, chief UK economist for Oxford Economics, said: “The data published in mid-April for services inflation and private sector regular pay growth has likely extinguished any remaining hopes of a move in May.

“Though both measures have continued to fall, progress has been slightly slower than the MPC anticipated, and they are currently running marginally higher than the forecasts published in February’s Monetary Policy Report.”

He said it is likely to be a “close call” on whether the MPC decides to cut rates in June or August.

02:00 , Maryam Zakir-Hussain

Higher interest rates are used as a tool to control inflation, which has fallen sharply in recent months.

The latest official figures showed that Consumer Prices Index (CPI) inflation slowed to 3.2% in March, as it edges closer to the Bank’s 2% target.

But economists think the Bank’s policymakers will want to hold out until they are more convinced that inflationary pressures have eased.

Mapped: Which areas worst hit by mortgage rate hikes as homeowners ‘forced to move’

Thursday 9 May 2024 00:00 , Maryam Zakir-Hussain

Homeowners coming off fixed rate mortgages faced huge rises in their monthly payments, latest figures have revealed, with the costs severely biting into household disposable income.

With the Bank of England base rate rising to 5.25 per cent in the summer of last year, families faced soaring mortagage rates with the average two-year fixed rate reaching 6.9 per cent.

The new rates meant many homeowners, especially those with large mortgages still to pay, faced challenging increases in monthly payments.

Mapped: Areas worst hit by mortgage rate hikes as homeowners ‘forced to move’

Bank of England not yet ready to cut UK interest rates, experts say

Wednesday 8 May 2024 21:57 , Maryam Zakir-Hussain

UK borrowers eager for costs to come down may have to wait a little longer before interest rates take a dip.

The Bank of England’s Monetary Policy Committee (MPC), which sets the level of UK interest rates, will announce its latest decision on Thursday.

However, economists are widely expecting the committee to keep rates at the current level of 5.25 per cent, which it has been held at since August last year.

Bank of England not yet ready to cut UK interest rates, experts say

Wednesday 8 May 2024 19:18 , Maryam Zakir-Hussain

Philip Shaw, chief economist at Investec, said: “This broad direction illustrates that collectively the committee is moving gradually towards a rate cut.

“It seems unlikely though to be ready to bite the bullet just yet and the Bank rate looks set to remain on hold at 5.25% for the sixth consecutive meeting.”

He added that it is possible that a second member of the MPC will switch to the “easing camp” and vote for a cut on Thursday.

‘Too early’ for economists to cut rates, economists predict

Wednesday 8 May 2024 17:30 , Maryam Zakir-Hussain

Economists think the Bank of England’s policymakers will want to hold out until they are more convinced that inflationary pressures have eased.

Laith Khalaf, head of investment analysis at AJ Bell, said: “It is almost certainly too early for the Bank of England to pull the trigger on a rate cut right now, especially against the backdrop of a more hawkish US central bank.”

The US Federal Reserve said last week it was keeping its key interest rate at the same level and noted a “lack of further progress” towards lowering inflation.

It means rates could stay higher for longer until there is firmer evidence of price rises easing, the Fed’s chairman Jerome Powell suggested.

Mr Khalaf said the Bank is also likely to be influenced by the European Central Bank, which is widely expected to cut rates in early June.

“The other important factor is more inflation readings for April and May, where CPI could get very close to, or possibly even hit, the Bank’s 2% target,” he added.

“The closer the inflation dial gets to 2%, the greater the pressure on the Bank of England to take its foot off the brake and cut rates.

“Markets currently think it’s a coin toss whether we get a UK rate cut in June, but this rises to a three in four chance priced in by August.”

The housing market has turned – so what does that mean for buyers and sellers waiting to make a move?

Wednesday 8 May 2024 16:29 , Maryam Zakir-Hussain

House prices are down and mortgage costs are up, writes James Moore. So how long will buyers and sellers need to wait before the market shows signs of life?

Britain’s housing market has turned hostile again, at least for sellers. The latest Nationwide index showed a surprise 0.4 per cent fall in April, the second month-on-month decline in a row.

A rival index produced by Halifax recorded a 1 per cent month-on-month fall in March, with the next update due next week. These indices can be volatile, but another fall would now be the betting favourite.

Read more here:

House prices are falling – but what does it mean for the future market?

Improving the economy may limit a Tory wipeout, but it won’t save Rishi Sunak

Wednesday 8 May 2024 15:47 , Maryam Zakir-Hussain

Thanks to the Liz Truss mini-Budget disaster, the Conservatives can no longer claim to be the party of economic competence, writes Andrew Grice. But an election campaign based on the economy is still their best hope of avoiding annihilation:

Improving the economy will not save Rishi Sunak

Pay growth and services sector inflation remain stubborn

Wednesday 8 May 2024 15:45 , Maryam Zakir-Hussain

Interest rates are used as a tool to help bring down UK inflation, which has fallen sharply from the highs hit in 2022 when energy costs spiked and the cost-of-living crisis was at its peak.

The rate of Consumer Prices Index (CPI) inflation fell to 3.2 per cent in March, according to the latest official figures.

But experts suggested that two key economic indicators for the Bank of England – pay growth and services sector inflation – have remained more stubborn.

Average wages continued to increase faster than the rate of inflation last month.

Bank of England not yet ready to cut UK interest rates, experts say

Wednesday 8 May 2024 15:43 , Maryam Zakir-Hussain

UK borrowers eager for costs to come down may have to wait a little longer before interest rates take a dip.

The Bank of England’s Monetary Policy Committee (MPC), which sets the level of UK interest rates, will announce its latest decision on Thursday.

