In this weekly market briefing, Jordan Keck provides a concise overview of current mortgage rates, which have held steady around 6.85‑6.87% for owner‑occupied, top‑tier credit borrowers. He explains how buydown strategies can push rates lower for FHA, VA, and conventional loans. Keck then shares a detailed client case study illustrating how a borrower leveraged both commercial and residential financing to refinance two loans, improve loan‑to‑value, and consolidate debt through a single lender. The macro‑economic segment covers the recent spike and retreat in oil prices following Israel‑Iran airstrikes, the impact of oil‑driven inflation expectations on bond markets, and the resulting modest effect on mortgage rates. He reviews May retail sales data, noting a 0.9% headline decline but a 0.4% core increase after stripping food and energy, and highlights the revision of April figures. The Federal Reserve’s latest meeting is summarized: rates were left unchanged, with commentary suggesting a pause and an expectation that rates will stay steady for several months. Keck reports a 1.7% year‑over‑year drop in new asking rents (22nd consecutive month) and links this softness to a surge in multifamily construction, while noting a slowdown in permits and completions that could eventually support rent growth. Finally, he details the decline in new housing supply—permits down 2% and starts down nearly 10% in May—creating a supply‑demand gap of roughly 500,000 units versus household formation, which could pressure home prices and encourage renters to become homeowners. The update concludes with a friendly sign‑off.
Chapters
Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Interest rates virtually unchanged week over week, fairly steady, moving from 6.85% to 6.87% week over week. Here again, a little bit of up and down in the week, but not much. So rates staying fairly steady for the most part. Meaning most people are going to be getting into those rates below the 7% mark. In looking at buydowns, if you're on FHA, VA, or conventional, buydowns can go even lower than that. So just remember, this is not a quote for every scenario. This is an example of average rates for lenders across the country for conventional purchases for owner-occupied clients with top-tier credit, 25% down payments. So kind of an idea of where trends are going. As far as the mortgage tip this week, had a really fun example for a client here that I think is worth sharing on how you can combine commercial and residential financing to get the best of both worlds. So we had a client looking to do a refinance, and the— he has a first and a second loan. Got the first when he purchased it, got a second loan from hard money to be able to put some about $400,000, $500,000 into the property, and ultimately doesn't have enough equity to refinance the first or the second, but it was only a 1-year second. So what do you do? In their situation, they owned a different— they owned their own company, and they had a building that that business owned where they were operating. The business that owned that building free and clear worth about $800,000. So in our case, we're able to look at doing a commercial refinance on that property, pulling cash out, using that to pay down on the residential loan, So now we have the right loan-to-value on the residential, we can refinance, combine those two into one, get nice low rates on both of those. So in their case, because we don't have to count residential, we don't have to count commercial payments against the residential side, we don't have to count any more income to do that, and even if the appraisal comes in low, we can pull more from the commercial side to be able to offset it. And as course, as I'm able to do both, they can just talk with one lender, I can handle financials for both of them, and be a one-stop shop to be able to utilize the best of both worlds for residential and commercial financing. As far as news this week here, oil prices coming back down after we saw an initial spike from the attacks, the airstrikes on Iran from Israel this last week. And normally those types of events, any type of global instability is going to be good for rates because there's a flight to safety. People are usually pulling money from stock market and putting into safer things like the bond market, like mortgages. But that was a threat to oil prices. Oil prices higher, it means higher inflation, and inflation is not good for bonds. So afterwards though, we did see this initial move up in oil, up to about, about $77 a barrel. Now back down to $68 a barrel, close to where we were before this started. And biggest ones on those are, you know, there's more and more talks around how they're not going to be specifically targeting oil production areas. It's not going to be closed off as far as exporting it. And so again, seeing a little bit of a reprieve on mortgage rates because of that news. Next up, we got retail sales numbers for May showing a decline of almost a full 1%, down 0.9% versus the expected 0.7% decline. We also saw April's report get revised lower by 0.2%. When what was originally reporting as an increase of 0.1% now showing a decrease of 0.1% for the month of April. There was a lot of decline in auto and gas, though. So when you remove those, the sales were only down 0.1% rather than the 0.9% reported. When you strip out the food and energy costs and the core rate for retail sales, that actually showed an increase of 0.4%, higher than the expected 0.3%. So even though the headline number was lower than expected, Core was higher and so ended up being kind of a moot point for market movement. As far as the Fed meeting, you may have already heard this, but the Federal Reserve did not change interest rates and they can change those only at their meetings. No real surprise in this one. Often there's a change in expectations for the future, change in commentary. And again, this one really threaded the needle to not go one way or the other, leaving rates relatively unchanged. Seems like the Fed's commentary is around, hey, we're fine waiting a few months to see see what happens. Don't want to move too soon. It seems like more of the expectation is rates are going to stay where they are for longer, probably not increasing, as they believe that inflation will move up a little bit here from what they're forecasting and not continue their trend lower that we're hoping to see. Realtor.com reported new asking rents are down 1.7% year over year. This is the 22nd consecutive month of declines in new asking rent amounts. And this is rents for units that are not currently occupied for new tenants. So renewals are a different number on this one, but this is again for new tenants coming in. Those asking rents down 1.7%. The softness on this we've talked a bit about in the past is largely due to a huge amount of multi-family apartment unit construction that has been coming on the market in the last year, this year, and seeing maybe even to next year as well. We have seen fewer permits though. There's a lower number of completions, lower number of permits that are coming out. So looking into the future, as there are fewer units, hopefully that's going to put some more pressure on rent prices to be able to continue to go up and move people from the renting side into homeownership side there as prices go up. And lastly, new construction supply has continued trending lower, and that reflects in the May report as well. Housing permits were down almost 2% to 1.39 million annualized pace, but not all permits get completed. Housing starts were down almost 10% in May alone, the lowest level since COVID at a 1.26 million annualized pace. And that's again starts, not completions. With an average household formation pace of about 1.8 million per year, that leaves roughly 500,000 fewer new housing starts than there are household creations. And the longer that trend goes, the more pressure there's going to be on housing prices because it just continually exacerbates that supply and demand imbalance. Hopefully between that and between less rental supply in future years, we'll see more and more people shift into homeownership in the future here. As always, hopefully this is helpful. Have a fantastic weekend and we'll see you next time. Take care.
