Good Monday PM from your Hometown Lender,

Not much data today.

New Home Sales figures were released, and they came in weaker than expected. Not much reaction. This week has a lot of data that will kick in starting tomorrow with Durable Goods, Consumer Confidence and Richmond Fed Manufacturing. Thursday is GDP and Chicago PMI and the main event this week is on Friday when February PCE inflation data is released. Bonds are going to be under some pressure early In the week as we have new Treasury auctions putting more supply into the market through Wednesday. The fly in this week’s ointment is that the bond market will be closed on Good Friday and there is an early close Thursday afternoon. Additionally, Chairman Powell will speak on Friday at 11:30 am at the Federal Reserve Bank of San Francisco Macroeconomics and Monetary Policy Conference. Lots of data and information to be digested while markets are close closed will create volatility and likely have rate sheets on the conservative side.

There is a great piece on a question I often ask.. How many homes do not transact because current rates are so much higher than what a potential seller is paying now? The lock in effect.. The answer is 1.3mm between 2022 and 2023.. WOW..

The FHFA researchers’ analysis reveals that the lock-in effect—where homeowners with lower mortgage rates are unwilling to sell and purchase another home at significantly higher mortgage rates—has resulted in 1.3 million “lost” home sales between Q2 2022 and Q4 2023. “People can be ‘locked-in’ or constrained in their ability to make appropriate financial changes, such as being unable to move homes, change jobs, sell stocks, rebalance portfolios, shift financial accounts, adjust insurance policies, transfer investment profits, or inherit wealth,” the paper’s abstract notes. “In the United States, nearly all 50 million active mortgages have fixed rates, and most have interest rates far below prevailing market rates, creating a disincentive to sell. This paper finds that for every percentage point that market mortgage rates exceed the origination interest rate, the probability of sale is decreased by 18.1%. This mortgage rate lock-in led to a 57% reduction in home sales with fixed-rate mortgages in 2023Q4 and prevented 1.33 million sales between [Q2 2022 and Q4 2023].”

Please remain safe and healthy, and make today great!