Market uncertainty and shifting expectations led to a turnaround in mortgage rates last week. Freddie Mac’s weekly survey reported an increase in the average rates for the 30-year fixed and 15-year fixed. As of the writing of this email, rates are trending toward improvement…but as you know, can change at any time.
With an impending Fed Meeting coming up next week, I expect we’ll see some market and potentially mortgage rate volatility this week leading up to the Fed’s decision.
As for the housing market, home prices have stabilized, however, supply is tight as buyers return to the market for the spring peak buying season. I doubt we’ll see much happen to loosen supply unless rates show a nice improvement.
We’re also bracing for the new loan level price adjustments coming next week on May 1st. Essentially, the Biden administration has mandated that home loan borrowers with good credit scores and higher down payments will subsidize home buyers with lower scores and lower down payments by paying additional monthly fees that equate to about $40 per month on a $400,000 mortgage.
These fees apply to any new mortgage that’s guaranteed by Fannie Mae or Freddie Mac – Federal guarantors – regardless of the lender. You can read an in-depth explanation of these changes at: https://www.mortgagenewsdaily.com/news/01192023-big-llpa-changes.
We saw sales of Existing Homes slip by 2.4 percent in the report released this week. Also falling back slightly was the median existing-home sales price dropping 1 percent to $375,700. The supply of homes on the market rose to 2.6 months of supply.
Home prices unexpectedly rose a little in the most recent Case-Shiller Home Price Index. Forecasters expected a -0.3 percent drop in prices.
As for New Home Sales, after a small uptick to a 640,000 annualized rate in February, new home sales in March were expected to slip back marginally to 634,000 but instead surprised analysts rising to 683,000.
Near the end of the week, we get a couple of high-impact economic reports, including the first quarter GDP (gross domestic product) which is expected to come in at 2.0 percent growth in the economy. Any surprises to the downside here could alight recession fears.
On Friday the Fed’s favorite inflation indicator is released, and just in time for next week’s Fed Meeting. Its inflation readings for March are expected to show continued moderation at monthly increases of 0.1 percent overall versus a 0.3 percent increase last time and an annual rate of 4.2 versus February’s respective rates of 5.0.
