⏱ THE MORTGAGE MINUTE

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One thing we can say about the past few days is that it definitely wasn’t boring! Just as we predicted in last week’s issue, a Trump election was met with some volatility and uncertainty. The dust had barely settled Wednesday morning when mortgage rates had a little panic attack of their own, spiking briefly before cooling down.

But thanks to a nudge from the Fed’s recent rate cut, rates have decided to sit back and chill—for now. 

We’re predicting mortgage rates are going to keep us guessing in a classic “will they, won’t they” saga. Are rates ready to settle, or just teasing us with another spike? Stay tuned—this drama is far from over!

In the meantime, we’re recommending to keep a close eye on those big green days, and—if it makes sense for your borrower—lock in those rates with an abundance of caution. 

Whether your candidate won or lost, the real estate world keeps turning. We’ll be here to help you make the most sense of it.

Market Sentiment & Economic Calendar

The initial post-election market reaction suggests that volatility is likely to persist as the market assesses potential economic policies from the incoming administration. This means keeping a close eye on short-term rate movements and economic indicators, as rates could fluctuate while policy priorities and timelines emerge.

Keep an eye out particularly during Fed Chairman Powell’s speech on Thursday, as his words may have an outsized lever on upward or downward volatility. Be sure to watch your locks closely that day.

What to Watch:

Consumer Price Index (CPI) – Wednesday, 8:30 AM ET

Inflation will be in the spotlight as the CPI report releases. This metric is crucial, as signs of increasing inflation could lead to higher mortgage rates. However, if the report shows softening inflation, it could maintain or even slightly ease rate levels, a positive for rate-sensitive buyers and refinancers.

Producer Price Index (PPI) – Thursday, 8:30 AM ET 

The PPI provides insight into inflationary pressures at the wholesale level. A lower-than-expected PPI could strengthen the case for a sustained low-rate environment, supporting borrower affordability. 

Federal Reserve Chair Speech – Thursday, 3:00 PM ET

Fed Chair comments following yesterday’s rate cut could offer additional guidance on the Fed’s approach to potential economic headwinds. Markets will be watching closely for any indications of whether the Fed will lean into additional rate cuts or opt for a wait-and-see approach. Any hints of further cuts could provide a temporary buffer for mortgage rates, but increased economic uncertainty could still lead to rate swings.

Pipeline Save of the Week

The Homeowners Insurance Rescue

Unless you’ve been living under a rock the past few years, you’ve most likely encountered a scenario where homeowners insurance (HOI) skyrockets in certain locations throughout the country, surprising unsuspecting homeowners with a nasty bill. 

And that’s exactly what happened to our loan officer who wrote in this week about a nearly derailed deal—all thanks to a surprise HOI bombshell.

The deal was just days away from closing and everything seemed perfect. The loan was fully underwritten, the borrower was packing boxes and practically backing up the moving van into the driveway. Their dream home was within reach and finally becoming a reality. 

And just when everything seemed perfect—near disaster. 

The HOI quote came in at nearly DOUBLE what had been originally estimated. The borrower’s debt-to-income (DTI) ratio shot through the roof, putting the deal at risk and that moving van idling and empty.

But the loan officer knew they couldn’t let the deal fall apart at the last minute. It was time for their secret weapon: a trusted relationship with a local insurance broker who specialized in budget-friendly policies.

With a quick phone call, they explained the situation and the need for a low-cost, bare-bones HOI policy. They secured a compliant policy that slashed the premium, dramatically reducing the DTI and putting the loan back in line for approval. 

Within hours the deal was once again approved through underwriting, and the client was back to the most important thing a borrower should have to worry about when moving—how to get their couch down the stairwell.

So, the takeaway in this Pipeline Save? Building a network of trusted partners can be a lifesaver in this business, and the difference between saving a deal and watching it slip through your fingers. 

Another lesson? Don’t wait for escrow to handle the insurance, and don’t assume default apps and websites that pre-fill the rates for you are going to be accurate. Work directly with your borrowers to secure their HOI as soon as escrow opens. It’s a simple step that can keep last-minute surprises at bay.

Reminder to send in your Pipeline Saves of the Week to [email protected] to be featured in future newsletters!

Red Wave or Rate Tsunami?

Former President—and now President-Elect—Trump’s return to the White House, backed by a strong Republican Congress, signals some big potential shifts in the mortgage world. While some experts are warning risk of 8% mortgage rates could be on the horizon, a focus on deregulation may soften that blow. 

While details remain hazy, there are some clues. 

In a general sense, right leaning policies often mean fewer compliance hurdles, lower regulatory costs, and a friendlier environment from some housing and consumer-focused agencies. And talk of releasing Fannie Mae and Freddie Mac from conservatorship could further shake things up.

But proposed mass deportation policies could lead to a construction labor shortage, and threats of tariffs could see an increase in material costs, bottlenecking the new build and home improvement sectors.

With volatile rates (at least in the short term), and major policy shifts on the horizon, it’s a critical time to keep a close watch. 

Source: https://www.housingwire.com/articles/trump-is-victorious-will-mortgage-rates-go-to-8/

Everything Old is New Again

It’s time to hop in the DeLorean with Doc Brown, because we’re heading back to the future. With Trump’s return to the White House and Republicans having a stronger hold in Congress, a regulatory overhaul is sure to be on the horizon and an early agenda item appears to be updating Executive Orders to curb housing and finance regulations. We may not know where we’re going, but this baby’s about to hit 88 miles per hour.

One Executive Order to keep a close eye on is EO 12866, which, if signed, will compel all federal agencies to report to the White House and the Office of Management & Budget (OMB) on any initiatives not specifically authorized by Congress. Many initiatives spearheaded by the Biden Administration will be rolled back. While this may loosen restrictions on originating and funding loans, be cautious—some programs you currently rely on could be rescinded. Knowing not only when to pivot but also which programs to shift to will be key.

While we’re seeing some rate volatility and uncertainty, some project that if the focus truly includes deficit reduction, the end result could be a stronger dollar and eventually lower rates.

We’ll be keeping a close eye on the evolving regulatory landscape and be ready to adapt as new policies roll out. 

For now, keep the flux capacitor charged and ready to go. You’ll want to be able to hit top speed when the housing market shifts into the future!

Source: https://www.nationalmortgagenews.com/opinion/how-trump-may-change-housing-market-regulation-in-second-term 

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