ADP Employment Report for August showed only 99,0000 jobs created. Most with companies with 50 or more employees. This is another datapoint for the Feds September 18th meeting.
We are holding our clients locks until Tomorrow’s Jobs Report.
Now getting back to Oil.
When oil production began, there was no standard container for oil, so oil and petroleum products were stored and transported in barrels of different shapes and sizes. Some of these barrels would originally have been used for other products, such as beer, fish, molasses, or turpentine.
JOLTS (Job Openings and Labor Turnover Survey) came in lower than expected, with numbers falling from the anticipated 8.1M to 7.7M.
At some point, actual jobs will be affected. Remember, this is the Job Openings number—another datapoint the Fed is closely watching.
The quit rate was reported at 2.1%, the same as last month and the lowest level since 2018 (excluding COVID data).
ADP Employment and Initial Jobless Claims are set to be released tomorrow, with the BLS Jobs Report coming out on Friday. Friday’s report could be the deciding factor that pushes the Fed towards a 50 basis point cut on the 18th.
That’s just my perspective, but it’s what we’re expecting.
Mortgage bonds have reacted positively this week, and we expect this trend to continue.
Remember, our team offers a soft credit pull. Let’s get your application tuned up and ready for a refinance or purchase.
With a short week in front of us, its all about Jobs report. JOTLS which measures Job Openings for July is expected to fall slightly to 8.1M.
The hiring rate fell to 3.4% which is the lowest since 2013. This does not include Covid which was 3.1%. Another indication of a slowing jobs market.
There is other data point within the JOLTS report, the Quit rate. The June report showed the Quit rate fall to 2.1%.
Rates continue to improve and with the jobs report ahead of the Fed meeting September 18th, we are set for a minimum 25bp cut and potentially a 50bp cut.
Historically, September has often been a challenging month for the stock market. The market consists of both stocks and bonds. When investors sell stocks, the proceeds typically don’t remain idle; instead, they are often reinvested in short-term bonds. This shift can be beneficial for mortgage rates.
Year over Year inflation remains at 2.5%, the expectation was 2.6%. The Core rate which strips out food and energy costs which the Feds are highly focused shows a core inflation rate at 1.93 Feds wanted just 2.0%.
This is all good news though nothing earth shattering. It keeps us on pace for the Feds September meeting to cut rates.
We have a fantastic Refinance program for conventional loans where we buy your rate down an extra point for a year for FREE.
Very cool program that can have a huge impact on your mortgage. Every $100k loan you have and a 1 point drop is $792 a year savings.
$500k loan that’s over $3960. The first year we drop the rate another point with another $3,960 saved.
Applied metaphorically, the phrase means taking action at the right moment—when circumstances are most favorable. It suggests that you should seize opportunities when they arise, especially when the situation is “hot” or optimal for making a change.
Now let’s look at the market. Rates are dropping, the 2-year and 10-year bonds this morning are not inverted again. this is another sign rates will continue to drop.
The housing market is starting to heat up, and those “3-percenters,” as I like to call them, are beginning to take notice. Do they really want to stay in the house they felt almost forced to buy a few years ago?
I have clients in that exact situation today. Whether it’s because of the neighbors, the commute, a growing family, or other life events, they’re starting to reconsider their options.
Initial Jobless Claims was reported at 231,000 claims last week. slight decrease but inline with expectations.
Gross Domestic Product (GDP) second quarter came in at 3% we expected 2.8%. Still within expectations.
Chicago Fed President, Austin Goolsbee is one of the most Dovish Fed members this last year.
Here is his comment:
“You only want to be this tight on purpose if you’re trying to cool an overheating economy, and this is not what is overheating looks like.“
The Labor market is cooling by all measures. When asked about a 25bp or 50bp cut at the September 18th meeting, he pivoted stating that it doesn’t matter which they choose, what is more important is the longer term view of Policy.
Home Prices up again.