However, economists are widely expecting the committee to keep rates at the current level of 5.25 per cent, which it has been held at since August last year.

This means that there could still be some time before the pressure of the cost of living begins to ease.

Bank of England not yet ready to cut UK interest rates, experts say

Source: uk.finance.yahoo.com

Apache is functioning normally

Hedging, Community Lending, Verification, CRM, Warehouse Products; NAR Reports on Q1; FHA and USDA Changes

<meta name="smartbanner:author" content="We now have a native iPhone
and Android app.
Download the NEW APP”>


This website requires Javascrip to run properly.

Hedging, Community Lending, Verification, CRM, Warehouse Products; NAR Reports on Q1; FHA and USDA Changes

By:
Rob Chrisman

Wed, May 8 2024, 11:25 AM

After a very long travel day filled with odd, time-sucking delays, when I arrived in Birmingham I was happy to hear Alabama on the Uber car’s radio singing, “My Home’s in Alabama.” “That my home’s in Alabama, no matter where I lay my head. My home’s in Alabama, Southern born and Southern bred.” Home prices in Alabama have tended to mimic many parts of the United States: In March 2024, home prices in Alabama were up 1.1 percent compared to last year, selling for a median price of $273,500 with the number of homes sold being down 8.9 percent year over year, per Redfin. (This morning NAR reported that more than 90 percent of metro markets posted home price gains in the first quarter of 2024: latest quarterly report.) There’s ample inventory, with over 22,000 homes for sale in Alabama, up nearly 11 percent year over year. A chunk of those are in Huntsville, 100 miles to the north of Birmingham, Alabama’s most populous city and the home of NASA’s Marshall Space Flight Center. (Found here, this week’s podcasts are sponsored by Matic, the digital insurance marketplace built for the mortgage industry. Matic integrates home insurance shopping into the lending and servicing experience, allowing customers to shop carriers and find a policy in minutes. Create a new revenue stream that boosts customer happiness today! Hear an interview with Matic’s Ben Madick on the insurance landscape and trends impacting both potential homebuyers and existing homeowners.)

Lender and Broker Software and Services

Do you love your technology partner so much that you’d tattoo its name on your arm? A top producing team at VanDyk Mortgage resorted to “tattoo” tactics when management replaced Floify with a competing mobile-first POS. The new system’s shortcomings in functionality and vendor support impacted the productivity and satisfaction of VanDyk’s team, particularly affecting branch managers and loan officers who struggled with the platform’s limitations and the vendor’s responsiveness. The result? A “baring” of arms and quick return to Floify, which in addition to preventing an LO mutiny saves VanDyk $300,000 annually in operating costs compared to the interim system. Read the full case study and see pics of the team’s “tats.”

Compliance Review Roadmap for Financial Institutions! Regular compliance testing and monitoring helps you get out in front of potential issues, identifying areas that might not normally receive enough attention. When you embrace compliance reviews, your entire institution becomes involved in building a culture of compliance. This whitepaper offers a how-to guide for implementing a compliance review process at your financial institution. Included in this roadmap is: Step-by-step instructions for building a compliance testing program; A checklist of what to assess in compliance monitoring; A breakdown of the roles and responsibilities for each department and division; The importance of conducting a root cause analysis; Challenges encountered in implementing compliance reviews and how to overcome them; and Solutions for automating your compliance review process. Download the free whitepaper now.

PlainsCapital Bank National Warehouse Lending, a subsidiary of Hilltop Holdings (NYSE: HTH), understands the importance of efficiency when it comes to meeting mortgage lenders funding requests. “Express Funding” is how we help our customers reduce the time needed to get loans funded quickly. Express Funding allows our customers to submit multiple loans for funding in one simple data upload, whether it is one loan or 100 loans. We have a growing list of 5,000+ approved closing agents, No Doc funding requirements and funding turn times averaging under 20 minutes! As a well-capitalized financially strong banking partner we give our customers confidence in an uncertain market. If you attending the MBA Secondary Conference in NY or the TMBA Annual Conference in Austin and interested in learning more about PlainsCapital Bank National Warehouse Lending please contact John White or Brent Amos.

Usherpa’s SmartCRM and Relationship Engagement Platform has been vetted by The Mortgage Collaborative (TMC), one of the largest mortgage cooperatives in the country, and is now a Preferred Partner to TMC’s growing network of mortgage lenders. According to TMC’s 2024 “Pulse of the Network” survey of 2,000 industry executives, finding new opportunities to grow volume and market share ranked first among the top critically important issues facing mortgage lenders. Having a CRM platform that is powerful but easy to use with guaranteed adoption is crucial. “TMC prides itself on having best in class preferred partners that help our lenders lower their cost of origination, improve their customer experience, and retain their best Loan Officers so that they can easily compete with even the largest lenders,” said Melissa Langdale, TMC’s President and COO. “We are thrilled to add Usherpa as a Preferred Partner.”

During the loan process, expedited turn times are crucial. Traditional methods of obtaining tax transcripts using a 4506-C form are slow and susceptible to rejections by the IRS due to minor discrepancies between the submitted form and what is on file at the IRS, thereby extending the verification process. Xactus, a leader in verification solutions, offers a streamlined alternative, Tax TranscriptX. Providing real-time IRS data feeds, this innovative tool enables fast and easy income verification, with the IRS rejecting less than 3 percent of the requests. Endorsed by the Government-Sponsored Enterprises (GSE), this solution empowers lenders to accelerate loan closures by furnishing tax transcripts within minutes rather than days. Lenders can use Xactus’ technology to streamline workflows, boost profits, and close loans right away. For more information, email Xactus. To stay up to date on its industry innovations, follow Xactus on LinkedIn.

