In this weekly market update, Jordan Keck reports that mortgage rates remain essentially flat week‑over‑week, hovering around 7.03‑7.05%. He shares a mortgage‑financing tip about how a lease on acreage—even a small, nominal lease for grass cutting—can disqualify a property from conventional financing under Fannie Mae guidelines, unless the lease is cancelled or not assumed. Keck then reviews CoreLogic’s December Home Price Index, noting a near‑flat month‑over‑month change (0.03% up) and a year‑over‑year increase of 3.4%, with a forecasted 0.2% dip in January but an upward‑revised 12‑month outlook to 4.1%. He moves to employment data: the ADP report showed 183,000 jobs added in January (above estimates) and a revision that lifted December’s total, while wage growth for stayers rose to 4.7% and for changers eased to 6.8%. The JOLTS report revealed a sharp decline in job openings to 7.6 million (down 15% YoY) and a quit rate holding at 2%, the lowest since 2015. The BLS January jobs report added 143,000 jobs (below expectations) but revisions to prior months erased the apparent weakness, and the unemployment rate slipped to 4.0%. Finally, initial jobless claims rose modestly to 219,000 and continuing claims increased to 1.886 million. Keck concludes with a casual Super Bowl sign‑off.
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Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Starting off, interest rates virtually unchanged week over week. We did see some positive improvement earlier in the week, today giving a little bit of that back, but overall not too much change, going from 7.05 to 7.03. Friday over Friday. For his weekly mortgage tip this week, wanted to talk about a situation that came up with a client where there was a lease on the land. So it was an acreage property, there's a main house on it, under a maximum limit for acreage there. So it was eligible for conventional financing. But on one of the counteroffers, we saw that there was a lease for basically cutting the grass on the land. And I've run into this a a few months ago as well on another property where there was a lease for the back portion of the land from a small farmer in town to be able to utilize that for growing some crops or being able to harvest the grass on the property. And while on the face, I mean, these are a couple hundred bucks a year leases, and unfortunately with the Fannie Mae guidelines, with conventional loan guidelines, because the property is income-producing, there's a lease on the property for income, doesn't matter the amount, that is not eligible for traditional financing. Agricultural financing may be. So in these situations, again, some lenders won't touch those at all. Others are okay if there's just a contract showing in, in the purchase contract that lease will not be assumed, that it will be canceled if they can get out of that. But wanted to make sure that you're aware of that. Again, in this situation, turns out it was more of a neighborly agreement, wasn't actually a lease signed on it, so so we're all good, but still, if I hadn't dug into that, that language in the contract would have potentially caused a problem just because of a lease on the property with agricultural income making it difficult for financing. So if you have questions about that or a scenario that might come up, give me a call, we can navigate around the best way to handle those situations so there's no surprises. Next up, CoreLogic's Home Price Index for the month of December was basically flat, showing home prices up only 0.03%, Year over year is still up 3.4%, which is unchanged over the last 3 monthly reports. Their forecast prices though, they do forecast that January will see a 0.2% drop in prices, but they increased their 12-month forecast from 3.8% to 4.1%. And this is up just even 2 months ago where they were as low as 2.4% for the coming 12 months, now up to almost double that at 4.1%. So some big increases there. The ADP employment report showed a total of 183,000 jobs created for the month of January, above 150,000 estimated. December was also revised higher by 54,000 to 176,000, adding more strength to the report. Remember, we don't like seeing strong jobs reports for mortgage rates. The stronger jobs are, the more that we see rates staying the same or going higher, whereas weak job reports are going to put pressure on mortgage rates to come down. We saw wages for job stayers, those at the same job, increase, go from 4.6% to 4.7%. And then job changers, those who moved jobs within the last year, saw an increase in wages of 6.8%. This is down from the previous report of 6.9%, which was even then revised down from 7.1%. So what we're seeing is the gap between the income growth from job changers and job stayers to shrink. Whereas there's just not as much competition among employers for employees to incentivize them to switch jobs like there used to be. Remember, this number was massive, especially right after the height of COVID when employers could not hire enough people. So they were highly incentivizing people to change jobs and not as much for those who are already staying. Next, the JOLTS job openings report for December did see a sharp drop from 8.156 million down to 7.6. This is after estimates that it was only going to drop to about 8 million flat, and job openings are now down 15% year over year and have been continuing to trend lower. The quit rate remained at 2%, which is still one of the lowest levels since 2015 when you remove COVID. Last, uh, for the jobs information, the BLS jobs report for the month of January just came out today, showed 143,000 jobs created versus 170 expected. And while initially this looks like good news for rates because it did come in weaker, unfortunately it ended up being a net negative because there were revisions to the last 2 months of reports increasing jobs by about 100,000, which more than erases the miss of about 27,000 we saw on the headline number for January. And then the household survey, which is where unemployment rate index comes from, that showed that the unemployment rate dropped from 4.1 to 4.0. So overall, pretty strong report. Mortgage rates responding to that, not in a huge way, but definitely would have been in our favor if the report had not been as strong. And lastly here, initial jobless claims came in another 11,000 higher to 219,000 for the week, slightly above estimates but still very low. And then continuing claims rose 36,000 to 1.886 million, still hovering around a pretty high number, not really seeing a whole lot of change there. Hopefully you have a fantastic weekend. Enjoy some time together with the Super Bowl, whether you're rooting for the Chiefs, rooting for the Eagles. Hopefully have a great time and we'll see you next week. Take care.
