Powell's Preview & The Boomer Effect: Quick Market Update

Hey Everyone! Hope you all made the best of the windy and rainy weekend we just had! It looks like the cold days are slowly making their exit, making way for a change in the weather. As we gear up for another week, let's delve into what's happening in the mortgage industry. Ready? Let's jump in!

Read time: ~ 4mins

Rates ended FLAT compared to last week, and volatility was LOW. Rates are in the low 7’s for most loan types without paying discount points. Paying discount points can get you in the high 6’s.

Mortgage Rates Find a Bit of Ease After Inflation News

The highlight of last week was the PCE inflation report – the Federal Reserve's go-to inflation gauge – which hit the mark perfectly. This was a breath of fresh air for us since the market had already priced in these expectations. A report indicating higher than expected inflation could have spelled trouble, potentially driving up rates. Fortunately, the outcome led to a slight improvement in interest rates, a smaller dip than hoped but a welcome one nonetheless, given it avoided any shocks to the market.

Jerome Powell’s Upcoming Testimony is the Talk of the Town

This week, my team and I are zeroing in on two key events likely to influence mortgage rates. First up is Federal Reserve Chair Jerome Powell's semi-annual monetary policy report to Congress on Wednesday.

Powell is expected to shed light on the current economic situation, the fight against inflation, and when we might see changes in interest rates.

With the market anticipating three rate cuts this year, possibly starting in June, Powell's comments will be pivotal. Should his insights differ from current projections, we can expect significant movements in mortgage rates.

The Spotlight is on Friday's Jobs Report

The week's headliner will be the release of the February jobs report on Friday morning. Remember the turmoil following the last report early in February? The job market far surpassed expectations, doubling predicted job growth and causing mortgage rates to jump nearly 0.5% in a matter of days. A robust job market tends to push mortgage rates higher.

The upcoming report is anticipated to show a growth of 190,000 non-farm payroll jobs, with the unemployment rate expected to hold steady at 3.7%. A report exceeding expectations could lead to another rate hike, while underperformance might bring rates down.

The “Silver Tsunami” and Its Impact on Housing Supply

A recent Freddie Mac study introduced an intriguing concept: the “Silver Tsunami.” As baby boomers (those 60+) start to retire or pass away, we're looking at approximately 9.2 million homes hitting the market by 2035.

The initial five-year outlook shows a more modest decrease, with around 2.7 million homes becoming available by 2028. However, as the decade closes, this trend is expected to accelerate. This could be a game-changer for the housing market, given the current shortage of single-family homes. It's a hopeful development for those struggling to find affordable housing.