Weekly Market Update 3/1/2024

Good morning and happy Friday. Jordan Keck here, your lender buddy, with your weekly market update. Kicking off things, I do want to let you know I will be out of the office next week from Wednesday through Sunday. So during that time, Tyler on my team, my right-hand man, will be covering for me. His contact information is down below, cell phone number, you can text on that and email. He'll access to all of my notes, everything on file, so he does not miss a beat. So while I'm gone, just know that my phone, my emails, and my texts will have updates with his contact info. He'll have access to all of my emails and of course texts, and we'll get an automatic response with his info, and then voicemail will mention it as well. So business as usual, just with Tyler as the main point of contact for that time while I'm gone. So appreciate you letting me get away for a few days for that. As far as interest rates go, we are unchanged, 7.1% for conventional loan top-tier average from last week to this week. So we saw a little bit higher, a little bit lower, and but at this point unchanged or moving in a positive direction, which looks like we are today. Might break through some technical levels on the charts and see if we can get some improvements there. And then even just stability, a lot of lenders, they're they don't necessarily immediately price in the changes in the market. And so rate sheets for lenders, you know, if we see some stability, they might be more readily available to give some of those gains. Then if we see some instability, they might want to buffer their rate sheets just a little bit. As far as the weekly mortgage tip here, I wanted to talk about the timing of first mortgage payments and closing. So you may or may not know this, but whenever you close, it doesn't matter if it's the first day of the month the last day of the month, the first mortgage payment is going to be on the same date. So let's say you're closing in February, you'd automatically skip the rest of March, and then April 1st is when your payment would technically be due. So, and then that doesn't matter if you're closing February 1st or February 28th, it's still going to be April 1st for that payment. And the reason for this, I mean, initially it sounds great. Well, let's always close at the beginning of the month. We'll have a almost 2 months before first payment's due. But there is a drawback. When you close at the beginning of the month, the reason your payment is still so far out is because you're paying interest for the following month. In this case, if you're closing in February, you've got January, February, March— pardon me there. So you're basically paying for March's interest when you close. And so your closing costs are going to be the highest at the beginning of the month for that reason. If you want your closing costs to be the lowest, you're going to close at the end of the month, but then you have only a shorter period of just over 30 days before your first mortgage payment is due. So at the end of the day, it still is a wash. It's the same money, but that can help you and your clients adjust for whatever your preference is, whether it's extra money out of pocket at closing or having a longer timeframe or shorter timeframe for that first mortgage payment date. So use that as you will. Next up, we got PCE, the personal consumption expenditures inflation data report this week, which is the Fed's favorite measure of inflation. The core rate specifically is what they usually look at in wanting to get inflation to their goal of 2%. So the headline number came in up 0.3% for January, which was right in line with expectations. Of course, we want to see the lower number, the better. But the nice part is the previous month of December was revised lower by 0.1%. Year over year, the number declined from 2.6% to 2.4% inflation, which is great. Again, moving in the right direction and very close to where we want to see it. And then the core rate, which again is what the Fed is looking at to want to be at 2% year over year, that rose 0.4% month over month and year over year declined from 2.9% to 2.8%. The previous month was also revised lower, 0.1%, so not a massive gain, but Hey, we'll take slow progress in the right direction any day of the week. Next up, durable goods orders for the month of January reported a -6.1%, which is much lower than the 4.5% drop that was expected. Adding to the weakness, there was a downward revision for December from a zero, which is a flat number, to a -0.3%. And again, that was a revision to December that showed up in the January report. And then the core rate rose 1%— or 0.1%, excuse me— to match expectations. But again, December was revised lower from showing a 0.1% gain to a negative 0.6%. So big downward revision on the core rate for December there. Next up, Case-Shiller and FHFA came out with their home appreciation numbers for the month of December. It's always a couple months delayed. Showing prices up 0.2% and 0.1% respectively. Remember, Case-Shiller is kind of the gold standard that takes into account all properties regardless of price range, and FHFA, that only takes into account homes financed with loans less— at the top— or less than the conventional county maximum. So Case-Shiller tends to take into account more of the higher-priced homes where FHFA is lower. Year over year, Case-Shiller is showing homes up 5.6% 6%, and home prices up about 46% since 2019. So just 5 years, homes up almost 50% in value. And then FHFA showing home values up 6.6% year over year. They're still trucking along even with the higher interest rates we've been seeing, even with high home prices. And I think a lot of us know it just has to come down to inventory. There's just not enough inventory to satisfy demand. And of course, that's going to pressure prices higher. Next up, CoreLogic's loan delinquency report for the month of December showed 30-day or more delinquencies did increase a bit from 2.9% to 3.1%. Delinquencies that were 90 days late or more also rose from 0.9% to 1.0%. And foreclosures stayed at the same level that they've been at, 0.3%. So a little bit of a tick up here, not a ton to be concerned about, but definitely something to keep watching. Because it's been so stable for so long. And, you know, one of the indicators in addition to jobless claims and unemployment rates in the economy is delinquency rates. We saw them going up on car loans and on credit cards. And now this first hint about it potentially happening on the mortgage side, something we're definitely going to want to watch closely. And lastly here, initial jobless claims, initial claims rose 13,000 to 215,000 total claims for the week. Of course, this was the week of President's Day, so numbers might be a little off. They don't do a great job of seasonal or holiday adjustments for those. And then continuing claims rose 45,000 to 1.905 million. Now continuing claims have gone back and forth. We see some big increases, some big drops, but this reading is the second highest number in about the last 2 years. So again, something we want to keep an eye on. And then also keeping in mind that with the unemployment rate and with continuing claims, there is an expiration to that. So if somebody's on their continuing claims for too long, doesn't necessarily mean that they're going to be back in the workforce. But if they're not receiving benefits anymore, they're removed from that continuing claims number. And then same with the unemployment rate. If you have somebody that's removed from the workforce, then the size of the workforce decreases. So even though you might be losing jobs, If those people are retiring and not reentering the workforce, of course, that changes the sample size and the unemployment rate may not go up. Of course, we saw in this last report, it actually went down even though you had a massive number of jobs cut because a lot of people left the workforce. So as always, hopefully you have a fantastic weekend. Let me know if you need anything. I'll be available this weekend here before heading out next Wednesday to help with any new pre-approvals. Getting letters out, running numbers. And if you have any deals that need a second opinion or a save, if somebody else is, you know, having hurdles to get to the finish line, let me know. Always happy to help. Of course, have a great weekend. We'll see you next time.