Issue 43. September 25th, 2023

Happy Monday💸

Rates are spooling back up. Jerome Powell did his best impression of a stubborn appraiser when asked why they missed something in a report.

They are sticking to the 2% inflation plan, so they said that rates could stay up for LONGER. Again, we’re talking Fed Funds rate here, guys, but still. Not good.

In other news, Oktoberfest was a hit. At least 175 people, we are still tallying it all up, and I’d guess closer to 200 again this year!

Have a wonderful week.

– Glenn T. Groves

TLDR (Too Long Didn’t Read) Summary:

• ⬆️ RATES – Trend Snapped. Rates Jump.

• 📊 TECHNICALS – 2% Target & Building Slows.

• 💡 PRODUCT SPOTLIGHT – Temporary Buydowns. 6 Months Later.

  Verify my mortgage eligibility (Dec 5th, 2023)

• ❤️ INSPIRATION – Michael Scott

RATES
➡️ SEPTEMBER 25th, 2023

Star Wars: Episode V – The Empire Strikes Back / 1980 / 20th Century Studios

Product Rate / APR Weekly Change

⬆️ Conventional (Zero Point) 7.500% / 7.517% +.125%

Conventional (One Point) 7.125% / 7.242%

⬆️ Conv. HB (Zero Point) 8.000% / 8.012% +.375%

Conv. HB (One Point) 7.375% / 7.502%

⬆️ JUMBO (Zero Point) 7.625% / 7.635% +.125%

JUMBO (One Point) 7.250% / 7.355%

⬆️ FHA 3.5% Down (Zero Point) 6.875% / 7.620% +.250%

FHA 3.5% Down (One Point) 6.500% / 7.326%

⬆️ VA 0% Down (Zero Point) 7.000% / 7.257% +.250%

VA 0% Down (One Point) 6.500% / 6.880%

Rate data as of morning of publication. Unless noted otherwise, all scenarios are assuming 30 Year Fixed mortgage, Purchase & R/T Refinance. No origination points charged, 780 FICO score, and 20% down payment .Provided for consumer education only and does not serve as a binding offer to extend lending. Payment period, interest rate, APR, and other terms subject to income, asset, and credit profile qualification.

Rates highlighted in this color have the same metrics as above, but would incur one discount point charge.

• 📊 Mortgage Rates: Here is the backlash of the “stand your ground. Hit 2% inflation” stance. Hopefully, this is a short-term knee-jerk reaction. Either way, it hurts to see High Balance at 8% again!

  Verify my mortgage eligibility (Dec 5th, 2023)

GTG Weekly Last Week = Stay sharp. All this stability could be turned on its head Wednesday. <– That happened, lol.

TECHNICALS

Stubborn To A Fault

Jerome Powell – Chair of the Federal Reserve of the United States

We should be careful about what we wish for. We got our break in rate hikes, and along with it came a reinforced view that the Fed is aiming for a 2% inflation goal.

Powell also mentioned that they are okay with leaving rates HIGHER for LONGER to accomplish this goal.

Current bets have a 74% chance of the first Fed Funds rate cut in the 3rd or 4th quarter of 2024. So we’re a while out.

Otherwise, everything feels like it is slowly winding down as we enter fall.

I’m not sure what we are winding down to, but a definite slowdown is happening.

Star Wars: Episode I – The Phantom Menace / 1999 / 20th Century Studios

📈 Will the Fed Keep Rates Higher for Longer?

The Skinny:
After keeping the Federal Funds Rate steady at 5.25% – 5.5%, indications suggest that the Fed is planning for a “higher for longer” approach.

Impact on Your Clients:

• 📉 Buyers: Higher rates may slow down buyer enthusiasm.
• 📈 Sellers: Might face pricing pressure as mortgage rates stay elevated.

Agent Tip: Advise clients to lock in rates now if they’re serious
about buying. A “higher for longer” approach could make borrowing more expensive.

🏡 Inventory of Existing Homes Needs to "Double"

The Skinny:
Active listings are down, and home sales have fallen 0.7% from July to August according to NAR.

Impact on Your Clients:

• 🏃‍♀️ Buyers: Will find it more challenging to find available homes.
• 💰 Sellers: May enjoy pricing power but may also face market stagnation.

Agent Tip: For buyers, consider off-market
listings or pocket listings. For sellers, keep your pricing realistic despite the low inventory to ensure your listing doesn't stagnate.

🏗️ Housing Starts Plunge to 2-year Lows

The Skinny:
Housing starts fell 11.3% in August, indicating a slowdown in home construction.

Impact on Your Clients:

• 📦 Buyers: Even less new inventory to choose from.
• 📊 Sellers: Existing homes may see more demand due to lack of new builds.

