This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.
Market Commentary:
For the week of July 21st – July 27th, 30-year and 15-year interest rates initially increased. However, after the Fed’s rate increase of 0.25% on July 26th, mortgage rates experience a slight decrease.
The good news? The Fed doesn’t expect a recession. After a year’s worth of warnings about a recession, Federal Reserve chair Jerome Powell said Wednesday that the central bank’s staff no longer forecasts a
nationwide economic downturn. It’s welcome news for the economy to achieve a soft landing, a scenario in which inflation falls, unemployment remains relatively low, and a recession is avoided.
Lack of liquidity and credit guideline tightening have had an impact on jumbo rates. “Mortgage rates inched up slightly after a significant decline last week,” said Sam Khater, Freddie Mac’s Chief Economist. “Higher interest rates continue to dampen activity in interest rate-sensitive sectors, such as housing. However, overall U.S. consumer confidence is unwavering, surging to a two-year high in the Conference Board’s Consumer Confidence Index for July 2023. Rising consumer confidence often leads to greater spending, which could drive more consumers into the housing market.” Fed Watch: Looking ahead, all eyes are on the upcoming September 20th Federal Open Market Committee (FOMC) meeting. According to the CME Group, 24% of forecasters predict an increase in interest rates, while 76% predict rates will remain the same. None of the forecasters expect rates to decrease.
Market Review:
Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 84.89% for purchase transactions, 12.81% for cash-out refinances, and 2.30% for rate and term refinances.
Per Black Knight 50.4% of all Retail loan production were Government Loans (FHA, VA, USDA), while 49.6% were Conventional and Non-Conforming loans.
News You Can Use:
• Pending Home Sales Rose 0.3% in June, First Increase in Three Months
• Fed lifts rates, Powell leaves door open to another hike in September
• Fed Chair Powell: A return to 2% inflation could come by 2025
• GDP Q2 2023: Economy grew at a 2.4% pace in the second quarter, beating estimate
• S&P Case-Shiller Shows U.S. Home Prices Up for Fourth Straight Month in May
• Interest for New Homes Strengthens
• Q3 is likely when we will see full effect of credit tightening, says Morgan Stanley’s Zentner
*Communication is intended for Industry Professionals only and not intended for Consumer Distribution
Interest rate and annual percentage rate (APR) are based on current market conditions as of 07/27/2023, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 07/27/2023 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.
