- 8 months ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the Fed meeting and what a united Fed could mean for mortgage rates. The two also discuss purchase apps.
Related to this episode:
Federal Reserve keeps benchmark rate unchanged
https://www.housingwire.com/articles/fed-holds-rates-steady/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Trust & Will visit trustandwill.com
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.
Related to this episode:
Federal Reserve keeps benchmark rate unchanged
https://www.housingwire.com/articles/fed-holds-rates-steady/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Trust & Will visit trustandwill.com
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.
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NewsTranscript
00:00You
00:05You
00:10Welcome everyone. My guest today is lead analyst Logan Motoshami to talk about the
00:15very interesting Fed meeting today and what we saw with purchase apps. First,
00:20I want to thank our sponsor trust and will for making this episode possible and a special
00:25shout out to our producer Corey Ashcroft for jumping in on such a late recording.
00:30Welcome back to the podcast. This is the first time we've done a podcast. I think at like
00:351030 at night. Yes, it's Fed day, but I was speaking in Boise.
00:40And you were coming back from Colorado. So this is the first time we're, you know,
00:45being able to talk in a normal setting and yeah, a very interesting
00:50day. I know market wise, not a lot of people thought it was a, it was a big day.
00:55But there were some kind of interesting clues going out for the rest of the year.
01:00Okay. So obviously nobody expected, um, you know, any rate cuts, anything like
01:05that. But as always, the really interesting thing is what Powell says in the speech.
01:10And what he says in the Q and a, so what did you get from that?
01:13Do you know what I found the most interesting?
01:15Do you know what I found today was the voting?
01:18Okay.
01:18Okay.
01:20It was 10 to two for no, no, uh, uh,
01:25no, no, no cuts. The two descents were Myron is going to descent always.
01:30Cause he's in there for Trump. Christopher Waller dissented, wanted a rate cut.
01:35You know, he's still auditioning for Fed chair, Michelle Bowman.
01:40Put it on hold as well. And, you know, she was, she was, you know, uh, labor.
01:45Over inflation, but the whole Q and a.
01:50With the voting kind of made sense to me that it seems like the Fed is a little bit more unified on.
01:55No rate cuts until Powell leaves. And we talked about this in the last podcast.
02:00That I think Powell has done his last rate cut as Fed chair. And because of that.
02:05It's going to get very interesting because today, Christopher Waller went up.
02:10And the odds to be next Fed chairman and Rick Reeder and, you know, the Kevins are.
02:15Are, are, are, are, are not a sure bet anymore. Me personally, I thought I saw.
02:20I saw a unified Fed and a unified Fed is really saying.
02:25Hey, unless labor is breaking, maybe you get two more rate cuts and that.
02:30That's it. Maybe, uh, uh, in that light. And I think it makes it a little bit.
02:35More difficult for Trump. If he can't fire governors, then the wall.
02:40The wallers and the Rick readers actually become more prevalent.
02:45Uh, because if it's the Kevins, the Kevins aren't going to unify anyone.
02:50Uh, out there. So I thought this whole day was a very interesting.
02:55Thought process to go out in a few months when Powell leaves.
03:00And I think this is one of the reasons why Trump hasn't picked anyone.
03:04If he can't fight.
03:05independers, the Kevins won't be very, you know advantage, uh, for
03:10him, but maybe a Waller and a Rick Reeder might be able to convince people to get.
03:15A little bit more rate cuts than Powell would like.
03:18So two more rate cuts.
03:20I mean, two more, two more is getting down to.
03:25To neutral, to where people might debate where neutral policy is, but.
03:30That's it.
03:31That might be it for the rest of the cycle, unless the labor market breaks.
03:35They're very adamant.
03:36They sounded very confident that we saw weakness in the labor market.
03:40But it looks like it's stabilized.
03:42Growth has picked up the rebound from the government.
03:45Shut down and they seem like they feel a little bit more.
03:50That's better suited.
03:51Now, we did a podcast not that long ago where, you know, I.
03:55I gave a case for the economy to outperform in 2026 with different.
04:00variables, it's midterms, you know, rates are lower now already, you know, there's more.
