The recent Federal Reserve statements convey that the high inflation being realized presently may more lasting, and not be as transitory as originally predicted. Now they’re expecting to raise rates sooner than previously perceived. There’s a lot of Fed banter now about starting with the scaling back on the purchasing of the $40B month of Mortgage Backed Securities, as it may be feeding into the housing boom. That’s more critical than when the Fed actually moves the Fed Funds Rate up from 0-.25%.
Mays inflation numbers were high. The Fed’s favorate Personal Consumption Expenditures (PCE) year over year increased 3.6% to 3.9%, but below the 4%+ expectations. CPI ran year over year at 5% . PPI ran 6.6%… all well over the Fed’s ultimate long term target of 2%.
Supply chain issues are already working their way through the system. Commodity prices have backed off. Lumber spot price dropped from 1686 on 5/7/21, to 779 on Friday 6/25/21. We won’t really know where inflation is at until October. That’s after schools open, the initial re-opening serge is out of the way, the additional unemployment payment has phased out and employment rates have normalized, and the original early pandemic shutdown economic numbers become old history.
Rates and Mortgage Backed Securities have been in a broad trading range since March. (Reference the channel in the chart). Mortgage rates are still great for 30 year fixed… (following rates are not quotes, as rates are based on loan to value and credit score) 2.75% conforming, .125-.25% higher for High Balance Conforming, around 3.375% for Jumbo. Non-QM pricing is all over the place for no-stated income, bank statement type programs, etc.
Every loan has to be shopped, as not all lenders are created equal. Lenders staffed up to handle last year’s mortgage origination serge. Some lenders are laying off, and some are aggressive with pricing to keep the origination flow high. One of the many things I have to keep my eye on.
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, SRES, SFR, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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