11/20/2023
Market Update for Monday, November 20, 2023: Understanding the Current Mortgage Market: A Guide for Homebuyers
Recent Trends in the Mortgage-Backed Securities (MBS) Market
• Impressive Growth: In the past three weeks, there's been a notable increase in the MBS market. This is the highest growth we've seen since early September.
• What's Driving This? This change is mainly due to new expectations about the Federal Funds rate, which influences mortgage rates.
Changing Expectations: Rate Hikes vs. Rate Cuts
• Earlier Predictions: A few weeks ago, there was a 30% chance of an increase in rates.
• Current Situation: Now, the chances of a rate hike are almost none. In fact, by March 2024, experts are starting to think rates might even be cut.
Why Is This Happening?
• Federal Reserve's Stance: Despite the Federal Reserve's intention to keep rates high, other factors are influencing the market.
• Key Factors:
• Cooling Inflation: Inflation is not as high as expected.
• Strong Job Market: Usually, high rates don't go hand-in-hand with a robust job market.
Fed's Role in the MBS Market
• Increase in Holdings: Since COVID began, the Fed nearly doubled its MBS holdings, reaching around $2.7 trillion.
• Current Status: They've started selling some of these, with holdings now at about $2.46 trillion.
• Future Outlook: The Fed is likely to continue selling, which might impact the market.
Holiday Market Schedule
• Thanksgiving Week: Expect early closure at 1pm on both Wednesday and Friday EST; expect a fully closed market on Thanksgiving Day.
• Market Impact: This could lead to less trading and potentially more unpredictability in the market.
What Does This Mean for You as a Homebuyer?
• Mortgage Rates: The current trends suggest that mortgage rates might not increase as previously expected, and there's even a possibility of them decreasing by 2024.
• Market Stability: The market is currently in a unique position with low inflation and a strong job market, which could favor homebuyers.
• Fed's Actions: Keep an eye on the Federal Reserve's moves, as their decisions on MBS holdings can influence mortgage rates.
• Holiday Considerations: The Thanksgiving holiday might cause some short-term fluctuations in the market, but these are likely temporary.
Bottom Line: If you're considering buying a home, these developments could be favorable. It's a good time to stay informed and possibly consult with a mortgage advisor to understand how these changes might benefit your home-buying journey.
Casey Delinsky, SVP Capital Markets
The author is not a financial advisor and nothing stated above should be viewed as financial advice. Consult a professional investment advisor before making any investment decisions. The information provided above does not, and is not intended to, constitute legal advice, investment advice, or the opinion of GO Mortgage, LLC. Instead, all information, content, and materials are for general informational purposes only.
