Fed Week – Week of September 18th, 2023

Fed Week – Week of September 18th, 2023

GTG Financial, Inc
GTG Financial, Inc
Published on September 19, 2023

Fed Week – Week of September 18th, 2023

Issue 42. September 18th, 2023

Verify my mortgage eligibility (Oct 3rd, 2023)

Happy MondayπŸ’Έ

Another great weekend of NFL football, and awesome weather here in Northern CA. I hope everyone had a relaxing time, especially as we head into FED WEEK.

We spent the entire weekend (finally) painting all of our interior doors at our house.

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That “EZ-UP” almost launched into the neighbor’s yard (twice) when the wind picked up. Kids thought it was hilarious. Parents, not so much. LOL

If you’d like to test your communication skills and how strong your relationship is with your spouse, try a 2-day weekend project where not everything goes according to plan. That should get you to an answer pretty quickly, lol.


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Shout out to my lovely wife, Jamie. Thank you for all the heavy lifting and boat load of work you did this weekend. Couldn’t have done it without you… Even though you frustrate the hell out of me sometimes ❀️

There is a bunch of news below, including a rehash of a First Time Home Buyer (FTHB) perk that hasn’t been talked about a whole ton, but we have used every single time we have had the opportunity this year!

Have a wonderful week.

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– Glenn T. Groves

TLDR (Too Long Didn’t Read) Summary:


Product Rate / APR Weekly Change

↔️ Conventional (Zero Point) 7.375% / 7.341% -.000%

Conventional (One Point) 6.950% / 7.065%

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↔️ Conv. HB (Zero Point) 7.625% / 7.635% -.000%

Conv. HB (One Point) 7.125% / 7.250%

⬇️ JUMBO (Zero Point) 7.500% / 7.552% -.125%

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JUMBO (One Point) 7.000% / 7.160%

↔️ FHA 3.5% Down (Zero Point) 6.625% / 7.357% .000%

FHA 3.5% Down (One Point) 6.250% / 7.086%

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↔️ VA 0% Down (Zero Point) 6.750% / 6.997% .000%

VA 0% Down (One Point) 6.375% / 6.723%

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.

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

  • πŸ“Š Mortgage Rates: 3rd straight week of stagnating, boring rate movement. And here is why that is a good thing:

    • Gives the media a chance to catch up on what is going on. We don’t have to deal with nearly as much “I heard rates did this” from consumers. Then I have to provide them with the news that their info is inaccurate.

    • Buyers and sellers can get acclimated to what the rate market is doing rather than attempting to keep a finger on the pulse of a volatile market.

      Verify my mortgage eligibility (Oct 3rd, 2023)
    • Re-enforces that with rates hovering in the mid to low 7s and now seemingly stable (ish), savvy borrowers can make a move before the hoards of fence-sitting pre-approved buyers jump when rates eventually retreat to the 6s. The longer we sit here, the bigger the flood will be when rates make a .375% – .675% move downward.

Stay sharp. All this stability could be turned on its head Wednesday.


Ready For A Rate Brake

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

Signs are pointing to a potential break in rate hikes. This could signal that the Fed realized that the unprecedented rate hike cycle for the last 18 months is finally taking hold. The next issue could be that they over-corrected with how aggressive they were, and we’re just at the beginning of a bullwhip effect. Time will tell.

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Friendly reminder: The Fed Funds Rate (what we are talking about here) are NOT mortgage rates but can affect them.

πŸ“ˆ Consumer Inflation Overview πŸ“Š

  • August’s CPI Increase: Inflation rose by 0.6%. Annually, it jumped from 3.2% to 3.7%.
    • Why? πŸš— Surging energy and gasoline prices took the lead.
    • The Good News: Food and shelter costs remained steady, and used car
      prices even declined.
  • A Closer Look: This rise isn't as bad as it seems, given last year’s high of 9.1%. New York Fed's John Williams even hinted at lower inflation if housing costs were better accounted for.

πŸ“¦ Wholesale Inflation: Should We Worry? πŸ’Ό

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  • August’s PPI Data: It went up by 0.7%. Annually, it’s gone from 0.8% to 1.6%.
  • What’s Behind the Numbers: Like with consumer inflation, energy prices are driving the numbers up.
  • The Bigger
    : The Fed has been hiking rates to keep inflation in check. Recent statements from key figures hint at a potential break from this trend. Mark your calendars for Wednesday’s Fed meeting conclusion! πŸ“…

🏑 Home Price Appreciation: Reaching New Heights πŸ“ˆ

  • CoreLogic’s Insight: Home prices increased for the 6th consecutive month, rising 0.4% from June to July. The forecast suggests a rise of 0.4% in August and 3.5% annually.
  • Zillow’s Two Cents: They’ve reported a 4.5% increase in home values since January, indicating a potential 7% appreciation this year.
  • What Does It Mean?: Consistent growth across multiple sources (CoreLogic, Zillow, Case-Shiller, and more) emphasizes the robustness of the real estate market. Owning a home remains a strong investment choice. πŸ’°

πŸ“Š Jobless Claims: A Closer Look πŸ‘©β€πŸ’Ό

  • Latest Numbers: Initial Jobless Claims increased by 3,000 last week. Continuing Claims saw a hike of 4,000.
  • The Larger Context: While the increase might suggest a healthy job market, the holiday-shortened week might have influenced these numbers. Furthermore, given the recent trend in job postings, hirings, and working hours, layoffs might be on the horizon.

