Issue 44. October 2nd, 2023

Happy Monday💸

I took a long weekend with the family to visit some old stomping grounds in San Diego and visit with some wonderful people. Never ceases to amaze me how beautiful and fun San Diego is!!

I have a bit more of a blurb in a section below about returning to MCAS Miramar for a ceremony and all the goods.

The markets feel like they are in full revolt. Each time we issue a set of rate scenarios to clients, we make sure to include a HEAVY dose of “this is a snapshot… right now… and they will likely change in a few hours.” So that has been fun.

Hang tight, this won’t last forever. I also included some suggestions on how to combat these runaway rates, although I know that I am beating a dead horse with some of you 🙂

Have a wonderful week.

– Glenn T. Groves

TLDR (Too Long Didn’t Read) Summary:

• ⬆️ RATES – Up… again.

  Verify my mortgage eligibility (Dec 5th, 2023)

• 📊 TECHNICALS – Everything Looking Positive, Not Feeling Like It.

• 📈 INDUSTRY – Rates Now Breaching 23 Year HIGH (Charts).

• 🎖️ INSPIRATION – United States Marine Corps.

  Verify my mortgage eligibility (Dec 5th, 2023)

RATES
➡️ OCTOBER 2ND, 2023

Friends – NBC

Product Rate / APR Weekly Change

⬆️ Conventional (Zero Point) 7.625% / 7.641% +.125%

Conventional (One Point) 7.250% / 7.383%

⬆️ Conv. HB (Zero Point) 8.125% / 8.171% +.125%

Conv. HB (One Point) 7.750% / 7.910%

⬆️ JUMBO (Zero Point) 7.750% / 7.799% +.125%

JUMBO (One Point) 7.375% / 7.513%

⬆️ FHA 3.5% Down (Zero Point) 7.000% / 7.737% +.125%

FHA 3.5% Down (One Point) 6.625% / 7.457%

⬆️ VA 0% Down (Zero Point) 7.125% / 7.397% +.125%

VA 0% Down (One Point) 6.625% / 6.972%

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: It’s not what we wanted to see. I am waiting for that bull whip of Fed news to catch up and HOPEFULLY cause a movement downward. We’re watching these rates VERY closely.

TECHNICALS

Prices Continue To Rise, Even w/ High Rates

Inflation is down (even though it doesn’t feel like it), Fed rates are steady, mortgage rates are up and student loan payments start back up. On paper, the Fed might feel like they really are making a difference, but in real life, it feels a bit different.

Soft landing or recession, I know we are in our own little bubble with the last 18 months of pain, but where do you really think we are headed as an economy?

📉 Inflation on a Downward Trend:

• August's Personal Consumption Expenditures (PCE) indicated a lesser than expected inflation rise of 0.4%.
• Yearly, it nudged slightly from 3.4% to 3.5%, mainly due to data revisions.
• Good News: Core PCE (sans food & energy prices)
  year-over-year dipped from 4.3% to 3.9% – a two-year low.
• The Fed’s actions of increasing the Federal Funds Rate 11 times since last March have shown traction in curbing inflation from a high of 7.1% to now 3.5%.

Anticipate: Whether this trajectory influences the Fed to halt further rate hikes – we'll have clarity post the November 1 meeting.

🏡 Pending Home Sales: A Stumble in August:

• Sales fell 7.1% month-over-month and are 18.7% lower than last year.
• The decrease implies probable lower closings in September, forecasting under 4 million on an annualized basis.
• Root Cause: High rates and scarce inventory have given some
  buyers a pause.

Expert Take: NAR's Chief Economist emphasizes on improved inventory and better rates to rejuvenate the housing market.

🛠️ New Home Sales: A Dip Yet Optimism Prevails:

• An 8.7% fall from July to August was noted, with a yearly positive outlook as sales are still higher than last year.
• The silver lining: Amidst the scarcity of existing homes, buyers are leaning towards new constructions.
• However, the
  demand-supply gap continues with only 76,000 out of 436,000 new homes ready for sale.

