In this weekly market update, Jordan Keck provides a brief holiday schedule notice, reports that mortgage rates remain flat around 6.34‑6.36%, and introduces a mortgage tip about bank‑statement loans for self‑employed, owner‑occupied borrowers. He explains the Federal Reserve’s split stance on a potential December rate cut, then reviews key macro data: the September BLS jobs report (119k jobs added, unemployment rising to 4.4%), the household survey (251k jobs but labor force up 470k), Core Rental Price Index (September down 1.3% MoM, Y/Y rents up 1%), October existing home sales (up 1.2% to a 4.1 M annualized pace, Y/Y up 1.7%), and unemployment claims (initial claims 220k, continuing claims 1.974 M). Keck interprets these figures as pressure on the Fed to hold rates, notes the deceleration in rent growth, and suggests that lower rates could spur more buyer activity. He closes with a friendly sign‑off and a reminder of his upcoming time off.
Chapters
Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Want to kick things off with a reminder that next week I will be out of the office Monday and Tuesday, and then of course we have Thanksgiving on Thursday. Probably not going to be a whole lot happening on Friday either, so no market update coming out next week. Hope you get a chance to enjoy time with your family there. Stay safe and get some good food. As far as interest rates, not a whole lot of movement overall, moving from 6.34% last week, slightly higher to 6.36% this week, but probably going to move a little bit lower again today based on new information coming out here. So pretty flat overall. As far as a mortgage tip, I want to talk about bank statement loans. So a couple weeks ago or so, I talked about debt service coverage ratio or DSCR loans. And those are loans to be able to buy investment properties just on the cash flow of the property alone with no additional income verification. Now there's a similar, kind of similar version of that for owner-occupied homes. So if you have somebody who's self-employed and maybe they write off a whole lot of expenses on their taxes, we all know that they're really making more than they're showing for tax purposes. So bank statement loans allow them to use either a 12-month or 24-month average of personal and/or business bank statements and being able to use the deposits for their income. So great opportunity for somebody who wouldn't otherwise qualify. Can do this as a purchase or refinance, single family up to 4 units, as long as it's owner occupied. And so if you have somebody who might be a good fit for that situation, let me know. Interest rate's a little bit higher, but not too much more, and can be a great opportunity to get people into a loan that otherwise wouldn't qualify. Next up, the Federal Reserve is split between their members on whether or not to cut rates at their next meeting, December 10th. They have 4 members who are in favor of a cut, 3 members who are outspoken about wanting to pause, and then the other 5 are currently undeclared, although looks like most of those 5 are leaning towards a pause. We'll see what happens when they go to vote, but because of that, likely not going to be seeing a cut happen. Next, the BLS jobs report for September was finally released here after it's been delayed due to the government shutdown, showing 119,000 jobs created for the month of September. This was above the estimates of 50,000, but even after you have some negative revisions for the months of July and August, those were down by about 33,000. The net result was still above estimates, and so not great for mortgage rates, and that's also further reasoning for the Fed not to cut rates in December's meeting. They want to see unemployment moving higher. They want to see jobs reports coming in weaker before they have incentive to be able to do that. The household survey component of the jobs report showed 251,000 job gains, but that's not the full picture because the labor force went up by 470,000. So with that, unemployment rate actually went up to 4.4%. Because there was a net result of 219,000 more people unemployed because of that increase in the workforce. Next, Cotality's Core Rental Price Index for September was down 1.3% for the month, showing year-over-year rents are still up 1%, but this is definitely a deceleration from the pace we saw in August of 1.4% increase year-over-year in those rents. So continuing to see rents coming down across the country. Existing home sales for October, which was closed sales, were up 1.2% to a 4.1 million annualized pace. This was above estimates, and year-over-year sales are now up 1.7%. Part of this may have been because this is for home buyers who were shopping in the months of August and September, and that's when we started to see a little bit of the rates coming down in September. So in the next report, might see further strength as well with a lot more buyers getting off the fence and moving into the markets because of those lower rates. And lastly here, initial jobless claims fell 8,000 for the week, but continuing claims rose 28,000. First-time claims were 220,000, which is still a fairly low overall level, showing there's not a huge amount of additional firings, not a lot of— not a whole lot of people filing for unemployment claims for the first time, but continuing claims are now up to 1.974 million. Still one of the highest levels in the last 4 years, not tipping above that 2 million mark, but staying very, very close to it. It has not come down meaningfully in a very long time. So we'll see as we're trying to thread the needle here between unemployment and job creation, and the Fed trying to watch very, very carefully to decide when would be a good time to cut rates and try and stimulate the economy, or if the economy is going to take care of itself. So we'll see what happens. As always, hopefully this is helpful. Have a great week next week. We'll see you in December. Take care.
