In this weekly market update, lender Jordan Keck walks viewers through recent mortgage rate movements, dropping from 7.07% to 6.97%, and offers a practical tip on estimating and padding closing costs, emphasizing the variability caused by closing dates, month, and daily rate changes. He then reviews key economic data: the second reading of Q1 GDP (revised to -0.2% with consumer spending growth at 1.2% versus expectations), Apartment List’s May rent index (+0.4% month‑over‑month, still -0.5% year‑over‑year) and a 7% vacancy rate, the ongoing conservatorship of Fannie Mae and Freddie Mac and its potential impact on interest rates, and divergent home‑price appreciation figures from the Case‑Shiller (0.3% month‑over‑month, 3.4% YoY) versus FHFA (‑0.1% month‑over‑month, 3.7% YoY). He also reports on the latest Personal Consumption Expenditures (PCE) inflation numbers—headline up 0.1% to 2.1% YoY, core up 0.1% to 2.5% YoY—highlighting their proximity to the Fed’s 2% target. Finally, Keck shares Fannie Mae’s updated rate forecasts, lowering the projected year‑end 2025 conventional rate to 6.1% and the 2026 rate to 5.8%, suggesting continued downward pressure on mortgage rates and potential stimulus for home purchases and refinancing. The update concludes with encouragement for agents and borrowers to use the information in planning and client communication.
Chapters
Good morning and happy Friday, Jordan Keck here, your lender buddy, with your weekly market update. Almost June, hard to believe, this is the last business day of May here. Coming into June, no federal holidays, but do remember that Father's Day is Sunday the 15th. As far as rates go, we moved down a little bit this week. 7.07% last week to 6.97% this week. Here's getting a bit of a reprieve. As far as a weekly mortgage tip, wanted to talk about estimating closing costs. This is something that may seem a little bit like the man behind the curtain or this black box, where when you're looking for writing closing costs into an offer, there's this range that you're given. Maybe you're given a specific dollar amount, but it is almost never accurate. So why is that? How are closing costs estimated? Well, one first thing to know is that when closing costs are estimated, it has to do with the day that you close, the month that you close in. We're estimating what insurance costs are going to be, and then once you get a quote, that can be different. You know, there's so many different factors in it, but the biggest one I want to touch on, besides the day and the month that you close, is the market interest rates. See, every, every single interest rate has a particular cost to it, just like the cost in the stock market. The lower the rate, the higher the cost. This is the idea of buying down your rate or paying points. Well, since that cost changes every single day, you can only lock in a rate for the most part once you have an offer accepted. If you're getting closing costs for the offer and saying, hey, we want to have the seller pay $6,000 or $12,000 of our buyer closing costs. That might be 100% accurate on Thursday, but if that offer gets accepted and then we lock the loan on Friday, that number will be different. Could be a small number, could be a big number. So that's one of those where regardless of what number you're getting, if there's any delay in getting that estimate and then being able to lock the rate, there will be variation in the cost of that rate by default. Now again, could be a small bit difference, could be a big difference. And then same every time you change the closing date. If we're moving up, if we're closing later, if we're into a new month, all of those are going to change the closing costs as well. So what do you do with this information? Well, one, the biggest thing you can do is prepare your clients for it mentally to know that closing costs are a range that will fluctuate. They are not an exact number. And two, if you're wanting to create some buffer room, ask for a little bit more than you think that you need. Maybe it's $500, maybe it's $1,000 more. Talk with your specific lender, talk with me if you want to know for sure. There are usually some things I do to pad them a little bit as well, preparing for a notary fee, having an appraisal re-inspection fee disclosed up front in case we need them. And then if we have extra credit, that's a good problem to have. There are ways to use that using a home warranty, you know, maybe having the seller pay for some things for repairs. So a lot of ways we can use that if we have it available rather than having to come up with extra cash out of pocket. All right. A lot of news this week as well. So move through. We got the second reading of the Q1 GDP. There's typically 2 to 3 different readings for each one. And so this was revised higher originally from a -0.3% to a -0.2%. So still down, but a little bit better than what the first reading was. But within the report, consumer spending dropped to 1.2% growth instead of the 1.8% that was expected. Showing that pullback from expectations on consumer spending is one of