By PATRICK LAVERY
With the end of the third quarter of 2023 in sight, indications are that the Federal Reserve will pause hiking its federal funds rate this week – as it did in June before again raising the target range in July – and investors will be watching closely on Wednesday to see if Chairman Jerome Powell gives any indication as to what they might do to end the calendar year.
The FOMC’s course of action, while holding no direct bearing on mortgage rates, acts as a strong indicator of what direction those rates will go in next. According to Business Insider, a pause on the part of the Fed won’t do much to move mortgage rates, currently above…
Mortgage applications tanked last week, raising concerns over the market’s future.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – fell by 4.2%, supercharging after the week prior’s 0.8% decline.
The average interest rate for 30-year fixed loans rose from 7.16% to 7.31%, pushing homeownership farther out of reach for many Americans. This is the fourth straight week of increases and the highest level since December 2000.
“Applications for home purchase mortgages dropped to their lowest level since April 1995, as homebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power. Low housing supply is also keeping home prices high in…
By CHUCK GREEN
Mortgage rates are hovering around 7% as the summer winds down and with potential homebuyers facing high monthly payments for the few properties for sale, people are wondering when the Federal Reserve will loosen its grip on monetary policy so the housing market can free up again.
Last month, Chairman Jerome Powell announced the key interest rate would be lifted to 5.25% to 5.5% — the upper figure representing a level not seen since 2001, according to the Associated Press. Powell said that they don’t expect to reach their goal of 2% inflation until 2025, and they do not intend to cut rates until next year.
“The Fed’s rate hikes attempt to combat inflation, increasing mortgage interest…
By PATRICK LAVERY
Six weeks ago, Federal Reserve Chairman Jerome Powell hinted that although the Fed was, at the time, pausing increases to its target range for the federal funds rate, the rate might be raised again several more times before the end of 2023.
Those waiting to find out if that was a threat or a promise got their swift answer on Wednesday, as Powell announced after the two-day Federal Open Market Committee meeting that the rate would be lifted to 5.25% to 5.5% — the upper figure representing a level not seen since 2001, according to the Associated Press.
Since early 2022, the key rate has risen 5 1/4 percentage points.
“We have covered a lot of ground,…
By PATRICK LAVERY
When last we heard from the Federal Reserve on interest rates, on June 14, the Federal Open Market Committee agreed not to raise the target range for the federal funds rate for the first time in more than a year.
With the Fed’s next meeting now less than a week away, could Chairman Jerome Powell be preparing to announce one of the hikes that he said in June might still be remaining for this year? Or will the FOMC stick to a holding pattern?
And how are those developments going to impact a U.S. housing market that Powell has continuously characterized as sluggish throughout 2023?
It is predicted that the central bank will deliver a quarter of…
Mortgage rates retreated last week, dropping more than ten basis points in a one-week period.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.78%, down from 6.96% the week prior. A year ago at this time, the 30-year FRM averaged 5.54%.
The 15-year fixed-rate mortgage reversed course as well, down a whopping 24 bps from 6.30% to 6.06%. A year ago, it averaged 4.75%.
“As inflation slows, mortgage rates decreased this week,” said Sam Khater, Freddie Mac’s Chief Economist. “Still, the ongoing shortage of previously owned homes for sale has been a detriment to homebuyers looking to take advantage of declining rates.”
Existing-home sales saw their most sluggish levels in 14 years in June.
At the…
The Federal Open Market Committee’s June meeting is just around the corner, and while most experts think the Fed will pause its rate increases, others are wary.
Most analysts expect the Central Bank not to introduce another rate hike at the meeting, scheduled for June 13-14, according to a poll of economists from Reuters. More than 90% of those polled, 78 of 86 total, don’t think another hike is on the horizon. These analysts think the Fed will pause to evaluate the impact of the 500 bps increases they’ve already instituted.
“[Fed Chairman Jerome Powell] expressed his bias in favor of remaining on hold in June … he’s going to stick with that as it gives them an additional month…
Mortgage applications rose last week across the board as rates dipped in the wake of positive news from the Fed.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – increased by 6.3%, changing course after last week’s 1.2% decrease.
Adjusted purchase applications rose by 5%, while the unadjusted index was up 5.3% from the week before and 32% lower YOY.
The average interest rate for 30-year fixed loans dipped from 6.50% to 6.48%.
Refinances also showed movement, up 10% from the week prior. They remain 44% lower than the same time last year, however, comprising only 28% of total applications.
In the past decade, refis averaged 58% of…
Inflation continued its upward march last month but showed signs of cooling, according to new data from the Bureau of Labor Statistics.
The Consumer Price Index rose 5% YOY in March, down from 6% in February. Month-over-month, inflation was up 0.1% on a seasonally adjusted basis, compared to 0.4% in February.
The core index, which measures everything but volatile food and fuel costs, ticked up by 0.1% to 5.6% YOY. Though the increase is slight, it’s the first YOY acceleration since September.
“This is obviously a short-term setback for the Fed. However, inflation was never expected to decelerate in a straight line,” Tiffany Wilding, managing director and North American economist at PIMCO, wrote in a note. “[N]otwithstanding this report we…
Home prices have fallen for the first time since 2012 as affordability concerns decimate buyer demand.
The median U.S. home sale price dipped by 1.2% to $386,721, the first annual decline in a decade, Redfin reported.
“Buyers are struggling because higher interest rates have increased the cost of homeownership, and sellers are struggling because they’re still adjusting to the fact that their home won’t sell for what their neighbors’ did a year ago,” said Andrew Vallejo, a Redfin real estate agent.
Prices are cooling, but after soaring to record heights after the pandemic, they’re still historically high. The cities with the biggest declines are pandemic hotspots seeing corrections after their boom moment. Two such cities, San Jose and Austin, saw…
