Jordan Keck delivers a weekly market update, noting the upcoming Independence Day closure and reminding viewers of the hot weather and safety tips. He reports a recent drop in average mortgage rates from 6.87% to 6.72% (based on a standard 25% down, owner‑occupied, conventional loan scenario) and clarifies that this is an indicative average, not a quote. Keck then explains escrow waiver options, outlining when borrowers might choose to include or exclude taxes and insurance from their mortgage payment, emphasizing benefits for fixed‑income borrowers, personal‑finance control, and reduced closing costs. He reviews May housing data: existing home sales rose 8% month‑over‑month to a 4.03 million annualized pace, inventory increased 6.2% month‑over‑month and 20.3% year‑over‑year, resulting in a 4.6‑month supply; pending home sales grew 1.8% month‑over‑month, outpacing expectations, and are up 1.1% year‑over‑year. The May PCE inflation report showed a 0.1% headline rise (in line with estimates) and a core increase of 0.2% (slightly above expectations), with year‑over‑year core PCE at 2.7%, still above the Fed’s 2% target. Keck discusses a proposed Federal Reserve deregulation bill that would let banks invest more in U.S. Treasuries without holding the usual 5% reserve, potentially lowering mortgage rates by 0.2–0.7% if enacted. Finally, he presents the final Q1 GDP reading, a 0.5% decline (double the prior revision), noting weaker personal spending and the possibility of a recession if Q2 also contracts. He concludes with a call to share the update and a reminder to subscribe.
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Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Remember that next Friday is Independence Day, so we will be closed for that. We will not be doing our weekly market update next week. Hopefully everybody stays safe, has a great time. Supposed to be pretty hot next week, so definitely be careful with fireworks as well. Got one more day for the month of June, one more business day, which is Monday, and then we're into July. More than halfway through the year. As far as rates go, dropping— saw a decent drop lower this week, which is great— from 6.87% to 6.72% for Mortgage News Daily. As a reminder, that is just an average for lenders across the country for top-tier scenarios of 25% down payment, owner-occupied purchase, conventional loan, with a small amount of origination fees there. Any of those you change, going to be different. So remember, it's not a quote, just an indication of where market rates are going. As far as your weekly mortgage tip, wanted to talk about the ability to waive escrows or putting taxes and insurance in or out of your mortgage payment. For the vast majority of mortgages out there, FHA, VA, and USDA require them to be included, and then conventional typically requires it if you have 20% or less than 20% for a down payment. There are a few lenders I have that make an exception, and you can choose not to have them included with less than 20% down on conventional. But for the most part, it's more than that. You have the option. So why would you want them included or not? Well, if you have clients that maybe are on a fixed income that want their monthly budget every month to be very small as far as their payments, but they don't mind paying their tax bill or their insurance bill once a year on their own, this can be a really great option, especially if you've got somebody with a fairly small loan amount. You know, maybe it goes from $1,500 a month for a total payment with tax and insurance to $1,000 a month, and that might be enough for them to make sure their budget is solid. Another reason, if somebody really likes to control their own personal finances, well, if you have the money escrowed, you're essentially paying the bank several hundred dollars a month they set aside without paying you any interest, and then once a year they pay it on your behalf. If you wanted to have it set aside, you could invest that money, put it aside into something that's going to earn some money for you, and then pull it out. So that's a couple different options if somebody wanted to have taxes and insurance removed from their mortgage payment. Last benefit for it is since we don't have to collect a prepaid amount for tax and insurance at closing, could help lower your closing costs a decent amount because we're not collecting for taxes and insurance. Next, as far as this week's updates, existing home sales came in at 8%, up for the month of May to a 4.03 million annualized pace. This is a little bit better than expected. Sales year over year are still down 0.7%, well below where they would be normally for this time of year, signaling that there could be some pent-up demand. Inventory rose 6.2% for the month of April and 20.3% up year over year, seeing a lot more homes on the market. We're now at about a 4.6-month supply nationally as of the end of May. May's PCE, personal consumption expenditure inflation report, which is the Fed's favorite measure of inflation, came in with a 0.1% rise, right in line with estimates on the headline number. The core rate, which strips out food and energy prices, that rose 0.18%, which is rounded up to 0.2%, a bit higher than expectations of 0.1%. Year over year also moving higher from 2.6% to 2.7%, still above and moving in the wrong direction to the Fed's ideal metric of 2%. For core PCE. Next, I also wanted to talk about something that's not official yet, but you might have been hearing about a proposed Federal Reserve deregulation bill, which could help potentially drop interest rates. Now, bank rate deregulation or regulation can be a pretty political topic. This one I think makes a decent amount of sense though, because right now banks typically have to maintain at least a 5% deposit amount on the money they lend out. So if they have $20,000 in loans, they need to have $1,000 left in their deposits that they are holding that money back from. This makes sense because you're covering for potential losses on those loans. You know, you don't want the bank to become insolvent. You want people to be able to withdraw their funds. But what about in the case of investing in US Treasuries? Now, Treasuries are backed by the full faith and trust of the US government. So they're essentially risk-free, but right now they're not differentiated. So if banks are going to be investing their money, that means that they have to have a certain amount held back in deposits. This proposal would allow banks to invest money into US Treasuries because they're not risky, because it's essentially very liquid and can still get a return on it and not have to set aside money for investments for their deposits. That being the case, their estimates that if this goes through, they because it would allow them to put more into treasuries, which helps with mortgage rates, we could see anywhere from a 0.2 to 0.7% better improvement in mortgage rates as a result. Still a lot of speculation around it. We'll see what happens, but some hopefully good movement on the horizon there. Next up, we got pending home sales for the month of May, which is up 1.8% for the month, a decent amount, almost over 3 times the half a percent increase that was expected. Year-over-year sales are now up 1.1% for pending home sales. The third and final reading of Q1 GDP, gross domestic product, came in. They do it 3 readings. They have an initial, a revised, and then a final. And this came in with a drop of 0.5%, decent amount below estimates. See, the previous reading, the second one, showed a 0.2% drop. So here we're more than doubling that drop number. Within it. If Q2 comes in a negative print, that technically meets the definition of recession, which is 2 quarters of negative GDP growth. And within the report, personal spending was a decent amount weaker, coming in at only a 0.5% increase versus the 1.2% increase we saw in the second reading of GDP. This hopefully is signaling lower pricing pressure, which is lower inflation, which would be helpful for mortgage rates. As always, hopefully this is helpful for you. If you know somebody who would benefit, feel free to pass it along. There's a button to subscribe down below in the email, and we'll look forward to seeing you next time. Take care.
