MARKET UPDATE | 9.18.23 – Blue Bird Home Loans Blog

10 yr testing cycle highs from overnight

Wednesday is the Fed’s statement. Prior to then, there is not much in the way of data that is going to shape the market.

We hit cycle highs overnight. It is interesting to see the progression from the April lows resulting from the banking crisis to today’s highs. You can see a steady upward trajectory.

Although the stock market as well as corporate earnings have continued to hold up, I believe spending has begun to taper substantially in September. China is having substantial issues and Europe is close to a recession.

Not only do I think there is next to zero percent chance the Fed’s are hiking on Wednesday, but I also believe that the Fed’s are done hiking and the impact of all those hikes are yet to be realized.

So now we sit and wait. There is a decent chance that a statement comes out Wednesday along these lines. It will not be an absolute, but I do believe we will see a shift in tone and that shift should impact mortgage rates positively. I don’t think they will come out and say they are done, but I think you will see them recognize they are comfortable with how restrictive rates are and will recognize the progress made.

We also will need to sit and wait for the reduced spending as well as the reduction in jobs to hit the market. I don’t think this is overnight, but I do believe in the next 30 days with positive CPI results next month replacing a much larger number and what I expect to be reduced spending to begin to show, that things will show progress. But it is not stopping us from setting cycle highs in interim.

We need to continue to increase activities and use our unique loan programs to create transactions. With reduced inventory, the bridge program is needed in a lot of transactions. Work to see if you can find those people that Redfin announced are being called back to the office. They are selling and relocating back to the area where their offices are.

The next 4-6 months I expect to be some of the hardest many of you have faced in the industry. There will be winners and losers and the way to get through this is to create deals. Find buyers, talk to builders, match buyers and builders. Find renovation properties, find buyers those properties will be a good fit for. Look for the expensive rents in your markets. Find Agents representing Sellers that are willing to do concessions for buydowns to get people in the same payment range to own. If rates come down, demand is likely to increase making things worse.

Please let me know if there is anything we can do to help.

Unless something changes in the market, we will communicate Wednesday explaining the Fed Statement. Again, I think there is zero chance they announce a raise, but the market are going to be watching the Fed Statement very closely and paying very close attention to Powell’s talk and Q+A.

Josh Erskine

Chief Executive Officer

CalCon Mutual Mortgage LLC dba OneTrust Home Loans
Yellowstone RE Holdings LLC
Yellowstone Global Investments LLC

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