April 3 - Mortgage Spotlight | Banking Stabilization = Rate Stabilization. Now Back to Inflation
Updated: Apr 23
A NOTE ON THE WEEK
I am happy to report that the banking crisis, while not over, has diminished. This is ultimately good news, but we liked the lower rates. The focus now shifts to inventory. Lance Lambert from Fortune (one of my favorite follows), has declared a Sellers Strike. So, that shapes our messaging for the coming weeks as we enter the heat of the buying season. Here is how we see today’s market story: Rates are down a bit due to the banking crises, home prices are trending up because of the seller's strike, long term, there is interest rate risk (oil prices). Now is a good time to be persistent and find the right home for you. Jesse Passafiume
SCRIPT OF THE WEEK
Capitalize on the Sellers Strike “Mortgage rates have stabilized and are lower than last fall. This is great news for buyers. Today's challenge is fewer homes for sale. Buyers need to be fully approved and ready to make an offer when they find their home. The benefit is that if home prices trend up, you are building equity immediately.”
MORTGAGE MARKET
A Week of Stabilized Rates, What About the Future? Let’s tackle the bank crisis first. While we aren’t out of the woods, deposits leaving regional banks have decreased. The Fed, FDIC, and Treasury seem to have won this round. The biggest fear for real estate during a banking crisis is liquidity. That is how much money is available to lend and on what terms. The direct impact on mortgage and real estate is minimal. There is some guideline tightening in Jumbo and NonQM. But, it looks like the core of the mortgage and real estate business remains lightly impacted. The upside? The 0.5% drop in rates brought the buyers back to the market. What comes next? The markets are re-focused on inflation and the next Fed move. This week, we have manufacturing data. On Friday, we will see the full jobs report. I am out of the business of predicting rates after the last few months, but the data from last week and today is directionally good for interest rates. The wild card? Did you see the OPEC announcement? They have agreed to cut oil output by 2m barrels a day. “The development comes as a blow for inflation,” Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said in a note Monday. “Markets are aware that if the pressure continues, central banks will need to extend or strengthen their interest rate hiking cycles.” The message is that we could be in for more inflation and higher rates.
FOR YOUR BUYERS
You can copy and paste this note and send it directly to your buyers. You will also see this on social and as a forward-able email on Thursday so you can engage your buyers before the weekend! Fewer Homes, More Competition, More Opportunities. Are you noticing fewer homes for sale in your market? You are not alone. Nationally, the number of homes for sale is well below pre-pandemic numbers. What does that mean for your home purchase? Make sure you understand our market. There are two significant driving forces in real estate—the supply of homes and interest rates. Low Supply + Lower Rates = Price increases. Many headlines point towards lower prices. We talk to buyers daily, waiting for “home values to drop.” While we can’t determine the future, the reality is that there is more competition for fewer homes, and values are trending up in 70% of all markets across the country. Real estate is local! We are happy to talk about specific local trends to help you start building equity! Happy Househunting!