the reasons we saw some benefit in the market this week. The slowdown may be an indication of lower inflationary pressure moving forward, and lower inflation is always a good thing for rates. Apartment List showed their May rent index rose 0.4%. Rents are still down 0.5% year over year though, at a time when we typically see rents rise quite a bit, especially year over year. The vacancy rate remained at 7% though, which is one of the reasons I mean, it's the highest since 2017, since they started tracking it. That's one of the big reasons why we're not seeing a lot of that pricing pressure higher as we likelihood of potential rent cuts to be able to keep people in those units to try and attract more tenants into those units and get those filled or keep them from being vacant. As far as next, you might have seen some information lately in the headlines about Fannie Mae and Freddie Mac going public or coming out of conservatorship. This is something I've followed closely for a while, and Fannie and Freddie, after 2008 when the government bailed them out, have been in conservatorship ever since. So they're still technically public companies. You can buy stock in Fannie Mae and Freddie Mac, but essentially all the profits for those companies are going to the government ever since that bailout, even though they've more than repaid everything that the government has given them since that time. So the government, why would they have any incentive to release them? Well, Trump recently has been talking about wanting to release them from conservatorship, put them fully back as public companies so the profits can go back to their shareholders. But there's been some fear about the implicit government guarantees that if those loans ever have issues, that the government would step in. Now, Trump came out and actually addressed this in a great way and said if they go back public, the government will still have those implicit guarantees. So that should not impact interest rates. The fear was that if there wasn't an implicit government guarantee, it would be higher risk. There'd be more put on private sector. And so interest rates would have to go move higher to offset that potential risk. This eliminates a lot of that fear, showing that if that were to happen, it shouldn't impact interest rates, which is great, great news. Next up, Case-Shiller and FHFA appreciation for the month of March. Showed a rise and a fall. So Case-Shiller showed 0.3% of appreciation for the month, and FHFA showed a fall of 0.1% for the month. So why the difference on these? Well, Case-Shiller is kind of considered the gold standard of appreciation and takes into account all homes at all prices, whereas FHFA only takes into account homes that are financed with loans at the county conventional loan limit or below. So Case-Shiller tends to take into account higher-priced homes as well in that mix. The mixed data, again, because of those differences showing that you may have less pricing pressure down on those higher-priced homes than, than maybe have some of that pressure, especially if we're seeing new home construction, you know, a lot of incentives being given right now, just degrading a little bit on that pricing. And so year over year, Case-Shiller is now showing up 3.4%. Previously it was at 4%, so a little bit of a slowdown but still up year over year. And FHFA now showing 3.7% year over year growth, down from 3.9% in the last report. We got PCE, the personal consumption expenditures inflation data, and this is the Fed's favorite measure of inflation, what they watch a lot. So when they're looking at it, they want to see the core rate down to 2%. That's kind of their target metric. The headline number rose 0.1%. Year over year decreased from 2.3 to 2.1. So getting real close there on the headline. And the core rate, which strips out food and energy prices, that was also up 0.1% for the month, year over year falling from 2.7 to 2.5. So that year over year core number, 2.5, very close to that Fed target. And so we'll see if we get even closer moving forward. And lastly here, Fannie Mae released an updated rate forecast for 2025. Dropping their estimated year-end rates from 6.2% to 6.1%, meaning they think the standard conventional rate will be about 6.1% at the end of this year. They also updated their 2026 year-end forecast, moving that down from 6% to 5.8%, showing they believe that rates are going to incrementally continue to drop through the end of this year and the end of next year. This could be additional stimulus for home purchases, as historically whenever we've seen interest rates drop, that stimulates home purchases as well as refinance activity. So for your clients who have been waiting for rates to come down, hopefully this forecast plays out. We see some good news, we see some relief and get some stimulation in the housing market and then drop those payments for everybody who's bought in the last few years looking to be able to refinance lower. As always, hopefully this is helpful for you. Have a fantastic weekend. We'll see you next time. Take care. Mm-hmm.