Agent Tip:
Encourage buyers to consider pre-construction sales or
investigate less popular regions where new builds are more likely.

📉 Higher Rates Dampen Home Builder Sentiment

The Skinny:
Builder sentiment has dipped below the key level of 50 for the first time since April.

Impact on Your Clients:

• 🚧 Buyers: May find fewer new homes on the market.
• 🛠️ Sellers: Could benefit if they are selling newer properties.

Agent Tip:
Stay updated on construction projects that might be delayed or
canceled, so you can offer timely advice to your clients.

😟 Is a Rise in Unemployment Claims Ahead?

The Skinny:
Initial Jobless Claims have hit an eight-month low, but other signs point to a possible rise.

Impact on Your Clients:

• 📜 Buyers: Might be cautious due to job security concerns.
• 🚪 Sellers: Could find fewer qualified buyers.

Agent Tip:
Keep an eye on employment trends in your local area and adjust your advice
to buyers and sellers accordingly.

🗓️ What to Look for This Week

Keep an eye on new and pending home sales reports, the latest Jobless Claims, and second quarter GDP data. An essential inflation update will be released on Friday via the Fed’s preferred measure, Personal Consumption Expenditures.

📊 Technical Picture: Update on the 10-Year Yield

The Skinny:
The 10-year yield has seen a significant jump this Monday morning, reaching 4.5395%.

Impact on Your Clients:

• 📈 Buyers: This uptick in yield could lead to higher mortgage rates, making borrowing more costly.
• 📉 Sellers: Higher rates might dampen buyer activity, making it crucial to price homes competitively.

Agent Tip:
Given the quick acceleration in yields, advise clients who are considering a purchase to lock in rates as soon as possible to avoid potential rate hikes.

10Y T Note 09.25.2023

Stay informed, stay ahead. Best wishes for the week! 🌟🏠

Note: Data and insights sourced from various industry publications and expert analyses.

PRODUCT SPOTLIGHT

Temporary Buydowns: AKA 2/1 Buydown

September 2023 – Hot Take:I can admit when I am wrong… These temporary buydowns continue to be super hot in the market. They are an easy way for buyers to take the sting out of the monthly payment for the first year or 2 and let the seller save face by not dropping the sales price.

They are becoming much easier to negotiate as Realtors and lenders become much more familiar with them, too.

PLEASE let me know if you have questions. I’m happy to answer them and/or have you to our office for a presentation!

March 2023 – Hot Take: Some of you might have seen this breakdown from weeks back, and it’s still totally valid. I have a feeling that as more buyers enter the market and inventory stays supressed, seller credit will disapear and Temporary buydowns with it.

Was great while they lasted. If we can still pull them off for clients getting boat loads of seller credit, cool, but to me they are destined to be marketing tactics only moving into Spring.

This is an actual in escrow file that closed in January 2023.

A program to help borrowers lower their interest rate for the first 12 to 36 months of their mortgage

• Can be seller paid or lender paid

• Borrowers must qualify off of the initial note rate

  Verify my mortgage eligibility (Dec 5th, 2023)

• ⭐ Non-disbursed and available buydown funds will be credited to the unpaid principal balance of the mortgage if the property is sold during the buydown period

• Buydown funds held in an escrow account will be used to pay down the principal of the new loan in the event of a refinance

• Benefits include: lower monthly payment, opportunity to use excess seller concessions, lower interest rate for 1-3 years, ability to use monthly savings towards renovations or other expenses, potential to refinance to a lower rate after the buydown period, and easing the transition from renting to buying

  Verify my mortgage eligibility (Dec 5th, 2023)

🏡 Sellers can benefit too.

• Allows sellers to avoid price reductions and offer credits instead.

• A great opportunity to help sell a property without affecting the sales price.

• In a rising interest rate environment, sellers may be more likely to offer a temporary rate buydown to make their property more appealing to potential buyers.

  Verify my mortgage eligibility (Dec 5th, 2023)

Who should do this?

⚠️ In my opinon, buyer only (no seller credit) funded temporary buydowns do NOT make financial sense. It is the same thing as just having a savings account to subsidise your monthly payment.

INSPIRATION

Feared or Loved?

No notes needed. A perfect response.

(For those not in the know, this is a fictional character from the hit show, The Office.)

Created by Glenn Groves

Loan Scenario Question?

• Email the team: TeamGlenn@gtgfi.com

  Verify my mortgage eligibility (Dec 5th, 2023)

Options For Your Clients

• Schedule Call: 1 on 1 with Glenn

• Apply Now: Online Application

  Verify my mortgage eligibility (Dec 5th, 2023)

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