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Mortgage Market Update (2/12/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates are higher this week as a result of strong labor market and manufacturing data.
  • The BLS Jobs Report showed nearly double the amount of jobs were added to the market than expected.
  • The ISM Non-Manufacturing PMI was also higher than expected and the upbeat economic data put additional upward pressure on rates.


BLS Jobs Report

  • The report for January showed that the 353,000 jobs created were nearly double the expected 180,000.
  • One thing to be mindful of is that January is a month of heavy adjustments due to new benchmarks, seasonal adjustments, and population controls.
  • Despite the job gains, the entire labor force is working on average 30 minutes less per week, which is equivalent to 2.4M jobs lost.
  • We will have to wait for February data to see if the labor market tightening once again.


Home Values Continue to Appreciate

  • The two most notable housing indices, Case-Shiller and FHFA, both recently released data showing that home prices set new highs.
  • Although data for December 2023 is not available yet, both indices show that home values were on pace to appreciate by 6% in 2023.
  • Lower numbers for existing inventory and active listings will continue to be supportive of home prices throughout 2024.
  1. RATES MOVE HIGHER – Upbeat economic reports provide the catalyst for higher week-over-week rates.
    https://www.mortgagenewsdaily.com/…
  2. MEDIA SAYING HOUSING CRASH – But housing credit data today looks nothing like what was seen in 2008.
    https://www.housingwire.com/…
  3. BOOST TO HOUSING SENTIMENT – The Fannie Mae Home Purchase Sentiment Index reached its highest level in nearly two years.
    https://www.fanniemae.com/…
  4. TWO SIDES TO JOB MARKET – Economists and reports say the labor market is strong, but job seekers don’t share the same confidence.
    https://www.cnbc.com/…

Mortgage Market Update (1/29/24)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates are relatively unchanged week-over-week with some volatility mixed in due to economic data and bond auction results.
  • Last week saw 2-year, 5-year, and 7-year Treasury auctions that were met with weak demand and put upward pressure on mortgage rates.
  • Recent GDP and labor market reports came in stronger than expected and the Fed would like to see more economic weakness to support disinflation.


Personal Consumption Expenditures (PCE)

  • Headline inflation rose 0.17% in January, close to the expected 0.2%, while the year-over-year reading remained at 2.6%.
  • Annualized core PCE over the last 6 and 8 months is 1.85% and 2.08%, respectively, which are close to the Fed’s target of 2%.
  • Although the Fed prefers the Core PCE measure for gauging inflation, it should be noted that the CPI tends to move the markets a bit more.


Pending Home Sales

  • Pending Home Sales (signed contracts on existing homes) surged 8.3% from November to December.
  • The large jump was attributed to the decline in mortgage rates we’ve seen since the highs back in October 2023.
  • The Chief Economist at the National Association of Realtors, Lawrence Yun, noted that sales are expected to rise significantly in each of the next two years.
  • An increase in the supply of homes on the market will be essential to satisfying all of the demand that current exists.
  1. RATES UNCHANGED WEEK-OVER-WEEK – Mortgage rates were volatile within a narrow range over the last week but are relatively unchanged.
    https://www.mortgagenewsdaily.com/…
  2. ECONOMY BOOSTED BY NEW HOME SALES – Continue demand for new housing helped employ workers, stimulate the purchase of goods, and avoid a recession in 2023.
    https://www.housingwire.com/…
  3. ACTIVE INVENTORY RISES – For the 11th straight week, active listings grew and looks to improve availability and affordability heading into the spring season.
    https://www.calculatedriskblog.com/…
  4. INFLATION CONTINUING TO COOL – The recent PCE report showed inflation continuing to cool and near the Fed’s 2% target.
    https://www.cnbc.com/…

Homeseed’s 2024 Mortgage & Real Estate Market Forecast

Welcome to Homeseed’s 2024 Mortgage & Real Estate Forecast! As we enter the exciting year of 2024, the anticipation and speculation surrounding the mortgage market and housing industry have prospective homebuyers carefully watching. In just the last three years, we’ve gone from seeing all-time low mortgage rates to some of the highest mortgage rates in the last two decades due to significant global events and economic shifts. To better understand what potentially lies ahead for this year, let’s dive into a forecast for the mortgage market and housing industry in 2024.