Wholesale and Correspondent Products

Attention all TPO and wholesale lenders: Don’t miss out on “The Wholesale Lending Sales Machine” webinar hosted by OptifiNow and Lender Price on May 15th at 10 am PT. The webinar will discuss how wholesale lenders are finding success in today’s challenging market by equipping their account executives with technology tools that are proven to generate more submissions and fundings. Make sure to register for this webinar today!

“Visio Lending is breaking records with a relentless focus on improving our Broker Experience. We are the nation’s leader in Non-QM Investor DSCR loans for buy and hold SFR rentals with nearly a decade of experience and over $2.8 billion in originations. No-DTI, 30-year terms, rate buy downs, free 45-day rate locks; I/O and Sub-1 DSCR options available. Now choose your own title company (including on refinances). Through our top-notch Broker Program, brokers are able to earn up to 2 points YSP, and 5 points total. Visio Brokers can count on a designated Account Executive and in-house processing.”

“Citi Correspondent Lending remains committed to responsible and sustainable growth with a focus on expanding our Community Lending platform. We’ve continued to gain momentum in these areas as illustrated by the 126 percent increase year-over-year in non-delegated Agency production and April’s 22 percent month-over-month increase in our proprietary HomeRun program production. We’re excited to discuss all that Citi offers now and what’s on the horizon at the upcoming Secondary and Capital Markets Conference. Reach out to your Citi Account Executive or our National Client Services Team to schedule time to talk with us.”

Government Program Updates

The lion’s share of locks continues to be headed Freddie & Fannie’s way, but there is a sizeable chunk that are either non-Agency (non-QM, jumbo, bond programs spring to mind) or are FHA, VA, and USDA. Let’s see what’s happening in that latter category.

FHA’s Mortgagee Letter (ML) 2024-08 further extends its foreclosure moratorium for borrowers with FHA-insured mortgages in Maui County, Hawaii. This extension, which runs through August 4, 2024, is effective immediately.

Mortgagee Letter (ML) 2024-07 strengthens FHA’s existing ROV process as part of HUD’s commitment to strengthening safeguards against unlawful discrimination in residential property valuations as outlined in the Property Appraisal and Valuation Equity (PAVE) Interagency Task Force. This update is the result of FHA’s consideration of the feedback received on its January 2023 proposed policy posted to its Single Family Drafting Table, and subsequent engagement with stakeholders and other federal agencies, including the Federal Housing Finance Agency (FHFA), to identify policies that would support a consistent industry-wide framework of minimum standards for the ROV process.

Updated information on SFH Section 502 Direct Funding was posted in USDA Rural Development SFH Bulletin.

Revisions that impact the AmeriHome USDA Guaranteed Rural Housing Program Guide are available in AmeriHome Mortgage Announcement 20240403-CL.

Newrez is updating its Government and Conforming loan underwriting guidelines, details are available in announcement 2024-024 and announcement 2024-025.

Capital Markets

With little in the way of economic releases this week or next until April CPI a week from today, investors continue to focus on Fed Chair Powell’s post-FOMC comments, potential Fed rate cuts in the latter half of the year, and the softer than expected April payrolls print. The MBS market is also busy digesting April agency prepayments, which were released late Monday, where speeds increased much less than expected. In reaction to the reports, UMBS30 and GNII rolls were mixed in mostly small moves.

Yesterday brought bland remarks from Minneapolis Fed President Neel Kashkari and some supply hitting the front end of the curve with a $58 billion 3-year Treasury auction that was received with good demand. Internationally, there was a policy hold from the Reserve Bank of Australia and a better-than-expected March Retail Sales report from the Eurozone.

Today’s domestic economic calendar kicked off with mortgage applications increasing 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. Sweden’s Riksbank was out with their latest monetary policy decision before the open. Later today brings wholesale inventories and sales, a Treasury auction of $42 billion 10-year notes, and remarks from three Fed speakers: Vice Chair Jefferson, Boston President Collins, and Governor Cook. We begin the day with Agency MBS prices little changed from Tuesday’s close and the 10-year yielding 4.48 after closing yesterday at 4.46 percent; the 2-year is at 4.83.

Employment

“Loan officers! Discover the radius advantage. Are you navigating a market that’s forgotten the value of loyalty? At radius financial group, we’re rewriting the script with our MLO Partnership-Proposition (MPP). We understand the industry’s pulse and the need for a genuine partnership—not just a platform to process loans. As lenders focus on consumers, we concentrate on you, the heartbeat of our business. You’re not just a number here; you’re the face of our brand, co-branded for success. We’re committed to investing in you, providing a stable home where your talents are nurtured and your book of business flourishes. For confidential inquires please contact Carla Herrera (781-742-6500).

Tired of having outdated news on your website or a stale newsletter? A skilled writer has some extra bandwidth and is available to produce weekly, monthly, or as-needed mortgage-related content for lenders on their website, email marketing or digital advertising. Reach out to Dustin Hobbs.

Carrington Mortgage Services has hired Steven Winokur to serve as VP, Marketing, Third-Party Origination using his “significant expertise in marketing strategy, brand development, marketing communications and digital marketing” to quickly build on existing marketplace momentum for Carrington’s diverse non-QM offerings. Congratulations!

Planet Home Lending has hired 20+ year vet Paul Walker to be Chief Financial Officer. “Paul will guide our financial strategy, leading Planet’s integrated platform to continuously deliver efficient, innovative solutions and services to consumers, business partners, and clients,” said Michael Dubeck, CEO and President of Planet Financial Group, parent of Planet Home Lending.

