Good Thursday AM from your Hometown Lender,
Some good commentary from Matt Graham:
Rate sheets this morning will show pricing is slipping worse, and reprice risk on the day is moderate. Rate sheets yesterday morning reflected a positive reaction in bonds to the CPI inflation data, despite inflation remaining stubbornly elevated, in kind of a mini “relief rally”. This reaction was caused by the numbers coming in as estimated, making a December Fed rate cut a 99% probability. However, yesterday the gains did not hold long as bonds (both mortgage bonds and the 10yr Treasury yield) were testing some strong technical resistance levels that would block further improvement. This morning’s core wholesale inflation data came in as expected while the top line was hotter than forecasted. This is no help to rate sheets, unemployment claims came in higher than expected and higher than last week but still was not enough to put mortgage bonds in the green.
Rates run in cycles, because the bond market runs in cycles.
We saw mortgage bonds, the basis of your pricing, hit the best levels since ’23 in September… so rate sheets reflected the best rates and pricing as well. Since then however, bonds fell HARD for almost two months, and rates jumped again until we finally saw the bleeding stop in the middle of November. From then till now, rates have improved about a quarter point, maybe .375 for some. But last Friday we saw bonds cap out, and this week we’ve seen mortgage bond prices fall back after failing to break through technical resistance, and the 10yr Treasury yield has bounced higher as well. The bottom line here is that there is nothing on the horizon to give us a positive outlook that rates will improve from here.
Is the luxury market insulated?
It appears so. The number of homes sold at $1 million or higher rose by 5.2% in the first half of 2024, and the median luxury home price jumped by 14.2%. That’s compared to a 12.9% drop in overall home sales and a 5% rise in median price.
Realtor.com shared their expectations for 2025.
The listing service is calling for nearly a 13% increase in prices in Colorado Springs in 2025, for example, and jumps of 12% or more in places like Las Vegas; Boise, Id.; Orlando, Tampa, and Daytona Beach, Fla.; and Ogden, Utah.
Stay safe and first, make today great!
