Projections For Monetary Policy Show No Rate Changes

By PATRICK LAVERY Americans were just putting away their families’ Halloween costumes the last time the Federal Reserve Board made an announcement on monetary policy, holding the federal funds rate at a range of 5.25% to 5.5%. Now the nation is well past Thanksgiving and fully focusing on the holiday season and the new year ahead. But even as the seasons change, most experts expect the Fed to once again refrain from taking any action at this week’s Federal Open Market Committee meeting, slowing a trend of 11 rate hikes since early 2022. The CME Group’s FedWatch, a forecast of interest rates based on Fed funds futures trading indicators, currently hedges a 98.4% chance that the FOMC will vote to…

Jobs Report Adds Pressure To Fed Ahead Of FOMC Meeting

The labor market experienced unexpected gains last month, with nonfarm payrolls rising 199,000, adding to a 150,000 bump in October. Unemployment fell to 2.7%, workforce participation increased, and monthly wage growth saw their biggest boost of the year. This paints a difficult picture for the Fed moving into its FOMC meeting, scheduled for this week. The Central Bank prefers a slower hiring pace to help it combat inflation. Its rate hikes have moved the economy closer to its 2% inflation target, down from 9.1% in June 2022 to 3.2% last month. Investors are hoping for cuts to federal funds rate sooner rather than later but November’s employment gains give the Federal Reserve more reason to hold interest rates at their…

Applications Soar As Rates Hit Lowest Level Since August

Mortgage applications increased again last week as cooling inflation and Fed rate expectations pushed mortgage rates down. The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – increased by 2.8%, up from the week prior’s modest +0.3%. Adjusted purchase applications fell by 0.3%, while the unadjusted index rose 35% from the week before and was 17% lower YOY. Falling rates drove the jump, with the 30-year fixed-rate falling to 7.17%, its lowest since August 2023. MBA Vice President and Deputy Chief Economist Joel Kan pinned the rate cooldown on disinflation and the dwindling possibility of further Fed rate hikes. The FOMC will meet on December 12-13 and Wall Street…

Ishbia Prepares For Market Rebound

By KIMBERLEY HAAS The CEO of United Wholesale Mortgage says they are investing in technology and hiring new team members in preparation for a turn in rates. Leaders at UWM Holdings Corporation announced their third-quarter results on Wednesday. Total loan origination volume was $29.7 billion, of which $25.9 billion was purchase volume. Net income was reported at $301 million, which includes a $92.9 million increase in the fair value of mortgage servicing rights and diluted earnings at $0.15 per share. This was the second consecutive quarter of profits for UWM despite industry-wide challenges. Mat Ishbia, chairman and CEO of UWMC, said in a statement that the strength of the company and the broker channel is on full display. “While others…

Fed’s Decision To Hold Steady Welcome News In Mortgage World

By PATRICK LAVERY As experts almost unanimously predicted, the Federal Reserve Board on Wednesday held its target range for the federal funds rate at 5.25% to 5.5%, meaning after a year and a half of upheaval, the range will approach the end of 2023 not having budged for more than a third of this year, from the last rate hike at the end of July until at least the Federal Open Market Committee’s next meeting two weeks before Christmas. That may belie the fact that the Fed has raised the rate a total of 5 1/4 percentage points since early 2022, but for now, the stability is welcome news – at least in the housing market. “Mortgage rates fell this…

Watching And Waiting For The Fed’s Next Move

By PATRICK LAVERY When the Federal Open Market Committee meets this week analysts will be looking for signs of what’s next and it may be anyone’s guess. At the Mortgage Bankers Association’s annual convention and expo in Philadelphia this month, MBA Chief Economist Michael Fratantoni told attendees that they expect the Feds will maintain the federal funds rate target range and do not expect an increase from them again this year. Fratantoni projected there will be at least two cuts in 2024, and possibly more in 2025. But then Patrick Harker, the president and CEO of the Federal Reserve Bank of Philadelphia, took the stage the next day and said rates may have to stay high in order for them…

PCE Soars To Four-Month High

The Fed’s preferred inflation measure soared to a four-month high in September, increasing the likelihood of future Fed rate hikes. The personal consumption expenditures price index tracks what Americans buy and for how much, offering a view into their spending habits. The core index, which excludes food and energy components, increased by 0.3% in September.  When adjusted for inflation, consumer spending rose 0.4%. The data comes on the heels of news that the economy grew by 4.9% in Q3 2023, the fastest pace in two years and more than expected. Consumers once again waved off recession fears, but the increase puts the Central Bank in a tough position as it battles inflation. Analysts generally maintain that another increase won’t come…

Fed’s Policies Take Center Stage At MBA Convention In Philadelphia

By KIMBERLEY HAAS The president and CEO of the Federal Reserve Bank of Philadelphia knew he was facing a tough crowd when he took the stage during a Monday morning session at the Mortgage Bankers Association’s annual convention and expo. “I stand here this morning fully aware of the mood in this room and I am also fully aware of the way the actions we on the FOMC have taken over the past 18 months in our efforts to tame inflation to get it back to a 2% annual target have, in their own way, contributed to the current mortgage climate,” Patrick Harker said. Harker said he met with community members this summer to see firsthand the impacts that monetary…

MBA Annual Convention And Expo Kicks Off In Philadelphia

By KIMBERLEY HAAS The Mortgage Bankers Association’s chief economist and his team had some good news for those in attendance of their annual convention and expo on Sunday afternoon. Total mortgage origination volume is expected to be $1.95 trillion in 2024, up from the $1.64 trillion projected for 2023. At the same time, volume is predicted to increase 19% by loan count, with 5.2 million loans expected next year. Michael Fratantoni, chief economist and senior vice president of research and industry technology, said members just have to make it through the winter. “In terms of origination volume, we think 2023 is the low point,” Fratantoni said, adding that many lenders have had five or six quarters of production losses. In…

Rates Jump To 7.49%

Mortgage rates climbed again last week following treasury yield gains in the wake of political turmoil and an unexpected jobs report spike. Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.49%, jumping from 7.31%. A year ago at this time, the 30-year FRM averaged 6.66%. The 15-year fixed-rate rose to 6.78% from 6.72%. A year ago, it averaged 5.90% “Mortgage rates maintained their upward trajectory as the 10-year Treasury yield, a key benchmark, climbed,” said Sam Khater, Freddie Mac’s Chief Economist. “Several factors, including shifts in inflation, the job market, and uncertainty around the Federal Reserve’s next move, are contributing to the highest mortgage rates in a generation. Unsurprisingly, this is pulling back homebuyer demand.” Chaos…