Market Update - Rates, ILA strike, job openings, job cuts, and job gains

Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. And a quick reminder as well, coming up, the federal holiday this month is going to be on Monday, October 14th, for President's Day and Indigenous Peoples' Day. So that is not going to be a day that we can close, not going to be counted for CD or loan estimate timeframes. So be sure to remember that in your contracts when you're writing your time frames, your closings, and plan accordingly. As far as interest rates this week, moving up a decent amount, down, up from 6.21% last week to 6.53% so far today. Likely looking like that's going to go even higher as a result of some of the news we'll get into with the jobs report. So we had a really good run there ever since the Federal Reserve cut the interest rates for banks The overnight lending rate, remember, that's not mortgage rates. They have been trending a bit higher, waiting for more data to confirm whether or not they should continue going lower. And so far, that data has not been good. So we'll get into that in a little bit. As far as this week's mortgage tip, wanted to talk about a situation I had come up for the first time in a while. Only run into it a few times, which is, can you buy properties on leased land with financing? The short answer to that question is yes, under certain circumstances. So whether it's conventional, FHA, even VA loans, all of them will allow it. Sometimes the lender won't, but those general guidelines do allow it as long as the current lease meets certain criteria. One of those criteria is typically that it's going to be at least the length of the mortgage, if not have some kind of cushion. A lot of the times VA, for example, in certain situations will require at least 14 years beyond the loan maturity date for the remaining land lease. So that can be one stipulation there. Another one, some lenders don't allow manufactured homes on leased land, some of them do. So it is potentially doable. There is a little bit more to take into account there. And also looking at what is the cost for the land lease, because that cost is going to be included in what that borrower qualifies for and it might push them out of qualifying in general. So be aware of that. If you do run into that situation, let me know. Most often this can be situations where there's either a community where they just have leased land as part of that situation, or sometimes I've seen it on BLS, Bureau of Land situations, and other times where it is going to be Native American land. So again, let me know on those situations. If you run across them, we can talk through and see if that makes sense. Next up this week, some of you may have already heard that the International Longshoremen's Association went on strike. There's potential for this to disrupt about $14 billion in goods per week. Luckily though, that strike ended after only about 3 days, so started and stopped within the course of this week. Great news on that, especially since this would have affected the loading and unloading of about 50% of the ports in the US. And not a good time, especially as we're wanting to get more goods to those affected by a hurricane. And of course, this also affects the major retailers such as Walmart, European car imports, things like that. So again, glad that that has been settled. The details should take a few weeks to sort out, but longshoremen in the meantime are back at work because of the resolution agreed upon in that strike and that negotiation. Next up here, the JOLTS, a lot of job data this week. So the JOLTS job openings jobs report for September showed an increase from 7.7 million job openings to 8, which was above estimates. The hiring rate fell from 3.5 to 3.3%, which is now the lowest since 2013 when you exclude COVID, but still very close to the COVID low of 3.1% for the hiring rate. The quit rate also fell from 2% to 1.9%. This can show weakness in the labor market since a low quit rate means that people aren't leaving their jobs to better opportunities as often if they're not finding them. And it also means that they're not getting recruited as much or pulled out of their jobs, um, from their current situations. Next up, the Challenger Job Cuts Report saw 50% higher job cuts this year compared to last year for the same month. So hiring plans year to date were also the lowest we've seen in 11 years since about 2013. Plans to hire were about 404,000, but only 2,000 of those were for non-seasonal hiring. Almost all of the hiring was seasonal for the holidays. Compare that with a year ago, there were about 40,000 plans to hire non-seasonal workers and 552,000 seasonal plan, plans to hire seasonal workers last year. So we get all of that data here this week that looks good. Mortgage rates should be helping in our favor. But the big one that came out today, unfortunately, that countered those other reports was the Bureau of Labor Statistics, the BLS. That came out, and of course we know that these numbers always get revised. There's been massive errors in the way they've been counting it, but it's still a market mover report. Today they were expecting 140,000 job creations, and it came in showing 254,000. So huge beat. But in addition to that, they kicked us again while we're down and added upward revisions to the last 2 months of job reports, increasing August by 17,000 and July by 55,000. So huge, huge increases, 72,000 upward revisions plus over 110,000 beat on the headline. So you're looking at more than double what was expected for that report. Of course, there's another component. That's the, the household survey is where the unemployment rate comes from. That It came in about 430,000 job gains. They had 150,000 increase in the labor force, but because there were still more job gains than the labor force increase, unemployment rate went down from 4.2 to 4.1. Overall, very strong report on both of those components. Mortgage market did not like that, and so we saw a jump higher in interest rates today, and again, likely throughout the day might see some lenders reprice. So remember, if you do not already have your interest rate locked in, probably going to be on the, you know, probably higher interest rate than what you were hoping for on that one. So as always, I really like to get clients locked in upfront, and then if things happen to drop, we can look at rate negotiations and looking at float-down options to keep the better, you know, to be able to get better rates there if they go down. But the cost of them going up very, very quickly on this You know, I had a client with a $300,000 loan amount, locked them in yesterday. Today, that same interest rate we locked them in at would have cost an extra $4,000. So get it locked in upfront. Don't mess around with the money. If you have anybody that didn't get locked in in time, needing a second opinion to save some money, or just outside of the range of qualifying, let me know. Happy to take a second look at that and see what I can do to help. Hopefully you have a fantastic weekend as always. And we'll see you next time. Take care.