December 13th, 2021 2:32 PM by Richard Sardella MLO.100007700/NMLS 233568
Economists say rent will be among the fastest growing portions of household expenses in coming years.
Rents for single-family homes across the country jumped more than 9% on average in August 2021 from the prior year, according to a report from the analytics firm CoreLogic.
The fresh demand is giving investors a reason to jump into the market. Experts say that’s boosting desperately needed supply. But there’s a catch: The homes being built are priced into the high end of the market. As a result, the evidence suggests that renters will be paying more for shelter this decade.
Detached homes are preferred by would-be homebuyers who have been either priced out of the market or unable to find a home in today’s supply-constrained market, which has pushed rent up for these homes. Annual rent growth for detached rentals was 11.7% in August, compared with 6.4% for attached rentals.
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 sideways today. The MBS market worsened by -55 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.
This Week's Rate Forecast: Neutral
Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Central Banks, 2) Covid and 3) Inflation
1) Central Banks: We have a very pivotal week for global policy as we get key decisions from Switzerland, Japan, Great Brittan, The ECB and the United States. About a month ago, it was expected that the Bank of England may be willing to raise their interest rate but that expectation has dissipated over the past couple of weeks. The ECB will be watched for more guidance on the bond buying program which was supposed to end but now may be kept alive a little longer. For our own Federal Reserve, the FOMC will conclude their meetings on Wednesday. This is one of those meetings that will also have their Economic Projections which includes the "dot plot chart" which by itself could have as much impact as any action that they take. We are very eager to see their bond purchase schedule for January and beyond. During their last meeting, they only published their schedule through the end of December which was a decrease of $5B in MBS purchases for November and December. Do they keep that same rate of reduction in January and February or do they increase that rate to $10B?
2) Covid: The concern over another round of supply-chain-crippling-lockdowns has been a major factor in rates since Thanksgiving. UK's Prime Minister said to expect a "tidal wave" of infections by Christmas. China has confirmed an Omicron case and has already staring shuttering some factories in a province. The markets are also reacting to various studies on the efficacy of current vaccines on the latest variant.
3) Inflation: We will get some very key inflationary data this week. Front and center will be Tuesday's Headline PPI which is expected to reach 9.2% on a YOY basis. We also get Import/Export Prices as well.
This Week's Potential Volatility: High
This morning is quiet without any major data points. Volatility is high this week with FOMC decisions Wednesday.
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.