πŸ‘€ This Week’s Watchlist πŸ“Œ

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  • πŸ— Housing Reports: Updates from the National Association of Home Builders, Housing Starts, Building Permits, and Existing Home Sales.
  • 🏦 Federal Reserve: Their meeting kicks off on Tuesday, with a public statement, rate decision, and press conference coming on Wednesday.
  • πŸ“ˆ Other Key Data: Stay tuned for the latest Jobless Claims and September's manufacturing details for Philadelphia.

πŸ” Deep Dive: The 10-Year Technical Analysis πŸ“‰

The 10-year is often seen as a benchmark in the financial world, influencing various rates and financial instruments. Here’s what has been happening recently:

  • πŸ“ˆ Recent Movement: The 10-year has breached a significant resistance level, moving past the 4.29% mark.

    Verify my mortgage eligibility (Oct 3rd, 2023)
    • What Does This Mean? Resistance levels in technical analysis are like barriers. Once they’re broken, it can indicate a strong move in the direction of the breach. In this case, the move upwards could signal higher rates ahead.
  • 🎯 Next
    : The next technical ceiling (or resistance) for the 10-year stands at 4.36%.

    • Why Is This Important? If the 10-year touches and retreats from this point, it might indicate a short-term peak. However, if it breaks through, the 10-year could continue its upward trajectory.
  • πŸ’‘ Historical Context: The
    recent movement is significant because it has pushed the 10-year to levels not seen in a while. For those in the mortgage industry, a rising 10-year can sometimes hint at rising mortgage rates, though the relationship isn’t always one-to-one.

  • 🌐 Broader Implications: For real estate agents, a rising 10-year might mean costlier borrowing. Potential homeowners could face higher mortgage rates, which might affect the buying appetite.

    Verify my mortgage eligibility (Oct 3rd, 2023)

10Y T Note 09.18.2023

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

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

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FTHB Advantage

Over the past year, there have been significant changes to Loan Level Price Adjustments (LLPAs) that have made it more expensive for investors and second home buyers to use
conventional financing. As a real estate agent, it’s important to understand what LLPAs are and how they impact your clients.

  • What the heck is an LLPA? They are adjustments made to the cost of a specific interest rate based on factors such as the borrower’s FICO score, the type of property being purchased, and the Loan to Value (LTV) ratio. These adjustments can significantly increase the cost of a mortgage, making it more expensive for certain borrowers, such as those purchasing investment properties or those with lower credit scores.

Existing home owners are now being targeted as well. New LLPAs that launched in January 2023 for borrowers who are accessing equity through cash-out refinances. These costs are expected to exceed $3,000 and will be absorbed into the interest rate, leading to higher rates for these borrowers

Verify my mortgage eligibility (Oct 3rd, 2023)

Fannie Mae and Freddie Mac announced that they will be waiving LLPAs for first-time buyers who meet certain income requirements. This could make it more affordable for first-time buyers to purchase a home. Every single 1st time buyer should be double checked by Loan Officers to see if they are eligible for these
This is not a different loan program, just a perk.

Big push for 1st time buyers

Overall, it appears that the goal is to encourage first-time buyers to enter the market. However, this comes at the expense of other borrowers who are facing higher mortgage costs due to the new LLPAs.

  • Who’s being hurt? Investors, 2nd home buyers and existing home owners looking to access equity.
  • Who’s being helped? First time buyers… at least those that can afford a $3,000 – $6,000 payment.

These waivers are worth anywhere from $600 – $15,000+ depending on the specific situation for the first-time buyer. The worst thing you can do is keep this a secret from your clients!!

Verify my mortgage eligibility (Oct 3rd, 2023)

πŸ“’ As a real estate agent, it’s important to keep these changes in mind and to help your clients navigate the complex world of mortgage financing.

  • πŸ”Ž You may want to consider recommending alternative financing options for your clients that are not subject to these new costs. Most lenders and brokers have access to some sort of portflio or jumbo product that could circumvent these LLPAs.

  • πŸ“° Additionally, make sure to keep your clients informed of these changes, both positive and negative, so they can make the best decision for their financial situation.

    Verify my mortgage eligibility (Oct 3rd, 2023)
  • πŸ’‘ Finally, if you have clients who are first-time buyers, now may be a good time to take advantage of the waived LLPAs while they are still available.


What Is Your Time Worth?

Do you know how my hours there are in a standard work year?


Verify my mortgage eligibility (Oct 3rd, 2023)

Most Loan Officers reading this already know that. Or at least they should.

We use this number day in and day out when calculating income for borrowers.

Here is another way to use that figure. How much money do you want to make in 2024? Seriously, think of the number, write it down, I don’t care.

Verify my mortgage eligibility (Oct 3rd, 2023)

Just hold that number for a minute.

Now, take that number and divide it by 2,080.

So, you hard chargers out there that thought, “One Million Dollars,” your answer is 480.77. As in, $480.77 an hour, assuming you are working a 40-hour work week and working yourself to the bone. And yes, I realize in our professions, we need to work more than the standard workday and “clock in” on the weekends sometimes.

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The question then becomes, are you doing $480.77 an hour work? Can you hire someone else to do less essential but still vital tasks? Is scrolling on TikTok and Instagram worth the $480.77 of time you chewed up at work?

Whatever your answer was, if you have never thought about time like this before, I hope that some part of this allowed you to re-frame how important it is and it’s the one asset we can never buy…


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GTG Financial, Inc
GTG Financial, Inc
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(707) 546-0440

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