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Market Snapshot 1/8/2025 – Not Much Good

Good Morning on this best day of the week, Wednesday from your Hometown Lender,

Not much good to say about the bond market.

A little data out today with the ADP payroll data coming in weak (this report though, has not been reliable over the last year), the unemployment claims data showed fewer claims than expected. Despite the Fed cutting rates by 100bps, the bond market has now given back all the improvement we saw in 2024. It is absurd. Fears over the new administrations policies are just overblown. Fed members and economists alike are all chiming in that new policies will not have a material affect on inflation. None the less, we are where we are.

The 10yr note is at 4.70% and mortgage bonds are leaking as well.

Do we hit 5% on the 10yr note? I hope not but if asked 60 days ago, I would have laughed off that possibility, now I’m concerned. The silver lining has been that the spreads between treasuries and mortgage rates have narrowed and if they continue to narrow back to normal spreads, rates could be in the high 5’s low 6’s even with the treasury yields as high as they are.

Here is a recap from Fannie on where consumers stand today. It is good intel.  

The Home Purchase Sentiment Index (HPSI) for Fannie Mae dropped 1.9 points to 73.1 in December. When compared to the same period last year, the HPSI is up 5.9 points.

  • Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 23% to 22%, while the percentage who say it is a bad time to buy increased from 77% to 78%. As a result, the net share of those who say it is a good time to buy decreased 3 percentage points MoM to negative 57%.
  • Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home decreased from 64% to 63%, while the percentage who say it’s a bad time to sell increased from 35% to 36%. As a result, the net share of those who say it is a good time to sell decreased 2 percentage points MoM to 27%.
  • Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months remained unchanged since last month at 38%, while the percentage who say home prices will go down increased from 25% to 27%. The share who think home prices will stay the same decreased from 36% to 35%. As a result, the net share of those who say home prices will go up in the next 12 months decreased 1 percentage point MoM to 11%.
  • Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 45% to 42%, while the percentage who expect mortgage rates to go up remained unchanged since last month at 25%. The share who think mortgage rates will stay the same increased from 29% to 32%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 4 percentage points MoM to 16%.
  • Job Loss Concern: The percentage of employed respondents who say they are not concerned about losing their job in the next 12 months decreased from 78% to 77%, while the percentage who say they are concerned increased from 20% to 22%. As a result, the net share of those who say they are not concerned about losing their job decreased 4 percentage points MoM to 54%.
  • Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 16% to 17%, while the percentage who say their household income is significantly lower decreased from 12% to 11%. The percentage who say their household income is about the same decreased from 71% to 70%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago increased 1 percentage point MoM to 6%.

Stay safe and make today great!!