There’s no way around it: if the Federal Reserve is going to get runaway inflation back under control, it’s going to cause some economic damage along the way. The central bank has already put immense upward pressure on mortgage rates, which have spiked from 3.11% to 5.25% over the past five months, as it works to cool one of inflation’s… Read More »
In mid-April, months into an increasingly frustrating house hunt, Harsh Grewal and his wife settled on a place in a San Francisco suburb and were prepping a bid, above the listed price so they’d have a chance of besting other offers in one of the nation’s hottest housing markets. Then he checked his phone and saw several alerts,… Read More »
“The increase in rates negatively impacted our mortgage banking business,” Wells Fargo CEO Charlie Scharf told analysts on Thursday. “The mortgage origination market experienced one of the largest quarterly declines that I can remember.” Wells Fargo home loans fell 33% from a year ago on lower mortgage originations and lower gains when selling those loans in the secondary… Read More »
“It really is time for us to begin to move away from those emergency pandemic settings to a more normal level,” Fed Chairman Jerome Powell told Congress two weeks ago, adding that “2022 will be the year in which we take steps toward normalization.” Moving away from those settings would involve raising the federal funds rate, the benchmark… Read More »
“The Fed came in trying to help, but they overshot,” said Phil Rasori, chief operating officer of Mortgage Capital Trading Inc., which says it handles hedging for about 20% of the mortgage market. He estimates margin calls initially drained as much as $5 billion from lenders before the Fed eased off, posing “an existential threat” to some nonbanks… Read More »
Members of the Treasury Borrowing Advisory Committee (TBAC), which advises the U.S. government on the strength of the economy and debt issuance, want a similar facility to cover loans backed by government-run housing finance giants Fannie Mae and Freddie Mac, which cover a far larger proportion of the overall market. The central bank and the U.S. Treasury, which… Read More »
“The bleaker economic outlook, along with the first wave of realized job losses reported in last week’s unemployment claims numbers, likely caused potential homebuyers to pull back,” he added. “Purchase applications were down over 10 percent, and after double-digit annual growth to start 2020, activity has fallen off last year’s pace for two straight weeks.” Mortgage applications increased… Read More »
The Fed bought $183 billion of purchases last week of mortgage-backed securities, in an effort to drive down rates, and they did. But the Fed’s actions, amid a volatile market environment, helped add further strains that resulted in blowing up a widespread hedge that mortgage bankers use to protect themselves against rate increases, and now some lenders are… Read More »
Mortgage rates seesawed lower this week after the Federal Reserve stepped in to provide some assurance to lenders who were at a loss as to how to price home loans amid the disruptions caused by the coronavirus emergency. “It was so disruptive to the point that last week, lenders were really having trouble determining how to price loans… Read More »