Inflation: The Driving Force for Mortgage Rates

Inflation has emerged as a pivotal factor shaping the mortgage market. After reaching a near 40-year high of 5.3% in March 2022, Core Personal Consumption Expenditures (PCE) has been on a gradual decline and now hovers at 3.2%, which is near the Federal Reserve’s (Fed) goal of 2%. Given the improvement on inflation, the Fed signaled they would begin rate cuts to their Fed Funds Rate before reaching the 2% target in hopes of easing into its inflation goal with minimal negative effects to the economy. With shelter accounting for 21% of Core PCE, CoreLogic’s most recent measure of shelter costs showed a 2.5% year-over-year increase in their real-time blended rents data. This suggests a continued improvement for inflation lies ahead as the shelter data used by the PCE report lags the real-time shelter data, and the markets are now predicting the first rate cut by the Fed as early as March 2024.

Supply and Demand: Limited Inventory Pushes Home Prices Higher

The housing market continues to grapple with enduring challenges in inventory shortage, fueling a steady increase in home prices. Despite efforts to address the housing deficit, housing starts persist below household formations, indicating a sustained scarcity of available homes for sale coming to the market that is unable to meet the escalating demand. This ongoing imbalance between the supply of homes and demand from buyers will likely intensify competition if mortgage rates continue to come down, leading to the possibility of bidding wars and soaring prices once again.

Mortgage Rate and Real Estate Forecasts

Given the trajectory of inflation, we forecast the 30-Year Fixed Rate Mortgage to fluctuate between a rate range of 5.75%-6.75% throughout 2024. If rates fall below 6%, this will potentially unlock move-up buyers who are current homeowners that want to upgrade their homes.

For home price appreciation, we forecast home values to increase between 4-5% in 2024. Values should stay strong as demand will remain high due to more households being formed than homes coming to market.

Seizing the Opportunity: A Time for Homeownership to Build Wealth

As we navigate the intricacies of 2024, this period stands as an opportunistic time for prospective homebuyers. With the likelihood of interest rates coming down and home prices on a continued ascent, buyers can consider the strategic move of securing a home now and later benefiting from potential refinancing opportunities in the near future. Here at Homeseed, we offer a Home Equity Forecast tool, shedding light on the significant wealth-building potential through home appreciation and amortization. It emphasizes that homeownership is not merely about costs and interest rates but extends to the concept of a home evolving into one of your most substantial investments for building wealth.

Mortgage Market Update (12/19/23)

Welcome to Homeseed’s Mortgage Market Update, where we dive into the latest trends, insights, and changes shaping the dynamic landscape of the housing and lending industries.

Mortgage Rate Trends & Forecasts

  • Mortgage rates move lower once again this week with the biggest improvement happening yesterday after the Fed Meeting.
  • The improvement in rates were due to the Fed signaling that they plan to cut rates multiple times in 2024.
  • This week’s Consumer Price Index and Producer Price Index also showed inflation moving lower.


This Week’s Fed Meeting

  • The Federal Reserve had their last meeting of 2023 yesterday and maintained its benchmark Fed Funds Rate, opting to not raise or cut rates.
  • The big improvement in mortgage rates occurred when the Fed signaled it will likely cut rates by 0.75% in the year ahead, which is an increase of 0.25% from their previous meeting in September.
  • Remember, the Fed Funds Rate does not directly impact mortgage rates but this shift in outlook directly affects the bond market that mortgage rates are tied to.


CPI and PPI Inflation Reports

  • This was a good week for inflation news as many reports and forecasts showed inflation moving lower.
  • Tuesday’s release of the Consumer Price Index (CPI) report showed inflation moving lower year-over-year from 3.2% to 3.1%.
  • Yesterday’s Producer Price Index (PPI) report showed producer inflation falling from 1.2% to 0.9% year-over-year.
  • The Fed also announced yesterday that they also project inflation will fall to 2.4% in 2024, which is better than the 2.5% they projected in September.
  1. GOOD NEWS FOR MORTGAGE RATES – Mortgage rates moved to the lowest levels since May with the help of some good news coming from the Fed yesterday.
    https://www.mortgagenewsdaily.com/…
  2. FED MEETING RECAP – The Fed had their final meeting of the year and signaled rates cuts and a lower inflation prediction for 2024.
    https://www.yahoo.com/…
  3. LARGE INCREASE IN MORTGAGE ACTIVITY – The Mortgage Bankers Association said that mortgage application volume was up 7.4% last week as rates continue to move lower.
    https://www.eyeonhousing.org/…
  4. CONSUMER PRICE INDEX – The CPI for November showed inflation falling further to 3.1% compared to the pandemic-era peak of 9.1% in June of 2022.
    https://www.cnbc.com/…

Lock & Shop: Lock in your rate today before you find a home

Purchasing a home should be an exciting process, but having to worry about interest rates rising in this market can dampen some of the joy. That is why Homeseed is offering our Lock & Shop program to clients. Potential homebuyers will now be able to lock in your rate before you have a fully executed purchase contract, so you can have peace of mind that your interest rate will not go up while searching for your home.

