Mortgage News

Definition, adjective – Optimistic or positive, especially in an apparently bad or difficult situation. “He is sanguine about prospects for the global economy”

European Central Bank (ECB) hiked rates 50bp this morning. Stocks dropped but have recovered for the most part. What will the Feds do March 22nd. Do nothing or explain the hike is the last for a long time.

Remember our inverted curve; the 2y bond has been outperforming the 10y. this is not normal. we are seeing a “de-inversion” on the horizon indicating a start to the recession.

This is very good news for rates. We have seen a demonstrable change in rates over the last week and expect that trend to continue.

It’s Thursday but sure feels like it’s been a month. Have a great rest of your week and always feel free to reach out.

The dust is still settling in the banking industry and has caught a few European banks off guard. We are not quite out of the woods as a few more trees may fall.

Credit Suisse’s struggles looks to be unrelated to the regional U.S. banks, the combination could prompt a reexamination of the banking system.

We continue to see rate improvement this week and expect this to continue. Next week the Feds meet, we will see what happens then.

On a happy note, a Japanese company received a Guinness World Record when it harvested a giant radish that weighed in over 101 pounds.

Manda Fermentation Co., is a supplement and fertilizer company.

Have a great rest of your week and call or email anytime.

The big news this morning is no news or at least the news we expected. The CPI (Consumer Price Index) came in as expected at 6%. Inflation still is stubbornly high but continues to go down. I personally prefer to see this in graph form below.

The Feds meet next week and are expected to raise rates 0.25% from the expected 0.50%.

We continue to watch the aftermath of Signature bank and Silicon Valley Bank. These are both unique situations though it has rattled the market and consumers.

Have a great rest of your week and yes its only Tuesday. Feels like Friday already.

As we are now aware, we have had three regional bank failures and a lot of nervous deposit holders. Investors are reassured by regulatory actions to limit the fallout. Specifically, that SVB depositors will be protected.

We hope the FEDs will pause and see what they have done. Let’s hope they move less aggressively raising interest rates.

From a bond perspective, we are seeing one of the largest rate improvements I have seen in the last five years. As of last Thursday, we have seen a 159bp (basis point) drop-in rates. The national average rate went from 7.126% to 6.879%.

So, what happened to Silicon Valley Bank.

How did SVB get here: During the pandemic they had a huge influx of deposits. Some of those deposits they made loans, while other funds were deposited in Securities i.e., bonds. The underlying issue was the Fed raising rates. When the rates rose, those purchased bonds lowered in value. This is not a problem unless you need to sell early.

Deposits started to leave the bank faster than they anticipated which forced SVB to sell the bonds at a reduced price and took a loss. Last Wednesday they announced they needed to raise capital the next day, and that panicked the depositors. The stock sold off and in one day 42 billion dollars was withdrawn. SVB was forced to meet draw demands. They sold $21B and forced to take a $2B loss.

How Significant is the collapse: it matters because it could panic other parts of the banking system like Signature bank and First Republic, who announced they received funds from the Federal Reserve and JP Morgan.

What could happen next: The Key thing to watch is, are the investors and depositors reassured. Time will tell.

Call or email with any questions.

When everyone and their brother tells you that daylight savings time is coming this weekend as if I haven’t heard it from a thousand other people. So, I decided I am not going to tell you that daylight savings time is this weekend.

Now that my rant is over…  Great news for rates, in fact one of the larger moves this year despite the hot jobs market. The February report shows 311k new jobs, but unemployment rose to 3.6%. We expected it to be unchanged.

There is still a strong leisure and hospitality component to that number, in fact retail and healthcare rounded out the top three jobs’ numbers.

Employers had 10.8 million open jobs in January. December had 11.2 million. These totals are almost double the number of unemployed people seeking work.

Elevated wage growth is a sign the economy is still overheated. This is a challenge for the Fed. As wages increase so does the employers’ products.

Get out there and start looking at homes and contact your lender or me. Rate improvement translates to more qualified borrowers and price points.

YouTube link to useful short videos regarding qualifying for a mortgage and the process.

That’s 32 trillion gallons of water. Back to business… The critical BLS (Bureau of Labor Statistics) Jobs Report is due out tomorrow.

The market is expecting 200,000 job creations with the unemployment rate unchanged at 3.4%. If the data comes in weaker as we anticipate, the rates should improve.

The news has highlighted the job cuts in technology but there were cuts in all 30 industries which has not happened in 10 years.

We are floating our clients until tomorrow. The Jobs Report is out 8:30am ET.

Have a fantastic rest of your week and always feel free to reach out this weekend with any questions.

Not exactly. Benjamin Franklin was likely one of the first to talk about daylight saving time in the 1780s, presumably to save money on candles.

Spring is in the air, and I am ready to get on a new train. We are seeing some rate improvement and the buying season is just around the corner.

The yield curve continues to invert. This means the short term 2-year bond is outperforming the 10-year. Usually a longer play demands higher yield. This is a continued indication of a recession.

ADP released their February jobs report which was well over the predicted 200k at 242k job creations. Leisure and Hospitality again lead the way. Remember we had huge job losses during Covid. Those jobs are being added back at a rate of 100k each month. We are nearing the end of those additions.

Its Wednesday, half way through the week and I’m back on the road.

Powell is speaking in front of the Senate this morning. If the data bears out, he is prepared to continue the rate hikes. Though inflation is easing, we still have a long road ahead of us.

Prematurely loosening policy might sound good but could be problematic down the road.

We have the lowest months of inventory over the last 20 years, averaging just 2.7 month of inventory. Between 1999 and 2005 it averaged over 5 months of inventory.

Have a great rest of your week.

I am in the middle of a road trip and the one constant is marmalade. Every breakfast its there waiting for me but I do not know anyone who likes it.

Mortgage Bonds have improved the last few days, but rates have gone up over a point in the last month. As I have said previously, as inflation goes, so go the rates.

This is a buyers’ market. The opportunity for appreciation is more evident in a market with low inventory and potentially at the bottom.

Had a great Real Estate seminar Friday afternoon. Thank you, Allan, Gina, and Rickie, for setting this up and inviting me to a part of the mortgage panel.  

“I never worry about the problem. I worry about the solution.” – Shaquille O’Neal

In our industry we are bombarded with a plethora of questions. As professionals if we don’t know the answer we know how to get it. Sometimes those answers are hard to hear but necessary.

I am on a mortgage panel at CDAR later this morning speaking with a room full of Real Estate Agents. I will update on the Monday blog.

We are seeing some recovery in the Bond market today to our favor. Looking to next week for the ADP Employment Report.

Have a fantastic weekend and always available if you have any questions.