Flagstar Bank has promoted Rich Hoffman to senior vice president and head of TPO lending. Congratulations!

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

The cost to buy a home has reached historic highs in the U.S. — the median price of a home is $420,800, according to the Federal Reserve Bank of St. Louis — and housing and mortgage costs are increasingly turning into a November election issue. 

Home shoppers today need to an annual income of $114,000 in order to comfortably afford a typical home in the U.S., according to Redfin, nearly double what was needed to afford a typical home in 2020. That figure is far above the 2022 median household income of $74,580, according to the Census Bureau. 

Higher monthly payments are driven by higher home prices as well as significantly higher interest rates. Mortgage interest rates, which dipped to an historic low of 2.65% on a 30-year fixed mortgage in 2021, have soared beyond 7%, higher than they’ve been since 2001. Interest rates are set by the independent Federal Reserve, and President Joe Biden has insisted on the Fed’s independence. The Federal Reserve has been raising interest rates since 2021 in order to combat stubborn inflation. 

smaller, entry-level homes, several experts agree.

Once interest rates are removed from the picture, “then you’re left focusing mainly on the supply shortfall,” said Jim Parrott, fellow at the Urban Institute and former Obama White House economic adviser. 

The housing market has seen a severe shortage of smaller starter homes, Parrott said. Builders, he said, are incentivized to build large, often mansion-like homes, which more easily turn a profit. 

“The cost of building larger homes tends to be quite high, and it’s easier to recoup those costs if you’re making big, expensive homes,” Parrott said. 

The federal government needs to “make the math for building homes at the bottom of the market more favorable” for developers, Parrott suggested. And Congress can do this with the tax code. One approach would be to give a tax cut to any builder who constructs a residence for a first-time home buyer at below the median home price, Parrott said. 

“You need to provide some sort of tax benefit for building homes in the parts of the market where we need them the most,” Parrott said. 

But getting this divided Congress to work together on something like this would be challenging, Parrott said. 

“I’m afraid that the legislative environment right now just isn’t conducive to this sort of big, bipartisan effort,” Parrott said. “Hopefully after the election we’ll see a reboot that provides a more hopeful window.”

Withhold funding from localities that don’t change zoning laws

Most of the control over zoning lies with state and local governments. And states have been working to overhaul zoning to ease restrictions on denser residential construction. But the federal government isn’t entirely powerless on zoning. 

Parrott said the federal government has used a carrot approach to encourage localities to rezone in favor of denser housing, but now he thinks maybe it’s time to use a stick. For instance, any federal funding for communities could be conditioned on how zoning decisions are made. Communities receive substantial financial support from the Department of Housing and Urban Development (HUD), the Transportation Department and other agencies for projects, Parrott noted. 

“If federal policymakers were to condition even a little bit some of that funding on whether or not local decision-making is supportive of or prohibitive of more density,…then you could begin to change things at the local level in a way that would really matter,” Parrott said. 

Such a move would be almost certain to trigger strict opposition from localities and unions. But more states have already been enacting legislation to supersede local zoning rules, said Alex Horowitz, director of housing policy at The Pew Charitable Trusts. Horowitz said nine states have passed laws allowing accessible dwelling units or ADUs — like small, independent, mother-in-law suites — on homeowners’ properties. 

Sell federal land to use for housing

“The federal government owns hundreds and hundreds of millions of acres, and we’re not talking about the National Parks here,” said Edward Pinto, co-director of the American Enterprise Institute’s Housing Center. 

But that’s a proposal that Congress would need to authorize. 

It has been tried. Sen. Mike Lee’s HOUSES Act of 2022 would have approved the sale of federal land to states and localities for below-market rates for housing projects. The federal government owns two-thirds of the land in Lee’s home state of Utah, and the gap between median household income and median home cost is largest in the West, according to HUD. 

But his bill went nowhere. The Bureau of Land Management, which oversees federal land, said in written Senate testimony that it would be forced to “sell land without sufficient evaluation of the values to the public or to future generations, or sufficient compensation to the American taxpayer.”

The sale of unused land could also attract opposition from environmentalist groups, though sometimes that can be overcome. In March, Washington Gov. Jay Inslee signed a law that will allow that state’s Department of Natural Resources (DNR) to transfer some of its property to localities to build affordable housing. 

Washington state GOP Rep. April Connors, who introduced the bill, noted that that the DNR had 7,000 acres of land that was unusable for timber harvesting because it was too close to developed land. Building housing on it could ease the shortage of homes in Washington, Connors noted in a statement, pointing out that the state has the “fewest housing units per household in the nation and nearly half of renters spend a third of their income on rent.”

Improve consumer access to financing for manufactured housing 

Manufactured homes are factory-built residences built after 1976 — formerly known as mobile homes — that can be placed on land. The average new manufactured home sold for $126,600 in November 2023, according to the Census Bureau. 

But loans are harder for homebuyers to secure for manufactured homes than for traditional ones, Horowitz said. And since manufactured housing usually involves shipping over state lines, the federal government plays a big role. HUD controls access to financing for manufactured homes, and rules are stricter than they are for traditional homes. 

Interest rates are typically also higher for manufactured home loans than for traditional home loans, in part because unlike traditional homes, which tend to appreciate in value over time, manufactured homes can depreciate. The structures are also viewed as riskier than conventional homes because they’re usually harder to sell on the market. Horowitz suggests HUD could make it easier for borrowers to access loans. 

Eliminate tax breaks for second (and third) homes 

Congress could increase the national housing stock over time by eliminating tax breaks for any homes that aren’t a primary residence, said AEI’s Pinto. 

