Jordan Keck breaks down mortgage rates hovering at 6.87%, tariff uncertainty, and recent economic data: retail sales up 1.4%, inflation cooling with CPI down 2.4% year-over-year, and rents declining for 20 straight months. He suggests borrowers with 20% down can skip escrows to lower payments and should lock rates now to avoid market swings.
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Good morning and happy Good Friday. Jordan Keck here, your lender buddy, with your weekly market update. Kicking off interest rates, you know, I was gone last week so didn't get a chance to do the update, but it kicked up quite a bit last week, going down here now. So we were at 7.07%, kicking over that 7% mark for the first time in a little while. Back down now at 6.87. Still a lot of volatility in the market. So some lenders are still holding on to those prices. Other lenders are putting those back in the market. But we were getting pretty close to 6.5 there for a while. So we'll see what happens moving forward. A lot of that uncertainty coming to do with tariffs and trade wars, which we'll get into today. Before that, starting with our weekly mortgage tip, talking about excluding taxes and insurance from the mortgage payment, or another way of saying that is waiving escrows. Now, if you get a conventional loan, you've got at least 20% for a down payment, you actually have the option of choosing not to include the tax and insurance escrow portion into your mortgage payments. You can do one, the other, or both. Some lenders, they do charge a little fee to be able to waive these, others, they do it for free. I have lenders who do both. And this can be a way if somebody's really concerned with the monthly cash flow, to be able to keep your monthly payments low. And then take a bit more control over those taxes and those insurance payments once a year or setting up on their own monthly payment plans. So just same amount of money at the end of the year adds a little bit of flexibility though. And so know if you've got clients who are very concerned, maybe on a fixed income, they have plenty of savings to make those one-time payments, but they just want to keep their monthly payments low. That could be a great way to go. Next on the topic of trade war volatility here tariffs continuing to move higher, increasing the market uncertainty. And anytime there's uncertainty, that's where you're seeing these big swings in the bond market and in the stock market. The US last week increased tariffs on Chinese products to 104%, and China responded by increasing the tariffs on US goods from 34% to 84%. And then I believe they may have even moved up further from that since that time. The European Union also approved a vote to place tariffs up to 25% on various goods. Then Trump dropped tariffs on all countries down to 10%, except for China, which remains high at least for the next 90 days. All of this happening within the last week, week and a half here. So with that uncertainty, there's more concern about a potential recession. And several high-level analysts are already predicting or already stating that they believe we're in a recession. It just hasn't been officially judged that yet. Because the official definition of a recession is 2 quarters of negative GDP growth. So we could be in the middle of it and then not have it officially be declared until after that 2 quarters has happened. Retail sales for March, they were up 1.4%, slightly above the 1.3% expected, but this was supposed to be coming in strong because markets anticipated that there would be a lot of spending coming in this month, trying to get in before the tariffs potentially raise prices. So you're essentially saying, hey, this is the going out of business sale. People are moving in quickly to get the deals before they think those deals are going to be gone. Autos and parts, you know, for this month especially, rose the majority of the gain in the headline number, with autos and parts rising 5.3% for the month alone, a huge jump. But if you strip out auto and retail auto sales in that retail sales only would have risen 0.5%. Core retail sales only rose 0.4%, which is below the 0.6% that was expected, but February was revised higher from 1.0% to 1.3%, so kind of negates the weakness in that portion of the report. Next up, we also got March's PPI, Producer Price Index, wholesale inflation number, which was down 0.4%, well below the gain of 0.2% that was expected. So big swing of 0.6%. And difference than expected. Year over year, PPI rose 2.7%, which is down from 3.2% in the previous report, below the increase that was expected to 3.3%. The core rate is down 0.1%, also significantly cooler than the gain of 0.3 that was expected. So on the wholesale side, seeing a lot of that drop off. Hopefully that moves into the CPI inflation report we'll get, I believe, next week. Meantime, we had CPI inflation, all the acronyms for inflation, the Consumer Price Index, which fell for March 0.1%, also below the 0.1% gain that was expected. So in the other direction there, year over year dropped from 2.8% to 2.4%, below the 2.5% that was expected for the year over year. Now, the core rate did increase 0.1%, but it was still below estimates of 0.2%. And so year over year dropped from 3.1% to 2.8%. Nice to see CPI getting back down on the core number to that 2 in front of it for inflation, as the Federal Reserve, they continue talking about their core— their target for inflation is 2% on the core PCE. And lastly here, Realtor.com's rent report for March showed asking rents fell 1.2% year over year. This is now the 20th consecutive month of declining year-over-year rents, with rents continuing to stay soft, most likely due to high vacancy rates nationally. Hopefully this will help catch up soon in the PCE and CPI inflation reports. And as those inflation numbers continue coming down, which the Federal Reserve is saying is more important than employment numbers now, that may be some relief for rates for the mortgage markets. That being said, there's just so much volatility. The default response is— should in my mind always be locking up front because you don't want to be on the wrong side of a temper tantrum in the markets. Easier to be able to float down, have some kind of float-down policy, or even change lenders. As a broker, I can do that on my end than have to worry about not locking and then being outside of the market. You can lose a lot of money really, really quickly. It's a gamble you just don't want to take right now. As always, hopefully this is helpful. Hope if you need anything at all, let me know. I'm here for you and available. Have a great Easter weekend. We'll see you next time. Take care. Mm-hmm.