04:05More rate cuts into the system.
04:06We're going to get the tax cut benefits and all these things.
04:09And unless.
04:10Labor breaks, you know, getting to neutral policy might be something that.
04:15It's, you know, prolonged throughout the whole year, but Trump has always talked about aggressive.
04:20rate cuts, you know, get get rates down as fast as possible, so.
04:25Interesting chess game.
04:27I thought by having a more unified.
04:30Fed go into Powell's, you know, last few months as.
04:35Fed chair and what that does for Trump, because if he can't.
04:40Fire governors, who does he pick?
04:42This is why I think Christopher Waller went.
04:45up in the in the race as a as a as a possible Fed chair today, so.
04:50That was my main thing coming out of this this Fed press.
04:54That would be.
04:55Wild if Christopher Waller ended up being the Fed chair when he's kind of been the dark
04:59horse.
05:00Yeah, it's kind of been, I mean, a lot of people just consider him the logical choice, but.
05:05Trump wants aggressive rate cuts, right?
05:07Trump wants the dollar lower.
05:09Remember the whole trend.
05:10Trump wants to be the stupidity thing about lower dollar, lower oil prices and lower rates.
05:14And.
05:15In this context, Christopher Waller is a more
05:20suited long-term choice, but the Kevins are all...
05:25The Kevins are only there to get aggressive rate cuts, but a Fed chairman...
05:30A Fed chairman can talk very dumbish, try to convince other people, but...
05:35Just not quite there, out there, and I thought the unification of the...
05:40The Fed governor is saying, hey, listen, the economy is not as bad anymore.
05:45We feel a little bit more confident.
05:47And again, to me, it's always been jobless claims.
05:50We really put a lot of weight on the jobless claims data, and the jobless claims data is still historically low.
05:55So it gives them time, gives them time to assess the other data.
06:01And what did the market do today?
06:03Not much.
06:04I mean, the 10-year year...
06:05The field rose a few basis points and then came down, so...
06:10Nothing on the bond market side.
06:12It's so calm, considering...
06:15The drama with Davos and the Japanese bond market and everything.
06:19Think what Morgan...
06:20The mortgage rates have done.
06:21We went from 6.07 to just 621 down to 650.
06:25Mortgage rates, just one basis points today.
06:28Very calm now.
06:29A lot of this...
06:30This has to do with the spreads being much better this year.
06:32But the bond market is just hovering around...
06:35This low range, not really breaking out.
06:38You know, one of the reasons why I have like...
06:40460 as the top end ranges.
06:42What if the labor data...
06:45It really starts to pick up.
06:46Job growth starts to pick up.
06:48Wage growth reverses.
06:50It's downstreak and heads up higher.
06:52The unemployment rate falls, but inflation is still...
06:551% above target.
06:56You can see easily the 10-year yield get up to 440, 460.
06:59Not a...
07:00Not a question.
07:01But not a lot of volatility on a day like this.
07:04And even...
07:05Even with as crazy as Greenland and Davos and Japan was...
07:09Mortgage rates pretty...
07:10Chill.
07:11And again, benefits of mortgage spreads.
07:15Benefits...
07:15Of that announcement of the $200 billion purchase.
07:18Well, however much money is...
07:20Left...
07:21Keeps the volatility very compressed.
07:23Which is good for the spring housing market.
07:25Very good.
07:26Okay.
07:27Well, speaking of that, let's talk about purchase apps, which is something that you...
07:30One of your favorite data lines to watch?
07:32Purchase application data.
07:33You know...
07:34A...
07:35A...
07:35Any time in the last three years, rates have already gone up a little bit.
07:40And...
07:40We would have seen some weakness on the week-to-week data noticeable for a two, three...
07:45weeks.
07:46We saw a very smidge negative zero point.
07:50Four percent decline week-to-week.
07:53Another double-digit...
07:55Eighteen percent print year over year.
07:58Um...
07:59We do not...
08:00We do not have the low bar anymore.
08:02I kind of always joke that in the night...
08:05You know, the...
08:06Last year, purchase application data was working from such a low bar.
08:09No doubt was a number...
08:10A new band.