Getting rid of the mortgage interest rate deduction for non-primary residences would eventually encourage many homeowners to sell, Pinto said. 

“Why should they be subsidized by the tax code,” Pinto asked. 

Without that tax break, hundreds of thousands of homes would come back onto the market as primary residences, Pinto said. 

“It would cost the federal government basically nothing,” Pinto said. “They’d actually save some money on the tax savings, and it would not increase demand at all.”

This isn’t likely to happen soon though. Such a measure would have to be passed by Congress — and many lawmakers own second and third residences. And a number of their constituents and donors own multiple homes. Realtor interest groups would oppose it, too, Pinto said.

The most Congress has done in recent years to address tax breaks for expensive residences was in 2017, when the GOP-controlled Congress capped the deduction limit for state and local income taxes, which hit coastal, heavily Democratic states like New York and California particularly hard. 

Still, eliminating the tax break for secondary homes is “low-hanging fruit,” and would increase supply and reduce demand simultaneously, Pinto said. 

Lowering interest rates probably wouldn’t lower housing costs 

Economists mostly doubt that action by the Federal Reserve to significantly lower interest rates would help much. 

“If the Fed were to cut rates in a way that allowed mortgage rates to fall to the 4% range, we would see both supply and demand increase in the housing market,” said Chen Zhao, who leads the economics team at Redfin. 

And whether home prices rise or fall would depend on what then happens to housing supply and demand. 

“If demand increases more, then prices would grow at a faster rate than they are currently,” Zhao said. “However, it’s also possible that supply would increase more because sellers have been so locked in by low existing mortgage rates. If that’s the case, then price growth could fall. I think it’s unlikely in either case that prices would fall outright.”

Would Biden or Trump’s policies help or hurt housing costs?

Former President Donald Trump hasn’t offered policy suggestions to address housing affordability yet, although he criticizes mortgage interest rates and home prices under President Biden. 

The president has proposed giving a $10,000 tax credit to first-time middle class homebuyers, and up to $25,000 to first generation home buyers. He’s also introducing a $20 billion fund that in addition to helping build affordable rental units, is meant to peel away local barriers to housing development and spur the construction of starter homes. 

Down payment assistance may help home shoppers in the near term, although the tax credit probably falls short of the traditional 20% down payment on most homes. With monthly payments at record highs, this down payment assistance would not lower monthly costs. And down payment assistance could have unintended consequences, Pinto said: “It would increase the price of entry level homes.”  

What can the White House do about high housing costs?

05:26

The effect down payment assistance or a buyer tax credit would have on the housing market is complicated in a supply-constrained market, Horowitz said.

While Trump hasn’t made specific proposals on housing, his proposals in other policy areas would likely drive home prices up, Parrott said. Mass deportations of undocumented migrants, for instance, could drive the cost of labor higher, and raising tariffs on China could drive up material costs, Parrott said. 

“The things that Trump has said relevant to housing almost all cut the wrong way,” Parrot said. 

How home costs could affect the election 

The cost of home ownership is a top concern for Democrats and Republicans, city dwellers and rural residents alike, said Parrott. Once an issue has broken through the barriers of red and blue, metro and rural, “then it changes the probability of something happening,” Parrott said. 

“Housing has found its way to the grownups table, in effect, for the first time,” Parrott said. 

And even though it’s the Fed that controls interest rates, Mr. Biden could be held accountable by voters. 

“President Biden’s reelection is closely tied to the cost of homeownership and thus, the fixed mortgage rates,” Mark Zandi, chief economist at Moody’s Analytics predicted. “The fixed rate is currently just over 7%. If it rises above 8% for any length of time, his reelection odds will fade, and if it falls closer to 6% his odds will increase meaningfully, all else equal.”

More

Kathryn Watson

Kathryn Watson is a politics reporter for CBS News Digital based in Washington, D.C.

Source: cbsnews.com

Apache is functioning normally

The Department of Veterans Affairs previously released a deadline with some leeway for a transition from a voluntary foreclosure suspension into a new loss mitigation program, where appropriate; but trade groups still want more time.

The Housing Policy Council and Mortgage Bankers Association in a letter released late last week asked for the VA to “extend the mandatory compliance date beyond Oct. 1” citing a need for more guidance related to the Veterans Affairs Servicing Purchase program.

The two groups specifically called for more direction “around loss mitigation and servicing transfers” as “critical components of the work that remains to prepare the program for implementation.” 

They’re also awaiting a response to a request for regular meetings with the VA as part of the process.

Once those steps are in place, implementation could take six months, the trade groups said.

The VA said that it has been and will continue to work closely with the industry as it has throughout the development of the program, which allows the department to purchase defaulted loans from servicers, modify them and place the mortgages in its portfolio to prevent foreclosures.
 

“VA was present at numerous industry events, to include those held by the Mortgage Bankers Association, to discuss the upcoming VASP program. The goal of our efforts and external communications has been to provide transparency while creating an affordable alternative to foreclosure that benefits veterans, the Federal government and the taxpayer. Many program improvements to VASP were informed by those valued discussions,” the department said in an emailed statement.

Around 40,000 veterans have been affected by the discontinuation of a temporary partial-claim program from the pandemic in October 2022. These distressed borrowers have been awaiting VASP’s setup as the successor to the partial claim.

The VA wants mortgage servicers to be responsible for identifying borrowers eligible for the program, making them central players in its implementation.

Servicers will “try to implement VASP as soon as possible,” even though they have the aforementioned reservations about the timeline, according to the two groups. They support “an extension of the voluntary foreclosure moratorium to align with the effective date.”

