Breaking: Fed's Inflation Measure Improves - A Game Changer for Home Buyers?

have you ever tried to lose weight and the first 5 10 pounds just went away like that and then all of a sudden you just hit a wall and it wouldn't move no matter what you do so it took extremely a lot more effort to get those lose those last few pounds that's basically where we're seeing right now on the inflation the us right now we had the inflation number just being sticky as I'll get out so in today's report we're going to go over the one number the main number that the Federal Reserve watches when it comes to inflation numbers and that's the pce so that's a report we're going to do today so mortgage trades eased a little bit yesterday based on some of the economic news but today the news even got I'll say a little bit better let's get over to the headlines that we see so we have right here on Friday we have the core pce price index month over month and year over- year so the first thing you got to figure out is what is this thing what's the pce well it's basically if you go down through here here's what it is let me see if I can zoom this in just a little bit okay so the core pce consumption index measures the change in the price of goods and services purchased by consumers from the p per purpose of consumption excluding F food and energy kind of like the CPI then it says right through here unlike the fixed weighted CPI the pce is chain weighted and adjusts uh through time so I'll explain that to you in a second but what I want you to understand is let's get over to CNBC so they can explain this but here's what the headlines say right now fed's preferred inflation measure Rose 02 in April as expected so let's get right over to CNBC let's go through this and like usual we're going to go through this then I'll put it in basic terms that you and I can understand and give you an idea what's going to happen in the markets today so without further Ado take it away CNB when he has those numbers Steve yeah uh it looks like uh personal income uh coming in at uh On Target at 0.3% versus March which was not revised down I expected it would be but came in at 05 as uh uh previously uh uh pointed out overall PC uh price index at 03 that is spot on with the prior month and spot on with expectations and the core the key one here coming in at 0.2% again according to expectations I told you that the economists have figured out how to do this and uh how to come up with with with a decent number relative to the to the actual number uh and they are spot on March not revised 0.3% okay year-over-year uh price index 27 in line with the expectation in line with the PRI the 27 the core however looks like it is a tick higher I'm not sure if that's due to rounding guys but the core at 2.8% versus the prior so no improvement in the core and no improvement in the year-over-year I'm guessing I can't calculate this on the Fly that maybe the 3-month annualize or six-month annualize is a little bit better let's see how the market is responding to this a little bit down in the 2-year note it had been at 494 it's now 491 looking at the 10year 453 and I have here what it was it had been at just down uh one one tick and I'll take a look at the FED fund futures for a second here that'll tell you uh really not much change here still at 12% for July call it 51% for September guys the the story here has been the market has really baked out almost uh really uh two cuts this year now it looks like it's comfortable with just one and a half is really where it's at for the full year this is a market that earlier had been forecasting six rate Cuts now down to holding on to one and getting rid of two here so uh pretty much in line this idea I think that we had this spike in uh January through March and it seems to have eased off I think is a story that remains intact yes idea I think that we we keep it at that so let's put this all into context okay let's go over to here here's what the pce here's what they're talking about but let's go let me explain to you what the PC is so I just did a chat gbt and and asked them this questions uh right through here what does this mean pce chain weighted uh versus how the CPI is factored in so let me go through here I'm going to put on my glasses here in a second I want you guys to understand this because it's important why you know fed officials are looking at the pce versus the CPI and the differences between those two inflationary numbers so let's go through here breaking down the concept the pce personal consumption expenditure the pce index measures the average increase in prices for a domestic personal consumption it is a broad measure of inflation within the E economy focusing on goods and services consumed by the households it is published by the Bureau of economic analysis and so forth chain weighted index a chain weighted index okay this is where it starts to get the the the gives us the differences between the two a chain weighted index also known as the chain index uses a method of calculating the updates of the basket of goods and services periodically unlike a fixed weighted index which uses a constant set of uh weights based on specific base uh base year a chain weighted index continually adjusts the weight to reflect changes in consumption here's a here's basically just a good analogy that they're saying through here U example suppose in year one consumers primary bought DVDs for a few uh and a few streaming services but by year five most of the consumers which switched away from