The Case Shiller Home Price Index, the gold standard for appreciation, showed home prices rose 0.2% in June. This is an all-time high. Prices are now up 5.4% year over year.
Rent concessions.
There has been a slew of multi-family apartments built or in the pipeline to be completed. This has drawn the vacancy rate up to its highest levels in four years.
Some of the concessions are a month or two months free rent and discounts on utilities. Quite a shift from two years ago.
Mortgage Rates continue to move in the right direction. We are anticipating a very busy Fall and Winter not just for refinances but for purchase transactions. The sellers are starting to realize that with rates lower, they can also get in the purchase market with the added benefit of adding their home to the pool.
As we barrel towards an exciting change in the Mortgage and Housing market, it’s best to start getting your documents in order.
Let’s take a look at the numbers 2019 vs Today
Core PCE: 1.8% vs 2.6%
Unemployment Rate: 3.6% vs 4.3%
Job Openings to Unemployment ratio: 1.24% vs 1.2%
Hiring Rate: 3.9% vs 3.4%
Fed Funds Rate: 2% vs 5.375%
10-year Treasury: 2.8%-1.9% vs 3.80%
30-year fixed Mortgage Rate: 4% vs 6.5%
We know inflation is higher today but has been dropping precipitously. The Labor market is weaker but the Fed Fund rate remains much higher than 2019.
Durable Goods Orders jumped 10%, with expectations at 5%, but most of that boost came from aircraft orders. When you take those out of the equation, the numbers actually dipped 0.2%. It’s a reminder that a single statistic doesn’t tell the whole story.
Here is a fun link to a video I did last week regarding refinancing. Have a fantastic week.
Fed Chair Powell sounded very dovish about September 18th rate cuts.
“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
Powell also said, that inflation has declined significantly and his confidence has grown that inflation is on path to 2%.
New Home Sales
New Home Sales, which measures signed contracts on new homes, rose 10.6%. This was a blowout from the estimated 1% rise.
If you or someone you know is looking to buy or refinance, tell them to get their ducks in a row.
Yesterday, we saw the Bureau of Labor Statistics (BLS) revise its jobs report, revealing that the number of jobs from March 2023 to March 2024 was overstated by over 818,000.
On the same day, the Federal Reserve released the minutes from its July 31st meeting, where they acknowledged the errors in the BLS report. Despite the continued goal of achieving 2.0% inflation, the inaccuracies in the jobs data have increased the pressure to lower interest rates sooner rather than later.
The Fed also noted that consumers are increasingly making only minimum debt payments, a sign of growing financial stress. The key takeaway from the minutes is that the Fed is laying the groundwork for a potential rate cut on September 18.
Additionally, Philadelphia Fed President Patrick Harker, who is not a voting member this year, made a noteworthy statement.
“as the rates come down we will see the Lock-In Effect subside and there will be more supply. “
He was mainly referring to builder costs and financing coming down but it also applies to those homeowners with low interest rates.
Get yourself, clients and friends ready for rates to drop and the housing market to really heat up.
When a Borrower applies for a Mortgage for a purchase or refinance the Credit Bureau’s Experian, Equifax and Transunion sell these leads that contain the customers name, contact information and other data within 24 hours of the application. Clients can get over 50 phone calls a day.
We in the Lending Industry cannot stop this from happening but the borrower can stop these Trigger Leads from being generated.
Our mortgage applications are Soft Pull only until we verify the client has opted out or direct them to opt out.
Click link below to opt out of all Bureau’s at once.
“A trigger lead is a prescreened offer or firm offer of credit or insurance that occurs when a lender pays a credit reporting agency to generate a report on a list of consumers. The most common trigger event is applying for a mortgage. When a lender pulls a borrower’s credit report, the action triggers an inquiry, which is then sold to other lenders as a lead. These leads contain the consumer’s name, contact information, and other data. The leads are created and sold within 24 hours of a loan application.”
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