“VA will continue to work with the industry, to include training and discussions, to address any questions regarding implementation,” the department said. “Please note, although VA is available to take VASP loans on May 31, servicers have until Oct. 1 to comply.  We expect servicers to explore all options for home retention prior to foreclosure, to include VASP. This could mean placing a loan in a special forbearance until the servicer can submit the loan for VASP consideration.

“We look forward to our continued work with industry partners and have confidence in them to deliver VASP to eligible Veterans.”

Meanwhile, the nature of the VA’s partial guarantee persists as an issue that complicates its efforts to provide manageable foreclosure prevention, the Housing Policy Council added in a separate letter to two senators.

In the letter to Democratic Sen. Jon Tester of Montana and Republican Sen. Jerry Moran of Kansas, HPC asked for more to be done to address the issue in the Veterans Housing Stability Act of 2024, a bill introduced earlier this year. 

Tester is the chairman of the Senate Committee on Veterans Affairs. Moran is the ranking member of that committee.

The council showed concern that the current bill’s proposal to restore the partial claim used in the pandemic runs into an issue the VA cited in originally discontinuing it: it introduces “additional VA risk exposure” that “is not budget neutral.”

The department has said VASP “will result in a government subsidy reduction of approximately $1.5 billion from 2024 to 2033 because it’ll cost less to purchase loans through the program than it would to go through the foreclosure process.

The HPC suggested a measure in the bill that could “make the VA’s powers more like those of the Federal Housing Administration” might address issues resulting from the former’s 25% guarantee

However, the council acknowledged the two are far different due to the FHA’s 100% insurance, which makes doing this challenging.

VASP, while different in structure and implementation from the administration’s new payment-supplemental partial claim, has a similar goal to address difficulty modifying loans for affordability purposes given differences in current and originated mortgage rates.

Something needs to be done to change the current approach because the current delay in the foreclosure process “increases a veteran’s indebtedness, adds to VA’s mortgage credit risk, and imposes a liquidity burden on servicers,” the council said.

Source: nationalmortgagenews.com

Apache is functioning normally

The theme of “waiting” amid an empty calendar will be played out by the end of the week (if it’s not already played out from most of the past year spent waiting for only a handful of key events each month). Despite a few scattered events on today’s calendar, none of them are worth any significant potential volatility for bonds.  Without big ticket data, other considerations become a bit more visible in terms of their impact on trading levels.  In today’s case, it’s the return of European markets after a 3 day weekend.  Weaker PMI data in Europe helped bonds overnight and US traders have added to the gains in the first few hours.

In the slightly bigger picture, however, we see that it requires a microscope to draw any conclusions from this morning’s movement and its relationship to the present trend.

Also recall yesterday’s commentary regarding the range set by the April 10th CPI reaction, and the assertion that this would be a logical place to wait for the next CPI release.  Against this backdrop, this morning’s moderate improvement only brings bonds closer to the center of that range.

Source: mortgagenewsdaily.com

Apache is functioning normally

Americans are in limbo about where the housing market could go next, but they are resolute about the conditions for buying right now.

Nearly 80% of Americans think it’s a bad time to buy a house, according to the Fannie Mae Home Purchase Sentiment Index (HPSI), a survey gauging homebuying and selling confidence. The index stayed flat in April compared to the previous month as consumers adjust to elevated mortgage rates that show little promise of easing. The average rate on a 30-year loan stood at 7.22% last week. Consumer confidence is still up 8% year over year.

In addition, fewer Americans believe mortgage rates will decline over the next 12 months, sidelining buyers awaiting affordability improvement.

“Housing sentiment increased from November through February, driven largely by consumer belief that mortgage rates would move lower,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “However, recent data showing stickier-than-expected inflation, rising mortgage rates, and continued home price appreciation appear to have given consumers pause regarding the market’s direction.”

Waning expectations of a rate drop are becoming a common trend.

In the latest survey, only about 1 in 4 Americans believed rates would drop over the next 12 months, a decline from nearly 1 in 3 a month prior. In comparison, at the beginning of the year, almost 40% of survey respondents said they expected rates to fall.

“[Strong economic and job market data] will keep mortgage rates at elevated levels for the near future, sidelining some prospective buyers from entering the housing market,” said Edward Seiler, Mortgage Bankers Association’s (MBA) associate vice president.

With rates hovering around 7% for a 30-year loan over the last few months, monthly mortgage costs have risen. The national median payment rose past $2,200 in March from $2,184 in February, according to the MBA. Payments could become even more expensive going forward as average 30-year loan rates surpassed 7% over the last three weeks, with no signs of falling.

Read more: Mortgage rates top 7% — is this a good time to buy a house?

Contrasting homebuyers’ woes, an increasing number of Americans think now is a good time to sell. The share of survey respondents confident in selling reached nearly 70% in April, up from 60% at the beginning of the year and 62% in the same month last year.

Home sellers’ growing optimism could be attributed to the continual growth in home prices nationwide. The latest national housing price index gained 6.4% in February, according to the S&P CoreLogic Case-Shiller US National Home Price.

“As interest rates go up, people’s purchasing power goes down, and thus, so should home prices. But that hasn’t happened in this latest correction cycle,” Jon Grauman, founder of Grauman Rosenfeld, a real estate firm in Los Angeles, told Yahoo Finance.

Only about 1 in 4 Americans believed rates would drop over the next 12 months, a decline from nearly 1 in 3 a month prior. (JUSTIN TALLIS via Getty Images)

Consumers are braced for high prices — more than 40% of Fannie Mae’s survey participants expect home prices to increase over the next 12 months, compared to 37% earlier this year.

