Jordan Keck reviews mortgage rates dipping to 6.89%, steel and aluminum tariffs rising to 50%, and May job gains of 139k against 125k expected. He notes Juneteenth closes loan offices and explains how paying off consumer debt at closing improves borrowing power more than a larger down payment.
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Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Kicking things off, I didn't realize it a week or two ago when I said there were no holidays in June, but I forgot that I want to say last year or two years ago, the federal government made June 19th, Juneteenth, a federal holiday. So that is still in effect for closings. It is, since it's a federal bank holiday, no closings. It doesn't count for a CD waiting period. So that is coming up here in about 2 weeks, Thursday the 19th. So be sure to plan accordingly. I definitely missed that one. So have that marked on your calendars. As far as interest rates go, moving down week over week from 6.97 to 6.89, but that's before the BLS jobs report came in today, moving rates a little higher. So we may end up the week basically flat over that period. As far as a mortgage tip, I wanted to talk this week about being able to pay off debts to qualify. This is something I'm running into a lot here with clients, especially if they're selling a home, looking at buying a new one, they've got a good chunk for their down payment, and talking through what's the best way to utilize those funds. Well, dollar for dollar, if you put $10,000 additional as down payment, it only changes your monthly payments by about $70 a month. Whereas if you pay off $10,000 for a remaining car balance, that might free up $200, $300, $400 a month. Depending on the loan. So one of the things that they can do is they can pay off that debt to qualify for a higher amount, because when you qualify, it's all going to be based off of the monthly payments, not the total amount of debt. So with that, one of the easiest ways to do it is to pay off debts at closing. That way we don't have to verify it ahead of time. That's extra paperwork, extra steps and time. So what we'll do is we'll collect statements for those debts, whether it's credit cards, car loans, you name it. And then have that debt paid at closing so that escrow sends a check. That way we can exclude the debt from calculations and what they qualify for. Simple, clean, easy way to do it. Helps qualify for more and keep the total amount of household monthly payments lower with the same amount of money out of pocket. If you or a client are interested in chatting through what this might look like, let me know. Happy to run the numbers and see if it might make sense. Next up, as far as tariff talks, thought we were done with these, not quite yet. The US and China both claim that each other have violated trade, the violations of their trade agreement that we reached just a couple of weeks ago, kind of re-escalating the tariff war. The US is raising steel and aluminum tariffs by from 25% to 50% on both China and the European Union. And both China and the US, again, claiming that there's been violations, meaning there could be more volatility ahead. and that we didn't have that longer-term trade deal that we were hoping for. Next, the May ADP jobs report showed 37,000 jobs created versus the 115,000 that was expected. Pretty big miss on this one. This is the lowest in the last 2 years, already coming off the heels of a weak report in April, which was also revised lower by 2,000 in this month's report from 62,000 to 60,000. The biggest area of weakness was in small businesses, which had a net which have less than 50 employees, and that faced a net loss of 13,000 jobs. Large companies with 500 or more employees also saw a net 3,000 job loss. So the only area of gains was in medium-sized businesses, which gained 49,000 jobs overall. In April, the JOLTS job openings job report rose from a— rose to 3.931 million. Above, they raised about 191,000 more jobs than expected, which is almost 200,000 more than estimates. Within the report, the quit rate fell from 2.1% to 2%, and the hiring rate increased from 3.4% to 3.5%. While it was an increase, this is still one of the lowest levels since 2013 when you take out COVID. Next, the BLS jobs report, which is the big one here today. There was an expectation of 125,000 jobs created. Came in at 139,000. But the BLS has been very vocal lately as well about saying that they are short-staffed. Their data that they usually have from people called enumerators collecting this data, they don't have as many, so they're having to rely on more estimates, more calculations. And because of that, they're seeing these massive revisions. As a result of that, we're still down, you know, 147,000 from the previous report. They revised the prior 2 months lower by 95,000, and it's no— I mean, there's almost certainly going to revise the current month lower as well. The problem though is that the market often responds to the headline numbers. And so as a result of that beat, that higher number for the headline report for BLS today, rates are already starting to move a little bit higher. Hopefully, as the market digests the information in the report a little bit more, starting to cast some doubt into this, we'll be able to see movement lower again. But this report is just constantly something that we're seeing miss on the headline, influence markets in a negative way, and then quietly get revised lower without any market movement within the report. This is the household. We saw the unemployment rate remain at 4.2% as expected, matching previous estimates, even though there was an overall job loss in that household survey. Of over 600,000 jobs. The reason for the unemployment rate staying the same is because we saw about an equal number of people leave the workforce. And lastly here, Cotality reported that home prices for the month of April were up 0.6%, following a 0.6% rise in March as well. This was below their forecast of 0.9%, but still very strong considering it would be over 7% if annualized on this monthly basis. Year-over-year home prices are up 2%, which is down from the previous report at 2.5%. Hopefully you have a wonderful weekend. Starting to get hot out there, and wish me luck. I'm doing my first century, 100-mile bike ride tomorrow. Feeling good for it, but starting out early, and it's going to be a hot one. So if you're out and about on the roads, just be careful of bicyclists. I appreciate it, and I will see you next time. Take care.
