Have We Made It Over the Last Hump of the Rate Roller Coaster??🎢 | Market Recap - May 3, 2024

hello and welcome to another edition of the Friday market update we're glad you're here with us today we have a lot of information to cover so it'll be a little bit longer than usual but here we go so have we made it over the last hump of the interest rate roller coaster I believe we have and it could be all downhill from here with interest rates so rates actually climbed above 7 and a half% midweek and ended up around 7 and a qu% today so what happened this week we had jobs data and the meeting now there are essentially two things the FED has been focused on to try and get interest rates lower that's inflation and jobs so last week we heard that inflation continues to be persistent and not coming down as quickly as a Fed would like this week was all about jobs data and listening closely to what fed chairman Jerome pal had to say after their two-day meetings this week so why is the Fed focused on jobs well a strong jobs Market generally leads to inflation people have jobs they can spend money while a soft job market can actually help curve inflation not as many jobs not as many people spending so they're also looking at wage growth and whether or not that is keeping up with inflation so in other words our workers making more money uh to pay the higher prices and pay their bills so job growth missed expectations the ADP jobs report actually came in a little bit higher than expected but the bureau bu of Labor Statistics BLS jobs report missed the mark So previously the month overon BLS report has been showing strong job growth this was the first report in recent memory that it actually came in lower than expected and we saw an increase in the unemployment rate from 3.8% to 3.9% so that's ticking up the FED is looking that for that to potentially go over 4% now looking a little bit deeper into the reports and the methodology differences between the ADP and the BLS reports it definitely appears the job market is softening which should be good for inflation and interest rates we could also see a scenario where the actual job numbers that were reported today were actually negative based on the differences in how the two reports calculate small business employment so we're also seeing lower wage increases as well that continues to tick down one interesting fact is that the average number hours of worked has also been on the decline in fact it is almost at the same level of hours worked as it was back in 2011 now this is kind of hidden in numbers but can have a big impact on employees and their overall take-home pay to survive so while there have been some wage increases employers are having their employees work Less hours which technically results in less take-home pay for many workers the higher wages that everyone kind of sees may not actually be allowing the consumer to pay the higher prices because they're working less hours so combined with this I've talked about this many many times a consumer has been living high on the hog since Co now a lot of you don't think so but the stimulus checks came in and they went but the consumer kept spending they didn't want to stop spending they like spending they like going out they were racking up record levels of credit card debt and I believe this has to come to roost in the not too distant future uh they will have to start paying their credit cards off instead of going out to dinner or buying fun things so not fun but it's a reality this will also slow the economy down as consumers will start spending money on interest which is nothing and not on the goods and services that they've been enjoying so now that I've talked about the Doom and Gloom what does this mean for interest rates in the real estate market it could mean we are headed down in interest rates and I believe that's going to definitely happen it's going to go a slow d uh trajectory so while the FED controls the cuts they make to the FED funds rate the mortgage back Securities Market the quote Wall Street of mortgages is driven and gen is Market driven and generally anticipates where the market will go so based on the data that I see and I believe Wall Street sees this as well the economy is slowing down they may try to get ahead of the curve right now and start and we'll start to see these interest rates uh get lower if Wall Street can buy mortgage back Securities now at a little bit higher return before the rates drop that's how they will make their money in the long run they may want to get in front of that curve so in my opinion this is a likely scenario and we'll start seeing the rates generally decline from here I can't stress enough for you to continue to engage or re engage with your buyers the K Shiller home price index came out this week showing home values increased 7% in Las Vegas year-over-year despite the elevated interest rates and in San Diego 11% it's unbelievable so those buyers that can qualify but are waiting until rates come down could lose out on significant wealth building by waiting it's a lack of supply of homes not interest rates that are keeping the value strong so as hard as it is to suck it up as a home buyer and pay a higher mortgage payment more than what you really want to pay the buyer basically needs to jump in and secure a home right now so they furthermore they will almost assuredly have a refinance opportunity down the road to lower their payment in the future this way they can lock in a lower home price and then get the home they want now and eventually get to the mortgage payment that they desire in the future so it it's going to suck honestly to have the higher mortgage payment for a while but they will be rewarded in the long run when rates come down and they can refinance to the lower payment and their income is likely to go up in the future hope you have an awesome weekend and we'll see you next week this is Gaylord out bye bye

Channel: Gaylord-Hansen Team at CrossCountry Mortgage

Views: 18

Keywords: mortgage, home financing, home loans, real estate, first-time hombuyers, san diego, las vegas, arizona, mortgage rates, mortgage rates today, home buying, homebuying, housing, interestrates, mortgagemarket, homefinancing, mortgagerates, mortgageratesdaily

Id: Zmbenq_OBzI

Length: 6min 23sec (383 seconds)

Published: Fri May 03 2024