In this weekly market update, Jordan Keck provides a concise overview of current mortgage and housing market conditions. He notes that mortgage rates edged higher from 6.17% to 6.21% after a recent Fed rate cut, explaining the market’s anticipation effect. Keck offers a practical tip on escrow holdbacks, distinguishing lender‑required from non‑lender‑required repairs and highlighting the limited willingness of lenders and escrow companies to accommodate them. He then reviews August PCE inflation data, showing a modest 0.1% rise and a year‑over‑year drop to 2.2%, indicating progress toward the Fed’s 2% target. The segment moves to Saudi Arabia’s decision to increase oil production, which pushed oil prices down about 3.5% and is expected to further ease inflation. Keck reports that August pending home sales rose 0.6% versus expectations, improving from July’s decline, driven by lower rates and higher inventory. He cites the Mortgage Bankers Association’s data that refinance applications jumped 20% week‑over‑week (175% YoY), now comprising 56% of loan applications, while warning of potential slowdowns in underwriting and appraisal turn‑times due to volume. Finally, he shares July home‑price appreciation figures from the Case‑Shiller and FHFA indices (0.2% and 0.1% monthly, 5% and 4.5% YoY respectively), noting strongest gains in NYC, Las Vegas, and LA, with all major cities still showing price increases. The update closes with a casual personal note about a poker event and a Hawaiian‑themed shirt.
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Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Kicking off, interest rates moving slightly sideways to a little bit higher after last week's federal rate cut on Wednesday. A lot of the reason for that is because rates had already been anticipating it, so once it actually happened, now they're kind of regaining their strength for hopefully another push lower. So rates moved from 6.17% to 6.21% this week. As far as weekly mortgage tip, we want to talk a little bit about escrow holdbacks. So escrow holdbacks are often used in situations where if there's a lender-required repair from the appraisal report, or if there are just repairs that— let's say it's for a septic system, bad time of year— the seller wants to put money aside on that behalf, but the work can't be completed before closing. So there are two differences on this I want to make. One is lender-required repairs, and one is non-lender-required repairs. If it is a lender-required repair, in that situation, you want to do the work after closing, then you would be looking at an escrow holdback. Now, the tricky part on this is you need a lender to agree to it, and you need an escrow company who's willing to agree to it. A lot of them aren't really willing to do that right now. Because it's the number one reason for lawsuits. And it's one of the lowest areas of revenue for them. So pairing those two things up can be tricky. Now, if it's a non-lender required repair, this can be a little bit easier, because lender doesn't have to sign off or approve on it. And for escrow, you don't even necessarily have to use the current escrow company you're going through. I know at least locally here, Santiam Escrow, from what I understand, is still a company that's willing to do escrow holdbacks. So it doesn't matter where you're closing. If you wanted to just do an escrow holdback for a particular repair, you can potentially go through Santiam Escrow or another company willing to do it, hold that funds aside until the work is done. So if you have any questions on this or other ways of using excess credit in a transaction, let me know. There's some creative things to do depending on the situation. Next up, the PCE, personal consumption expenditure, inflation data came out for August showing only a 0.1% rise. Below the 0.2% that was expected. And this is important because it's going to show on an annual basis we're below that 2% inflation target for the Federal Reserve. Year-over-year inflation dropped from 2.5% to 2.2%, and the core rate also only rose 0.1% below estimates, putting us on a year-over-year annual basis for core going up from 2.64% to 2.68%, just because we were placing a pretty low number last August. So we're headed in the right direction. Next up, Saudi Arabia, after saying that the US had failed to fulfill their, uh, essentially promise of buying more oil a few years ago, they started increasing the prices, started cutting production on that. They just announced that they will start increasing oil supply. Just on that news alone, prices for oil dropped about 3.5% because they're moving away from their $100 per barrel per barrel target. And of course, oil prices, they filter through the economy in so many different ways because it affects transportation, a lot of plastic goods, things like that. And so likely going to help even lower inflation numbers into the future. May get to see some low gas prices from it as well. Pending home sales for August rose 0.6% above the 0.3% that was estimated. Year-over-year sales are still down 3%, but that's quite a bit better than the negative 8.5% we saw in the previous month for July. Increase in signed contracts does line up with the lowering of interest rates and increasing levels of inventory, giving buyers more options at more affordable monthly payments. So hopefully continue to see more of that as inventory levels stay strong and interest rates are continuing same or lower. Next, the Mortgage Bankers Association reported that applications for refinances rose another 20% last week, to be up 175% higher year over year. Refinances made up 56% of all total loan applications, up from 51% the prior week, while purchase applications rose 1% week over week. We're starting to see slowdown in some underwriting as well in turn times, and we might start to see some slowdowns in appraisal turn times as you have a lot of additional volume before companies really have had time to ramp up on any hiring. So again, make sure you're being aware of those turn times. We might start to see contracts pushed out a little bit, but again, wanted to give you a heads up before we really start to see any issues there. Right now, 30 days still fine. If it becomes more of an issue, might want to start adding an extra week or so. And lastly here, Case-Shiller and FHFA both reporting home appreciation for July up 0.2% and 0.1% respectively. Case-Shiller now is showing home values up 5% year over year, and FHA is up 4.5%, showing prices continue to stay strong throughout the US as a whole. Using the 20-City Index, the biggest gains from that were from New York City, Las Vegas, and LA. Lowest gains were actually seen in Portland, but it still showed price— prices increasing rather than going negative across all cities. As always, hopefully this is helpful for you. If you're planning to make it to poker tonight, looking forward to it, it's going to be a great time. And of course, Hawaiian theme, so wearing my shirt here ahead of time. So I will see you then. Have a fantastic weekend. We'll see you next week in October. Take care.
