Mortgage Update - April 15th, 2024
Hello everyone! I hope you had a wonderful weekend enjoying the beautiful weather! It's been quite an eventful week in the mortgage industry. Let's dive into the latest updates and highlights!
Additionally, with all the uncertainty from the NAR settlement, we’re excited to share a resource that will help you engage with potential clients about buyer's agency agreements. Check it out!
We are posting regular content to Instagram (Nick | Kreg) and Facebook (Nick | Kreg) to help you and your buyers stay informed. Be sure to follow us!
Read time: ~4 minutes
All 👀 on Israel and Iran
As real estate professionals, it is important for us all to understand how geopolitical conflicts, such as Iran’s attack on Israel, impact financial markets. During these times, global funds tend to gravitate towards the “safe-haven” of the US Dollar and Treasuries. This safe-haven effect typically pushes mortgage rates lower. All risky assets, like stocks and cryptocurrencies, tend to sell off, as people move their money to cash and Treasuries. We witnessed this directly over the weekend as the crypto market took an absolute beating.
We obviously have no idea how long the Iran/Israel conflict will last, and we can only hope for minimal human casualties and contained impact. As events unfold, they will continue to influence financial markets. If the situation escalates further, we should anticipate rates to remain stable or even move lower. However, any positive developments in the conflict could reverse the safe-haven trend, causing rates to rise again.
Key Takeaway: The new Israel/Iran conflict could change everything. If you have a buyer looking to purchase, now is the time to buy when there is a lot of uncertainty. However, if the situation is contained and resolved, we should expect rates to inch higher.
Inflation Too Hot to Handle 🔥
I swear, I feel like a broken record sometimes. Once again, we received the worst possible inflation report you could have imagined last week. CPI inflation came in hotter than expected for the third straight month. Both headline and core prices rose 0.4%. The market reaction to the hot inflation report was fast and brutal. We saw mortgage rates jump nearly 0.375% within a 24-hour period. It was enough to give me that throw up feeling in the back of my throat ☹
This inflation report is concerning as the Fed has consistently stated that they will be data-driven when it comes to making the decision to lower rates. If inflation remains stubbornly high and continues to drift further from their 2% target, how can they justify lowering rates in the near future? The Fed understands that cutting rates now would only add fuel to the inflation fire. We've gone from an initial forecast of 7 potential rate cuts at the start of the year to now projecting only 2 cuts in just 4 months.
Nick and I remain in the “No rate cut in 2024” camp as long as inflation remains hot, and the economy remains resilient. What could cause the Fed to lower rates despite higher inflation? A black swan event, such as war (see above).
Key Takeaway: The hotter-than-expected inflation report was the main catalyst for rates moving higher this past week. We must see evidence of economic weakening and a cooling of inflation before the Fed considers lowering rates.
What to Watch This Week 👀
All attention will be on the Fed this week, with a total of 13 Fed speakers scheduled to address the public, notably including Jerome Powell on Tuesday. The Fed is increasingly getting put in a corner as the market tends to hang on every word out of their month. It will be very interesting to see how they navigate their rhetoric amidst last week's higher inflation report and ongoing geopolitical tensions.
If the Fed hints at the need for rates to remain elevated for longer, we anticipate the market to react negatively, causing rates to inch higher. However, if they address the geopolitical tensions and suggest potential future rate cuts, we may see rates move lower.
Key Takeaway: Fed is in a tough spot with rising inflation and escalating geopolitical tensions. Their statements will significantly influence the movement of the market this week.
Realtor Resource - V.A.L.U.E. Framework
This week, in light of recent changes from the NAR settlement, I'm excited to share a resource that could revolutionize the way you engage with your clients about buyer's agency agreements. Our new PDF, "How to Approach Your Clients About a Buyer’s Agency Agreement," introduces the V.A.L.U.E. Framework—a powerful five-step process designed to help you build trust, demonstrate your expertise, and enhance the homebuying experience.
Whether you're initiating a partnership, advocating for your clients' best interests, understanding compensation, or empowering their success, this guide is essential for fostering professional relationships that benefit everyone involved. Elevate your practice and ensure smoother transactions by downloading this essential guide today. It’s an investment in better outcomes for your clients and your business.