Southern California home prices are falling, eroding equity homeowners could spend on renovations or emergencies. People who bought at the peak are particularly nervous.
Today I am your guest, Mike Hambright! Today, Iâm gonna talk about something thatâs been on my mind and something that Iâve been struggling with personallyâ¦itâs a little cliché but itâs âwhat is your WHYâ? Iâve been struggling with it myself and I actually asked this question in the Facebook Group the other day and I want to share some thoughts with youâ¦Letâs get started!
For some, this will be old hat. For others, there’s a mystifying dynamic that demands explanation. The confusion stems from years of being conditioned to believe that when the Fed “hikes” or “cuts” rates that mortgage rates move accordingly. That’s actually not exactly how it works. The Fed is currently in a rate hike cycle, so we’ll focus on that. Today was the latest installment with an as-expected 0.25% increase to the Fed Funds Rate. There are two important points in that last sentence. First off, the rate hike was entirely “as-expected.” That means the market was able to fully prepare for it in advance. One portion of the market in question is that of mortgage-backed securities (MBS). These are basically bonds that are guaranteed by pools of mortgage loans. As investor demand waxes/wanes for those securities, the value of a mortgage changes in the eyes of investors. This is what determines day to day mortgage rate movement above all else. The Fed only has 8 scheduled meetings to hike/cut rates per year whereas MBS can move as frequently as they want on any given business day. All that to say that if the market knew the Fed would hike 0.25%, it has long since been baked into MBS prices as well as the rest of the bond market. The second important point is that the Fed deals with the “Fed Funds Rate.” This is a target range for the shortest-term lending among large financial institutions. The easiest way to think of it is like the Fed setting the rate of return on a savings account. The higher it is, the more banks will park money there and the higher rates they must charge other banks and clients to borrow money (otherwise it makes more sense to just park the money in the bank and earn that interest).
Rather than clipping coupons, I have a new strategy for saving money on groceries: computing how much each meal costs to feed my family.
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Mortgage rates for 30-year fixed mortgages rose this week, with the current rate borrowers were quoted on…
Buyer sentiment data shows that potential new homeowners are chilling out about purchasing in this seller’s market.
The post June 2021 Signals Indicate Housing Market Easing appeared first on RealtyBizNews: Real Estate Marketing & Beyond.
Interest rates take cues from several places. Regularly scheduled economic data is always a consideration because a stronger economy implies more growth and tighter Fed policy, both of which are bad for rates. Certain reports carry significantly more weight than others. If put to a vote, the perennial top dog would be The Employment Situation (aka “the jobs report”). Over the years it is responsible for more volume and volatility in rates than any other data. The most recent installment came out this morning and it was a doozy. The headline number of the jobs report is a tally of new job creation reported by employers: nonfarm payrolls (NFP). That’s just a fancy name for “jobs.” Today’s data reported the new jobs added in January, and there were quite a bit more than expected. NFP can be fairly volatile. It’s not uncommon to see the number deviate from forecasts by more than 100k a few times a year. Those big deviations usually result in big reactions in rates. Forecasts called for just shy of 200k jobs. Today’s actual NFP number came in at a staggering 517k, thus edging out March 2022 to stand as the biggest deviation since August 2021. To some extent, the massive gains may be attributed to a seasonal adjustment process that still struggles to understand new seasonal patterns that emerged after the pandemic. But even if we forego seasonal adjustments, the economy added more than 400k jobs per month on average over the past 12 months and the employment rate has fallen to the lowest level since the 1960s.
Bonds Talked Into Modest Gains by Europe US bond traders didn’t necessarily come into work with the intention of adding to yesterday’s rally. It was only after European bonds exploded into stronger territory that US yields grudgingly followed–very grudgingly. In fact, as soon as European trading wrapped up for the day, US yields rose back to meet yesterday’s 3pm closing levels. Several big corporate bonds may have added some pressure. We can also consider that US bonds already had a fairly big rally after the Fed yesterday. But the simplest view would be that it didn’t make sense to get too carried away with the jobs report on deck in the morning. Econ Data / Events Jobless Claims 183 vs 200 f’cast,186k prev Unit Labor Costs, Q4 1.1 vs 1.5 f’cast, 2.0 prev Market Movement Recap 09:05 AM Flat to slightly stronger overnight. Additional gains after ECB announcement. 10yr down 8bps at 3.34%. MBS up 3/8ths of a point 12:51 PM Largely sideways during the domestic session, but off the best levels from earlier this morning. 10yr down 3.8bps at 3.376. MBS up 6 ticks (.19) in 4.5 coupons and 3 ticks (0.09) in 5.0 coupons. 01:51 PM Weakest levels of the day in Treasuries with 10yr up to 3.404 (still down 1.3bps on the day). MBS are also still slightly stronger, but more than a quarter point off the highs. 03:18 PM Not much additional weakness over the past hour. Still slightly stronger on the day but near the weakest levels of the day.
New data shows job openings are high and jobless claims are low, with a 3.4% unemployment rate, which isn’t ideal for mortgage rates.
Mortgage rates for 30-year fixed mortgages fell this week, with the current rate borrowers were quoted on…