The Fed Doubles Down - Feb 13 - Weekly Mortgage Update
Strong job reports continue to give ammunition for the Fed to raise their target rate higher and for longer than the market expects.
Purchase or Refinance Quotes
A complete workup of your payment and closing costs on any home purchase or existing mortgage refinance. (same-day response, no credit check required)
⭐️ Check This Out
Home prices are down 5.3% since June 2022, as January sees the 6th straight MoM decline. But all is not lost, as activity levels pick up, with 57% of borrowers buying points like they're stocking up on toilet paper during a pandemic.
Nationwide home prices rise 6.9% YoY in December 2022 compared to December 2021, even the ugly ducklings (distressed sales) included.
Building material shortages, a thing of the past? Not quite. Most have improved since last May, except for HVAC equipment and some types of ceramic materials (tiles, bricks, cement-based products), which have only gotten worse.
Nearly 9 in 10 metro areas see the green in the 4Q of 2022 with home price gains.
U.S. housing affordability hits rock bottom, with three consecutive quarterly declines in 2022, now at its lowest level since 2012. Thanks, NAHB, for the harsh reality check.
📊 Market Update
Fed Chair Powell spoke Tuesday of last week and emphasized that due to the labor market's strength, bringing down inflation may take longer and require more rate hikes than expected. As you can imagine, this hawkish tone wasn’t friendly to mortgage markets, and interest rates ended the week higher.
Powell also mentioned that the Fed's annual target rate of 2.0% may be a "process that takes a significant period of time." (we’re talking years) Still, Powell repeated that monetary policy would be determined by ongoing data, suggesting that the amount of tightening could be adjusted in either direction based on future economic reports.
It turns out that Powell didn't have that incredible jobs report from the week prior before his speech (phew!), but he says it wouldn't have changed anything. The strong jobs report was something they already had in mind before communicating the need for ongoing rate hikes.
What About All the Layoffs?
It feels like every day, we’re seeing more announcements of layoffs by major companies. According to layoffstracker.com, the US trend is obvious. Layoffs are on the rise. It’s not pretty.
Just this last week, we’ve seen the following:
Yahoo lays off 1,600 (20% of total)
Github lays off 300 (10% of total)
Paypal lays off 2,000 (7% of total)
Zoom lays off 1,300 (15% of total)
Ebay lays off 500 (4% of total)
Boeing lays off 2,000
Dell lays off 6,650 (5% of total)
Can the upcoming employment reports be as rosy? I have strong doubts. A jobs report that comes in under expectations is one of the indicators that the Fed will be looking for when considering any change in policy.
🗓️ Economic Calendar
Tuesday
Consumer Price Index (CPI) - Jan YoY - measures the changes in the price of goods and services, excluding food and energy.
Wednesday
Retail Sales (MoM) - measures the change in the total value of sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.
Thursday
Core PPI (Jan) - measures the change in the selling price of goods and services sold by producers, excluding food and energy.
Housing Starts (Jan) - measures the change in the annualized number of new residential buildings that began construction during the reported month.