Happy Cinco de Mayo!
The Fed raised interest rates yesterday by 50 basis points and signaled a reduction in the Fed balance sheet. While it was a good start in heading where they need to go, it’s about a year late! As expected, the bond market is happy with the announcement and while there may be some continued volatility with the unemployment data and Friday’s jobs report, I think this is a sign that the bond market will see how things progress before running up any higher.
Purchase applications are off a little more than 10% year over year, but stronger than they were last week. Even refinances went up a little week over week but are just about a third of what they were last year. So that was the news.
Here is the nonsense. Layoffs continue throughout the industry as those lenders who were pounding refinances last year are having to cut deeply as those losses will never be made up. The fact that some of these lenders AND so called “industry experts” are saying the reason for the layoffs is the slowing of the housing markets. That is complete and total NONSENSE! While purchase business isn’t as robust as it was last year, purchase business is still strong. You don’t layoff 30% - 40% -50% or more of your employees because purchase business is off 10%; you do so because your company hired people and pounded refinances, and now that business has gone back to a much more “normal” level.
There are still more buyers than sellers in this market. Prices are going to ease, but all the talk of a “Housing Bubble” is once again, NONSENSE! Prices may not rise as fast as they were, but until we have more sellers and less buyers, prices are not coming down. Especially given how HOT the rental markets are! You want to identify a potential slowing of the housing market? Watch for RENTS to start coming down. Until then, do the work and keep your clients in the best possible position to win their deal!
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