In the latest episode of the Optimal Insights podcast, Optimal Blue experts Jim Glennon , Jeff McCarty , Ben Larcombe , and Olivia DeLancey discuss the current mortgage landscape and their takeaways from the HousingWire Housing Economic Summit, offering invaluable insights and practical advice.
Here’s what you need to know this week.
Key Insights and Trends
Mortgage Rates and Market Dynamics
➕ Current Rates: The OBMMI conventional 30-year mortgage rate is approaching 6.6%, the lowest seen this year, driving volume to pre-pandemic levels.
➕ Volume Trends: Volume levels are comparable to 2019, a healthy year for the market, indicating a positive trend.
➕ Psychological Impact: The 6% mortgage rate is a critical threshold, potentially boosting both refinance and purchase activities.
Economic Indicators and Market Stability
➕ Unemployment Data: The upcoming jobs report and its potential impact on the market are crucial. A slight increase in unemployment could influence the Fed's decisions on interest rates.
➕ Inflation Concerns: Despite a slight cooling in personal spending, inflation remains a concern, with rent and owner's equivalent rent being significant contributors.
The 6% Mortgage Rate
The 6% mortgage rate is not just a psychological barrier but a mathematical one. Historically, reaching this rate has unlocked significant market activity, both in refinancing and new purchases.
Impact on the Market
➕ Refinancing Boom: Many homeowners with rates above 7% are eager to refinance, driving market activity.
➕ Purchase Market: Lower rates make home purchases more affordable, stimulating the housing market.
➕ Market Stability: A stable rate environment fosters confidence among buyers and sellers.
➕ Inflation Risks: Persistent inflation could offset the benefits of lower rates.
Practical Actions You Can Take Today
Leverage Technology to Reduce Costs
➕ Engage with Vendors: Christy Sukamnet from University Federal Credit Union emphasized the importance of regularly communicating with tech vendors to ensure full utilization of available features. This approach helped reduce their loan production costs to below the industry average.
➕ Adopt New Features: Stay updated with the latest product features and innovations from your tech providers. Optimal Blue recently announced seven new product innovations.
Optimize Your Mortgage Strategy
➕ Hedge and Deliver Mandatory: Transition from best efforts to mandatory delivery to capture additional basis points. This strategy can significantly impact profitability, especially in tight markets.
➕ Manage Margins Proactively: Use data-driven insights to adjust margins strategically, ensuring competitiveness in various markets and product groups.
Monitor Economic Indicators
➕ Unemployment and Inflation: Keep a close eye on unemployment rates and inflation data. These indicators can influence the Federal Reserve's decisions on interest rates, impacting the mortgage market.
➕ Residential Construction Jobs: Track residential construction job trends as a leading indicator of potential recessions. A plateau in hiring could signal economic downturns.
Plan for Market Changes
➕ Known Unknowns and Unknown Unknowns: Prepare for both predictable and unpredictable market changes. This includes staying informed about policy decisions that could indirectly affect interest rates and housing affordability.
➕ Consumer Sentiment: Monitor consumer sentiment and spending data, as these are critical components of economic health and can influence market dynamics.
Listen on all major podcast platforms: https://optimal-insights.captivate.fm/listen
The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Optimal Blue, LLC.