Takeaway: Although median sales prices have slightly decreased, the appreciation story is different, hinting at the need for more new homes in the market.

📈 Home Prices Touch The Sky:

• The revered Case-Shiller Index, alongside FHFA, CoreLogic, Black Knight and Zillow, all report soaring home prices.
• From June to July, a 0.6% and 0.8% growth was observed by Case-Shiller and FHFA respectively, marking continuous gains.
• Yearly appreciation is projected between 5-9%, showcasing a robust wealth-building avenue through homeownership.

💼 Employment Scenario: A Calm Tide:

• Initial Unemployment Claims slightly rose but remain at a low, indicating a stable employment scenario.
• The Fed is closely monitoring these metrics to gauge the economy's health for future rate decisions, the next one being on November 1.

👀
This Week's Lookout:

• Key labor sector updates are on the horizon with the JOLTS report, ADP's Employment Report, and the grand September's Jobs Report from the Bureau of Labor Statistics.

📈 10 Year Recent Performance:

• Over the last week, the 10-year Treasury yield traded in a wide range between support at 4.323% and a ceiling at 4.676%.
• This volatility can be reflective of broader economic sentiments and the investors’ outlook on inflation and future Federal Reserve actions.

10Y T Note 10.02.2023

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

Insights are powered by a blend of market analysis and online resources that enhance the understanding of the evolving mortgage landscape. For any deeper dive into these topics, feel free to reach out.

Sources:

• Federal Reserve
• National Association of Realtors (NAR)
• Case-Shiller Home Price Index
• Federal Housing Finance Agency (FHFA)
• Bureau of Labor Statistics

INDUSTRY

Highest Rates Since 2002 2000!

Jumanji: Welcome To The Jungle / 2017 – Sony Pictures

Hey gang, re-hash or my article from about 6 weeks ago. Here is that chart:

(10/02/23) And here is today’s. Yeah, it has gotten worse.

30 Year Fixed Mortgage Rates 2000 – 2023

10Y T 8.21.23

(10/02/23) The last 2 weeks have seen a .250% – .500% run-up in RATE.

10Y T 10.02.23

Potential Solutions:

• Negotiate seller credit to facilitate temporary and/or permanent buy-downs.

• Buyer agents – Ensure the listing side understands how your buyers are affected.

  Verify my mortgage eligibility (Dec 5th, 2023)

• Use the increased pressure to your advantage when possible. For example, competition will be waning, and buyers might be able to request more credit concessions or other favorable terms.

Prices are still increasing at a reasonable rate. I would highly discourage advising such as, “Let’s wait for the market to cool off” or “Let’s wait for rates to drop”. We all know that there will not be a substantial “cooling” and WHEN rates do drop, the prices could go to the moon 🌔.

If the buyer can live with the payment for the next 2-3 years, they should act now.

INSPIRATION

San Diego Trip

I had the privilege of taking my family back to my old squadron, VMFAT-101, where I served in the Marine Corps from 2006-2010.

It was extraordinary to share just a touch of how special the flight line is and the sights and sounds of F/A18s and F35s taking off, landing, and everything in between.

Jamie and I reminisced that this was a massive part of our lives, well before kids. We saw a few familiar faces and enjoyed an extremely well-put-together and executed “sundown” ceremony for the retirement of the squadron.

Kids were starting to fade after a few hours.

I had a massive rush of nostalgia walking into the hangar where I was pinned Sergeant (by my Gunny and Jamie!) and where I worked for 4 years.

It was fantastic to hear and see the commanding officers of the squadron and the 3rd Marine Aircraft Wing speak. It was very motivating, to say the least.

The amount of paise and teamwork discussed made me feel proud of my team at GTG Financial. What we’re building and how we work as a cohesive unit. If I can bring a fraction of that steadfast dedication and work to the mortgage space, the sky is the limit.

Semper Fi!

Created by Glenn Groves

Loan Scenario Question?

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