“We think consumers’ generally improved sense of home-selling conditions bodes well for listings and housing activity, particularly for the segment of the population who may need to move for lifestyle reasons and have already begun adjusting their financial expectations to the current mortgage rate and price environment,” Duncan said.

Correction: A previous version of this article listed the incorrect firm name for Grauman Rosenfeld. We regret the error.

Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).

Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more

Read the latest financial and business news from Yahoo Finance

Source: finance.yahoo.com

Apache is functioning normally

It was an action-packed week for the housing and mortgage market. Wednesday’s Fed announcement was the highlight, but we also got several economic reports that caused rate volatility. Thankfully, it was mostly the good kind.

The week got off to a slightly stronger start with Monday’s only major rate news being updated borrowing estimates from the Treasury Department.  Why would such a thing matter? 

Treasuries largely dictate day to day interest rate momentum in the U.S. because they are abundant, simple, and as close to risk-free as it gets.  As such, Treasuries are the universal yardstick for all other debt in the U.S., including MBS, the mortgage-backed securities that have the most direct impact on mortgage rates.  This is why Treasury yields and mortgage rates correlate so well over time.

Treasuries can take cues from several sources.  One of the biggest is the change in the outright level of supply.  In other words, how much more debt is the U.S. government issuing in the upcoming quarter?  If that number is higher than expected, it puts upward pressure on rates. Monday’s news from Treasury was fairly palatable and roughly in line with market expectations, which allowed rates to stay steady.

Things changed on Tuesday when the Employment Cost Index (ECI) data came out.  This is one of several reports that the Fed has mentioned as being important to the rate outlook recently.  Higher numbers mean higher rates, all other things being equal.  This week’s installment showed Q1 costs at 1.2, up from 0.9 in Q4 and well above the market consensus of 1.0.  Rates hit the highest levels of the week as a result, both in terms of Treasury yields and mortgage rates.

Things changed on Wednesday. The morning economic data did no harm, but didn’t necessarily deserve much credit for turning things around.  Those honors went to the Fed Announcement in the afternoon–specifically: Fed Chair Powell’s press conference.

Markets already knew the Fed wouldn’t change rates at this meeting, so the focus was likely to be on Powell anyway.  Expectations were more varied as to how he might address the recent inflation data, but we knew he’d have to be less convinced than last time when it comes to 2024 rate cut prospects.

Unsurprisingly, Powell acknowledged that what had looked like one month of noise earlier in the year was now an undeniable and unwelcome shift in progress toward lower inflation.  Nonetheless, he expects progress to get back on track in the coming months and for the Fed’s next move to be a cut instead of a hike. 

Markets also appreciated his clarification on political matters. Many analysts have suggested the Fed won’t be able to cut rates until December because it risks looking like a political move if it happens before November’s election.  But Powell was clear in saying the Fed would take whatever monetary policy action it deemed appropriate whenever the data suggested it.  In other words, if inflation were to begin falling in a more meaningful way in the next several months and if the economy began to falter, we would not have to wait several more months for the Fed to deliver some rate relief.

With that, momentum had shifted in favor of lower rates for the week.  There was some follow-through on Thursday, but even better gains on Friday after the latest monthly jobs report came out weaker than expected. Job creation fell to its lowest level since October, and that’s in line with the lowest since covid lockdowns.  It was also well below the forecast consensus (175k versus 243k).

Historically, 175k is a solid number, but everything’s relative.  Rates typically fall when the job count undershoots the forecast by that much and Friday was no exception.  10yr Treasury yields and mortgage rates ended the week at the lowest levels since April 9th. Traders further lowered their outlook for the end-of-year Fed Funds Rate, once again pricing in at least one full cut this year.

On the housing data front, the week’s most notable releases were the two leading national price indices from FHFA and Case Shiller.  Both were much higher than forecast for the month of February, showing annual growth of 7.0% and 7.3% respectively.

From here, the calendar is comparatively much more quiet until the biggest economic report of the month on April 15: the Consumer Price Index (CPI).  This is the broad inflation index that has been at the scene of many crimes against the world of interest rates.  Reactions have been big enough that it’s not uncommon to see rate momentum fizzle sideways as traders wait for the next inflationary shoe to drop.

Source: mortgagenewsdaily.com

Apache is functioning normally

#masthead-section-label, #masthead-bar-one display: none

Advertisement

SKIP ADVERTISEMENT

You have a preview view of this article while we are checking your access. When we have confirmed access, the full article content will load.

What the Fed’s Moves Mean for Mortgages, Credit Cards and More

Higher rates benefit those who can save, but for borrowers falling rates would reduce bills on credit cards, home equity loans and other forms of debt.

The average 30-year mortgage rate was 6.74 percent as of March 14.Credit…Amanda Lucier for The New York Times

  • May 1, 2024

American households who were hoping interest rates would soon decline will have to wait a bit longer.

The Federal Reserve kept its benchmark interest rate unchanged on Wednesday, noting that progress on cooling inflation had stalled.

The central bank has raised its key interest rate to 5.33 percent from near zero in a series of increases between March 2022 and last summer, and they’ve remained unchanged since then. The goal was to tamp down inflation, which has cooled considerably, but is still higher than the Fed would like, suggesting that interest rates could remain high for longer than previously expected.

For people with money stashed away in higher-yielding savings accounts, a continuation of elevated rates translates into more interest earnings. But for people saddled with high cost credit card debt, or aspiring homeowners who have been sidelined by higher interest rates, a lower-rate environment can’t come soon enough.

log into your Times account, or subscribe for all of The Times.

Thank you for your patience while we verify access.

Already a subscriber? Log in.