08:11Gangster Paradise was the number one song.
08:13And I had blonde hair.
08:14Auditioning...
08:15Like...
08:15Back in the night...
08:16It was...
08:17Literally...
08:18That's how low purchase application was that I...
08:20Blonde hair was auditioning for Levi's commercial.
08:22So that...
08:23We were a totally different generation back then.
08:25But...
08:26We don't have that now.
08:28We don't have that extreme...
08:30Low bar.
08:31So the fact that we're still pushing double-digit...
08:33And this is what we talked about toward the end of...
08:35Last year, that if we see double-digit year-over-year growth with positive weeklies, you guys...
08:40You got to take that more seriously.
08:42And that's what we've had at the start of the year.
08:44And why...
08:45The spreads, baby!
08:47Mortgage spreads are back to normal.
08:49What we know...
08:50Normally, historically think.
08:51And volatility is not that big.
08:53And rates are near 6%.
08:55Right?
08:56If I didn't see that rates getting near 6%...
09:00Pushes the demand curve higher, we wouldn't be having this discussion.
09:03But we saw it...
09:04In...
09:05Late 2022.
09:06Early 2023.
09:07We saw it in mid 2024.
09:08We saw it last year.
09:10So...
09:10So here we are, the first spring season, where rates are near 6%.
09:15And there's not an impetus or a Federal Reserve or economic data...
09:20To warrant it to go up above 7%.
09:23See, now...
09:24Last year...
09:25In the last few years, we had 7.25%, 7.5%.
09:27We had 8% mortgage rates toward the end of 2020.
09:30All that is gone.
09:31And look how better the data works out there.
09:35And it's very positive to see that early on.
09:40Because, you know, you get that early shift in the demand curve.
09:43And usually, I mean, in the old...
09:45In the old days, I would go...
09:46I only really count purchase apps from the second week of January to the first...
09:50The first week of May.
09:51After that, total May volumes fall.
09:54The...
09:55Demand curve starts out here.
09:56So, very, very, very positive purchase app.
10:00Application data start of the year and today in the last few weeks.
10:03So, we kind of go with that.
10:05And, of course, we...
10:06You know, you and I both had issues...
10:10With traveling because of flights.
10:11You know, the snow and everything.
10:13That will impact the data.
10:15Just short term.
10:16But when we get back to normal, man, we...
10:18This is very positive for spring.
10:202026.
10:21Because it's...
10:22It's unlike the backdrops we had.
10:24Now...
10:25Early 2023, when we did have 5.99% mortgage rates...
10:30We didn't have that much inventory.
10:31Prices were still growing a little bit faster and...
10:35Affordability was still stretched.
10:37We got a little bit more affordability improvement over the...
10:40The last two years because price growth has slowed down.
10:42Wages have out...
10:43Out...
10:44Outgrown a...
10:45home prices. So positive. All these things are positive. This is what you want to see happen.
10:50And we've tested this now with Greenland, Penguins.
10:55Japan, Davos, Federal Reserve, Powell indictment.
11:00Powell not indictment. All this stuff. All these crazy headlines.
11:03Boy, the mortgage.
11:05Not too crazy, right? I mean, I think the, I mean, we just, we did.
11:10Have a 20 basis point move from the lowest levels recently up to the highest level.
11:15Or 21, 22 basis points, but we're still in the low sixes.
11:20Not above sevens. Big time difference in the economic data for.
11:25Housing. And we see it. We saw it again on purchase application date.
11:29Okay. I think the.
11:30Penguins are my favorite out of all of those.
11:32Hey, hey, hey, listen, I got an AI.
11:35I have me walking a penguin. I don't know where we are.
11:37The Arctic, Iceland, Greenland, but I don't know where we are.
11:40But I, I, I, I got one of those ready to, ready to go out.
11:43I think they're only.
11:45In Antarctica, we'll, we'll hear from our people about that.
11:50Okay. Well, Logan, thank you so much. Thanks for jumping on after a very long.
11:55Day of speaking and travel. Um, and we will talk again soon.
11:59Pleasure.
12:00Day of speaking and travel.
12:05Day of speaking and travel.
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