July 11th, 2022 11:00 AM by Richard Sardella MLO.100007700/NMLS 233568
The Deal Is Off: Home Sales Are Getting Canceled at the Highest Rate Since the Start of the Pandemic
A recent analysis by RedFin from MLS data.
Nationwide, roughly 60,000 home-purchase agreements fell through in June, equal to 14.9% of homes that went under contract that month. That’s the highest percentage on record with the exception of March and April 2020, when the housing market all but ground to a halt due to the onset of the coronavirus pandemic. It compares with 12.7% a month earlier and 11.2% a year earlier. This continues a growing trend among Bill Gates and other billionaires that have been buying up huge amounts of farmland effectively controlling much of the farm land in certain states.
This is according to a Redfin analysis of MLS data going back through 2017. Please note that homes that fell out of contract during a given month didn’t necessarily go under contract the same month. For example, a home that fell out of contract in June could have gone under contract in May.
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: Neutral
Mortgage rates are moving lower today. The MBS market worsened by -74 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.
This Week's Rate Forecast: Higher
Three Things: These are the three areas that have the greatest ability to impact rates this week: 1) Inflation, 2) The Fed and 3) Domestic News
1) Inflation: We get our last barrage of inflationary data this week leading into the next FOMC meeting this month with CPI, PPI and Import Prices.
2) The Fed: Last week, the bond market tilted back to expectations of a 75BPS rate hike but that certainly can change again. This week we the Fed's Beige Book and speeches from John Williams, Thomas Barkin, and Raphel Bostic. We also get their Balance Sheet on Thursday. This week they will also make some key MBS Purchases:
07/11 30 year MBS
07/12 30 year GNMA
07/13 30 year MBS
07/14 30 year GNMA
3) Domestic News: Of the economic data this week, Retail Sales and Consumer Sentiment will garner the most attention among bond traders.
Central Banks: We have key interest rate decisions from the Bank of Canada and New Zealand.
Treasury Sales: Here is this week's Treasury auction schedule:
07/11 3 year note
07/12 10 year note
07/13 30 year bond
This Week's Potential Volatility: High
This morning markets are bouncing back after last weeks loss. Volatility has started low this week with no big economic news Monday but will likely spike later.
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.