There has been plenty of buffer built into mortgage rates lately, so more declines are possible. But a hot CPI tomorrow will give mortgage lenders a great reason to raise their rates in advance of the Fed meeting next week.
Speaking of big things, the bigger question is “what’s next?”
What indeed! There are more questions than answers right now. Some say the bank failures are evidence that the Fed’s tough interest rate policies have “broken something,” and they must now dial back their intensity.
Others say the Fed knew some things would “break” and that they’ll only dial back if lower inflation says they can. To that, others say that inflation is even more likely to move down now that people are worried about the banking system and a recession.
And to that I say we just don’t know yet. All we do know is that these bank failures are very different than those seen before the financial crisis in several important ways. We also know the Fed/FDIC/Treasury stepped in with a non-taxpayer-funded plan to calm the market, and it seems to generally be working today.
If the market is calmer, then why are rates still so much lower? This has to do with the market shifting its expectations for Fed rate hikes in the rest of 2023. Specifically, the market now sees the Fed hitting a ceiling rate that’s more than 1.5% lower than it was at the beginning of last week!
If that continues to be the case in the coming days, mortgage rates could move down even more. We’ll learn more about those odds at two key moments: tomorrow morning at 8:30am Eastern Time when we get the next major inflation report, and then next Wednesday afternoon when the Fed releases its latest policy announcement.
I’ve heard that rates might look/be low but banks are scared + want $$$ on shelf right now to protect them against bank runs.
Because of this they’re not originating loans even for people with qualifying credit.
The fed should continue raising rates to counteract inflation. Another possiblity is that gov stop spending to slow down inflation. But we all know that will never happen.
Richy Riches: Oh &#*$%!, time to pull out of the banks/Wall St. and buy up even more properties for cash.
Normal People: Oh &#*$%!, there’s even less inventory now and it doesn’t matter if rates just came down a point. Honey…check out the how bad the weather really gets in Sioux Falls.
Calm? Dozens of bank stocks were halted today after huge drops.
Just a flesh wound! 😆
“What are you going to do, bleed on me?”
Bailout is decidedly taxpayer-funded, since banks are just going to raise loan rates or lower depositor yield to pay the FDIC cost increases.
either way, taxpayers as bank customers are picking up the tab