ratealert @ratealert

Did we mention higher for longer. There is no case, no matter the Fedspeak for rates to go down from here anytime soon. W/O downward momentum we have upward momentum...

Higher for longer. If you don't understand "Fedspeak", it's that simple.

Mortgage rates have no reason to move higher right now. There is no inflation pressure. However, rates have no reason to move lower right now. No inflation relief or Fed cuts realistically in sight. So here we are, basically a 7% market. This is pretty healthy, big picture.

Mortgage bonds flat this morning. Maybe there is a path to lower rates for mortgages closing 30+ days out. But here on March 27, likely best to lock anything less than 30 days and move on. No real reason to see better rates on the horizon...

So after the dust has settled on Fed week it appears mortgage rates won't be falling much but won't likely be rising anytime soon either!

FOMC holds steady There's a thin median for three rate cuts in 2024 The core PCE inflation forecast for 2024 was revised up to 2.6% from 2.4% in December The GDP forecast for 2024 was revised up to 2.1% from 1.4% in December

"The Fed delivered a straightforwardly dovish message: rate cuts are coming even if inflation or growth run stronger than expected:" Citi's Andrew Hollenhorst Traders are now pricing in an 70% chance of a June Fed rate cut vs a 57% chance priced in on Tuesday.

Floating into the Fed meeting on a hope and a prayer. No reason for mortgage rates to move much before the Wednesday announcement, and it would be surprising to get a positive result...but it ain't likely getting worse until the white smoke rises from the chimney...so to speak.

On the NAR proposed settlement p2: More transparency should reduce costs but ultimately like changes in health care & mortgage lending a few years back this likely will ends with more hoops to jump, more "clarity" via paperwork & change very little in the eyes of the home buyer

On the proposed NAR commissions settlement: -It's only proposed right now -The issue at hand is the clarity of the disclosures -It's not a bad thing for consumers to get more transparency, even if that transparency is wrapped in more paperwork -Home value won't drop b/c of this

Single‐family homebuilding in February: 🟢Permits +1.0% MoM: leading indicator of future starts. Highest level of SF permits since May 2022. 🟢Starts +11.6% MoM: More groundbreaking on new homes. Single-family housing starts are at the highest level since April 2022. 🟢Completions +20.2% MoM: More supply added to the housing stock. This report aligns with builder sentiment, which improved in March for the fourth consecutive month to the highest level since July. Builder sentiment has now crossed the break-even point of 50, indicating positive sentiment. All three of the index’s components increased—current sales conditions rose 4 points to 56, sales expectations in the next six months rose 2 points to 62, and buyer traffic rose 2 points to 34.

Mortgage rates are likely in a holding pattern until Wednesday's Fed Meeting. Oddly the market still thinks the Fed will be talking rate cuts...if they aren't then rates could move sharply higher afterwards. But for now, OK to float and see if we can get a break!

Another unwelcome inflation surprise from the Producer's Price Index (PPI) this morning, which is the last inflation print that the Federal Reserve will receive before its meeting next week. On a monthly basis, headline PPI for final demand rose 0.6% in February, compared to 0.3% in January. Notably, this 0.6% monthly increase was double the consensus forecasts. Two thirds of this increase was due to a rise in goods inflation, which was driven primarily by higher energy costs. On a monthly basis, core final demand (excluding energy, food, and trade services) rose 0.4% in February, compared to 0.6% in January, and 2.8% on an annual basis, compared to 2.7% in January. The PPI is unique from the CPI in that it accounts for different layers of demand. Final demand is the price received by sellers at the point of sale to consumers. Intermediate demand is the price received by sellers to other businesses. Within intermediate demand, processed goods prices rose 1.6% month over month, the largest increase since August 2023, and 1.2% for unprocessed goods. Again, much of this increase was due to energy prices. Intermediate demand for services inflation rose by 0.1%, but within this category there was a notable rise in transportation and warehousing services of 1.1%, with freight and cargo transport leading the way at 7.1%. While I need to dig into this a bit further, these higher cargo costs may well be due to recent disruptions in the Red Sea, which has forced many shipping routes around the southern tip of Africa rather than traversing the Suez Canal, a much longer trip. Ships that are still traveling through the shorter route are facing meaningfully higher insurance rates given the increased risk of attacks near the Bab al-Mandab strait. One other difference in the PPI index is that there are many thousands of subindices that track prices for all sorts of goods and services. Digging into the indices for inputs to construction (ITC) costs for commercial properties, there also appears a re-acceleration of inflation developing. On a monthly basis, ITC for nonresidential and multifamily properties increased 0.9% and 0.8%, respectively, representing annualized rates (monthly rate x 12) of 10.9% and 9.9%.

Mortgage rates taking another step to the negative today. Again, economic news showing no real inflation moderation makes it impossible to see the Fed cutting rates for the foreseeable future.

"The 3-month and 6-month changes in core inflation continue to move higher, and this is a problem for the Fed:" Apollo's Torsten Slok

Today in the mortgage market it appears that rates want to grind higher. Rates creeping up for days & higher for longer seems like it will be the market message. Not enough winning on inflation and "too much strength" in the economy.

Low rates made this account less relevant, but with rates high for a couple of years now, we are back!

It’s that time. #TheRoyale

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