This is a YouTube video titled "This Week's Fed Meeting" containing a detailed explanation about the Federal Reserve's recent meeting and its implications for the mortgage and housing market. The speaker discusses inflation components, particularly shelter costs including home prices and rents, and how changes in these affect mortgage rates. The content is informative and focused on economic and financial analysis as of early 2025.
Federal Reserve met yesterday. So let's unpack what does that mean for the mortgage world and the housing market? So we know the Fed's had a keen eye on inflation and inflation is very closely correlated to where mortgage rates are headed. So if we unpack the CPI inflation report, there's eight different components that make up that pie chart. 44% are just the shelter component. So that's the overwhelming majority of it. Shelter is home prices and rental amounts. So we've seen homes that are staying steady in value, but they're not rapidly increasing like they once were. That's good for shelter, which is good for inflation, which is good for mortgage rates. The other side of shelter is the rental amounts. Now, we know the last couple of years rents have been hot. They've been rapidly going up at kind of record paces. But if you think about it, when you sign a rental lease agreement, generally it's a 12 month term. So it takes 12 months for those to fall off the reports. With that, people that signed leases a year ago are just now falling off the reports. Fed mentioned that they seen rents starting to soften. And actually there was, you know, stats that came out for quarter four of 2024, rents decreased by 2.4% across the country. That's the first quarterly decrease in 15 years. This is the last stubbornly high inflation part of the whole CPI report. Once rents get under control, everything else is primed and ready for inflation to drop to where the Fed wants it to drop. And we know when inflation drops, the mortgage rates follow suit.