buying uh switch to Services streaming services and got away from DVDs so why would you continue to monitor these sales of DVDs so that's what the CPI does versus the pp uh pce so if if you're getting confused it's all inflationary data okay so that's what's going on but let's take a look a quick economic uh view of what happened so far this week in the economy Monday was a holiday cons uh Tuesday consumer confidence it was up from 97 to 102 that caused the market some Havoc uh they were saying okay now the consumer is going to start spending again and and everything's going to go out of control so you had a huge jump in rates and then all of a sudden the the GDP came in on Thursday was 34 to 13 it's saying the country's production is going way down jobless claims they're staying steady but this isn't helping the fed's piece of view but this number isn't going way down or way up so it's kind of good there and then we had the pce numbers coming in today and they both were basically completely in line to what was expected the month over month went from. 3 to 0.2 so there was a little uh better off right there so that's basically what's going on right now with that stock market has a stock market reaction to this let's scroll up to here Dow Jones is up S&P is up and then n NASDAQ just flipped over to negative territories cryptocurrencies uh bitcoin's down just a hair and let's look over at oil oil is up just a hair as well but we're still under that $80 of barrel uh trigger that we're looking at so now let's go over to uh Steve Leeman said something about well the there's a 12% chance that rates will be cut and so forth here's what he's talking about there's a Fed meeting coming up and it's in 12 days okay if you want check out what the probabilities are that the Federal Reserve is going to cut rates just go to the CME fed watch tool okay what this is is if you scroll down it's basically saying what's the likelihood the Federal Reserve is going to change the federal funds rate the rate that they control okay at the next few meetings or Les least this meeting so you go down through here the probability is basically none there's 99% probability they're not going to change down through here this is basically what the federal funds rate is right now the the range we're about 5.35 right now now so it is stays in in that range but if you go through here you can also look at the probability now here's what he was talking about if you click this and you go through here you're going to see what the probabilities are of them or what they're going to do at the next few meetings so you go through here and it's saying well in the June meeting they're not going to do anything we just looked at this one okay now at the July meeting there's an 86 perc chance they're not going to do anything and then the August meeting that's when everything starts to kind of skew so if they're going to cut they're going to cut you know maybe one or two of these meetings right through here it's quite a ways out we do have a lot of data coming in at that you know between now and then so you know time's going to tell so that's that piece of it but I want to also talk to you guys about you know the here's the two main questions I get Dan what's going to go on with interest rates and can I afford that so we created this tool I don't know if you guys are aware of it but if you go on in the description down below you can subscribe to this thing I it's less than 20 bucks especially if you use the code Dan you use my name Dan in the promo code you're going to get a discount here's a here's a really cool tool we put together how much can you really afford okay so this analysis is there's a lot of tools out there that says you know how how much is the payments going to be and so forth but not a lot of tools say okay here's exactly you know all the basically Dynamics you're going to need to look at when you're looking at you know possibly what your future house payment would be so if you go you click that link down below here's what's basically going to pop up and it it's simp it looks simple but it's more complex than you think so you go down through here and you can actually put in a lot of the data what I tell people to do is you know go off and and pull your credit to make sure you know what your creditors are and what the balances are you might even be surprised I I also have a link down below it's idiq check it out it'll give you your FICO credit score it'll do monitoring it'll do a whole bunch of things for you that's down below but once you get that now you know your scores and now you know the other debt that you have so you're going to start plugging that data in here if you want so you're going to go through here and this one you know the only thing I would change in here is change the rate to about 7 .25 if you have anything different keep in the down payment at between three and three and a half I'll put it this way if your credit score is over 700 put in three in here if it's if it's under 700 put three and a half% okay and I'll explain the differences there in a second then you're going to put in the rest of the information now here's what it's going to ask you it's going to say how much do you make okay you're going to put that in then it's going to say what are your debts well you're going to take from the credit report you have and you're going to put in your debts okay do you have a cosigner well if you do put in their information as well right here now here's where the magic starts you go