Want all of The Times? Subscribe.

SKIP ADVERTISEMENT

Source: nytimes.com

Apache is functioning normally

Counterintuitive Rally And Asymmetric Risk

By:
Matthew Graham

Thu, May 2 2024, 4:26 PM

Counterintuitive Rally And Asymmetric Risk

Bonds began the day in slightly stronger territory and managed to hold the gains after the early economic data which consisted of unfriendly readings in Challenger layoffs, Jobless Claims, and Q1 Unit Labor Costs.  All three spoke to ongoing labor market strength with the latter adding some inflationary fuel to the fire.  But the bond market is apparently tired of reacting to the alarming data from Q1 and March.  Instead, the perfect adherence to previously established technical levels (4.64 and 4.57 in terms of the 10yr) suggests intraday volatility was a factor of positioning and short-covering ahead of Friday’s jobs report.  There is some asymmetric risk potential on Friday considering how unfazed bonds seem to be by yet another unfriendly report (with the implication being a greater willingness to chase the bid on a downbeat jobs number). Just remember, the previous sentence tells us nothing about the direction of trading–only probable magnitude.

    • Jobless Claims
      • 208k vs 212k f’cast, 208k prev
    • Continued Claims
      • 1774k vs 1800k f’cast, 1774k prev

08:34 AM

10yr up from 4.592 overnight lows to 4.621 (still down 1.3bps on the day).  MBS are still up an eighth of a point, but down 2 ticks (.06) from the highs.

12:37 PM

Some weakness into the 9am hour, but now at the best levels of the day.  10yr down 4bps at 4.593.  MBS up just over a quarter point.

03:18 PM

Flat at best levels.  MBS up nearly 3/8ths and 10yr down 5.6bps at 4.578

 Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.

Source: mortgagenewsdaily.com

Apache is functioning normally

With the Federal Reserve meeting again this week, many homebuyers are wondering about the future of mortgage interest rates.

Getty Images


All eyes will once again turn to the Federal Reserve this week as they meet to discuss the next steps with interest rates and economic policy. Specifically, will they raise rates above their current 23-year high? Or will they keep them steady following a series of disappointing inflation reports at the start of 2024? After all, rate cuts that seemed promising at the beginning of the year now seem off the table, possibly for the rest of the year. 

And while the Fed doesn’t directly dictate rates for loans like mortgages, personal loans and other borrowing products, what they ultimately decide will greatly affect what rate lenders are willing to offer. Homebuyers will then follow this week’s meeting carefully. After coping with the highest mortgage rates since 2000, buyers are looking for relief — or signs of rate relief to come. 

To that point, many are wondering if mortgage rates will rise after this week’s Fed meeting. That’s what we will break down below.

See what mortgage rate you could lock in before a potential increase here now.

Will mortgage rates rise after this week’s Fed meeting?

While no one knows with certainty what will happen after the Fed meeting, set for April 30 and May 1, the chances of a rate cut are minimal. Thanks to sticky inflation and a target inflation rate goal of 2%, more work must be done (the current inflation rate is 3.5%). So rate cuts look out for this week. While a rate hike is possible, it’s also unlikely to happen until more data about the fight against inflation becomes available. 

With those scenarios accounted for, then, it’s likely that the Fed will keep its benchmark interest rate unchanged at a range between 5.25% and 5.50%. But what will that mean for mortgage rates? 

It won’t be particularly positive. While a rate pause is better than a rate hike, even a hint at an extended pause — or the potential for rate hikes in the months to come — could cause mortgage rates to rise in anticipation. So what Fed chairman Jerome Powell says this week will go a long way toward cooling rates — or making them rise further. However, if homebuyers were hoping for a rate cut, as some were predicting at the end of 2023, that’s not likely to happen, at least for now.

See what mortgage rate you could secure before the Fed announces its rate decision.

How to get a lower mortgage rate now

While the sub-3% mortgage rates of 2020 are unlikely to return anytime soon (or ever again), that doesn’t mean homebuyers still can’t get a lower mortgage rate now. It will just require a bit more work and strategic planning. Here are three ways buyers can get a lower mortgage rate now:

  • Buy mortgage points: Mortgage points can potentially help you secure a rate half a percentage point or lower than average. By paying points (or a fee) to a lender at closing (or by having it rolled into your overall mortgage loan), you can potentially save hundreds of dollars each month with a lower rate. That said, the amount of points you can typically buy will be limited and will vary from lender to lender. 
  • Get an adjustable-rate mortgage: An adjustable-rate mortgage (ARM) works as it sounds. It’s a mortgage in which the rate will adjust over time, typically starting at a below-average rate before rising after a predetermined period has concluded. That said, it’s important to crunch the savings here before acting because when the rate does adjust, it could become costly for many buyers. 
  • Shop around: While you’re unlikely to find one mortgage lender that offers a rate a full point lower than another, you can, potentially, find one that offers a slightly lower rate than others. And in today’s rate climate, every basis point counts. So shop around for lenders to find one offering the best rates and terms (and be sure to compare fees and closing costs, too, to ensure that the lower rate won’t be canceled out by fees paid elsewhere).

The bottom line

The strong potential for mortgage rates to rise again this week, even if the Fed keeps rates unchanged, could be a motivating factor for buyers to lock in a rate now. That said, there are still effective ways to get a below-average rate, ranging from buying mortgage points to adjustable-rate mortgages to simply shopping around for the best rates and terms. None of these strategies will bring back the record-low mortgage rates of recent years, but they are all worth carefully considering until the Fed finally starts cutting rates again. 

Matt Richardson

Matt Richardson is the managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.

Source: cbsnews.com