Homeseed has developed our Lock & Shop program to allow for your rate to be protected for up to 60 days. Extensions are also available for more time. By locking in your rate now while you look for your home, the Lock & Shop program gives you the opportunity to save money should interest rates continue to rise as many experts predict they will throughout 2022. Locking in a rate now also helps you manage your home budget by removing any surprises of a higher monthly mortgage payment if interest rates were to rise.

Please reach out today with any questions. The Homeseed Team is ready to get you pre-approved and help strengthen your offer by letting sellers know you are certified for financing with an interest rate that is already locked!

Housing Market Alert – Seattle Has Over 15% Year Over Year Appreciation

Home appreciation continues to reach historic highs as tight supply and strong demand lead to an extremely competitive housing market. According to the S&P CoreLogic Case-Shiller home price index, prices in February rose 12% year over year across the US. This 12% gain is a 15-year high, and Seattle is one of the top cities with a gain of 15.4% year over year.

Those trying to enter the housing market are feeling the frustrations and disappointments of a competitive low inventory market. In many cases, buyers are having to make over five offers on homes before getting one accepted. However, the risk and rewards can quickly make sense when you consider the yearly equity gains with appreciation being higher than most full-time annual salaries. With a 15.4% gain in home prices year over year in Seattle, a person purchasing a $750,000 home last year would have gained $115,500 in appreciation on average. Historically low interest rates are also helping give a small boost to your purchasing power, so long as they remain low.

In the end, the most important thing prospective homebuyers need to consider is if are you in a position to responsibly take on a mortgage payment. Make sure you are evaluating a range of factors including your finances, personal life, and future. Connect with us today if you have any questions. If you have anyone looking to get pre-approved to purchase a home or refinance, we’d love the opportunity to serve them!

Homeseed’s Forecast for Mortgage Rates in 2021

Mortgage rates reached all-time record lows in 2020 and are expected to remain low through the end of the year. COVID-19 has created a crisis for many economic sectors, and as a general rule of thumb, weak economic data tends to cause lower mortgage rates. However, there are numerous indicators suggesting rates will increase in 2021 that we will discuss in this blog post. Fannie Mae is predicting the 30-year fixed rate to remain near 2.8% for 2021 and 2.9% for 2022. The National Mortgage Bankers Association is predicting we will reach 3.3% by end of 2021, and 3.6% by end of 2022.

The record low rates we are currently experiencing have been brought on by weak economic data shown in the poor numbers for the labor market, employment rate, and consumer spending. With news of successful vaccine trials giving hope for ending global lockdown restrictions, prospects for economic growth will gradually improve and likely push mortgage rates up in 2021. So far, the stock markets have also seemed to welcome news of a Biden presidency. Continued optimism in the stock market would persuade investors to shift money out of safer investments like mortgage-backed securities and into riskier assets like stocks, further increasing the potential for rising mortgage rates.

Lastly, while we expect mortgage rates to rise, we don’t expect them to rise quickly or very much. The fallout from a global pandemic will take time to recover from, and the housing industry is one of few current bright spots of the economy being supported by low mortgage rates. The Federal Reserve has also committed to keeping its Federal Funds Rate low, which indirectly impacts a broad range of markets including mortgages. If we were to see rates rise half a percent from its current 2.75% to 3.25% in 2021, we can expect an average borrower who qualified for a $400,000 loan to lose about $25,000 in purchasing power as a result of the 0.5% increase in rate.

Links/Notes:

  1. Market Watch – COVID-19 vaccines would improve prospects for economic growth and push overall interest rates up
  2. National Mortgage News – Fannie Mae predicts 30-year to remain near 2.8% for 2021 and 2.9% for 2022. MBA predicts rates will reach 3.3% by end of 2021, and 3.6% by end of 2022
  3. Bank Rate – “My gut feeling is that rates are going to rise in the next year,” Johnson said. “You’re just not going to get investors willing to accept 1 percent returns,” he added. “As COVID ebbs away, these record low interest rates will ebb away.”
  4. The Mortgage Reports – Markets welcomed news of Biden presidency, leading to more money flowing into stocks.
  5. How rates impact a borrower’s purchasing power:
    1. $400,000 Loan’s Monthly Principal & Interest = $1632.96 (30-Year Fixed at 2.75%)
    1. $375,000 Loan’s Monthly Principal & Interest = $1632.02 (30-Year Fixed at 3.25%)

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