the next Tab and it's going to tell you a whole bunch of things okay this tells you more than you actually kind of need to know maybe but it's going to say okay based on this information you can actually afford that kind of payment that's that that's your down payment and here's what your estimated closing costs are okay you're going to go down through here and it's going to tell you okay here's different mortgage models or mortgage options that you would qualify for it's going to go from safe meaning you know you don't really want to go out on a limit all all the way up to B basically you getting qualified for an FHA loan that'll go to a 57% yes 57% debt ratio it's not I didn't make the guidelines folks it's just that's the reality so if you go all the way down through here it says safely you can buy this conservatively you can buy this moderately you can buy this aggressively here and so forth you you get it and here's what the payment would be then you scroll down it's going to give you okay say different mortgage options that you can go through and the definitions there it's also going to go down through here and tell you the breakdown of what your payment would be it's all going also going to say you know based on where you're living here's some other expenses that you're going to incur because you own a house and there's what the payments are going to be how much you're going to need for your down payment closing cost and so forth it breaks it down for you and just a bunch of other different information pieces of information right through here it also you can manipulate this to say okay what if if I had a little bit more income or if I paid off that debt what can I what what can my mortgage payment be and it gives you a bunch of terms and definitions and everything else so there's a lot packed in this program I'd highly suggest you you'd reach an and checking out that product but let's get back to the report that we have So based so far today what the Market's doing well you go right up through here and it's not doing bad we have the MBS market up 20 let's go over the last two days hold on let's see the the nice moves we had in the last two days that is the last two days so how mortgage rates are basically how we figure this out what the price of a mortgage bond is doing because the yield on this thing the mortgage Bond the MBs is the biggest component of your mortgage rate when this number the price of this Bond goes up that's great great news that means the rates are coming down okay so we went basically from here the last from yesterday beginning of yesterday up to here might not seem like a big move but we're also seeing mortgage rates coming down so yesterday we dropped down about 0.005 I'm expecting to drop down probably to 7.2 today probably shave off another 0.9 and it's nothing to write home about or at least we're going in kind of the right direction right now so if you're out there and you're like hey Dan I need help you might need a reverse mortgage you might have a family member a neighbor uh an aunt Uncle mom dad that needs a reverse mortgage let me know I'd love to help you with that I specialize in Reverse Mortgages and I can help you through that but if you're also looking to maybe buy your first house buy an investment property refinance we talked about that yesterday on a uh an event that we did how how you can refinance we'd love to help you okay my name is Dan Frio I'm a mortgage loan officer I'm licensed in all 50 states as well as PTO Rico I'd love to help you I'm also a mortgage broker I'm set up with 33 companies right now so what that means is by going through me is basically you're applying at 33 different companies but it's one application one credit pool the first thing I want you to do the first thing about anything is I want to see if you can get a grant if you're looking to buy your first house okay the grant right there it's a grant finder fantastic tool go through it'll take you probably three minutes to complete it's going to see if you're eligible for Grants up to 7500 bucks that don't need to be paid back okay that's the first thing if the if that didn't work and you still want to apply well go ahead it's right through there hit the apply Now button but what's going to happen is you're going to fill out an application we're going to then reach out to you within 24 hours go over any and all questions that you have to make sure you're comfortable and then we're going to work with you to get from you take you basically from the dream of home ownership to the day that you get the keys in your pockets so thanks so much for watching guys God bless have a fantastic weekend if you'd like to reach out to us directly just scroll down to the bottom of the raid update and you're going to see our 800 number as well as my email address right there take care folks be safe today and I hope to see you back here on Monday bye-bye

Channel: The Rate Update with Dan Frio

Views: 2,581

Keywords: mortgage rates, mortgage guidelines, real estate market, first time home buyer, mortgage interest rates, Dan Frio, win the house you love, kyle seagraves, Fha, VA mortgage, DSCR, USDA, the rate update, Mortgage Rates 2023, How to buy a home, how much can i afford, how much money do i need to buy a home, housing market trends, Home buying tips, Real estate news, buying vs renting, real estate market analysis, real estate finance, real estate investing strategies, homeownership

Id: fHwk59nSw5Q

Length: 14min 0sec (840 seconds)

Published: Fri May 31 2024