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    January Newsletter – Mortgage Interest Rate Forecast

    Welcome to my January newsletter featuring personal insights and advice on the mortgage rates, plus economic news that affects our local housing market.

    Interest Rates

    Interest rates were up a bit on some loan products following the Fed December meeting notes published earlier this week. The minutes indicated the Fed is ready to begin dialing back its bond purchasing program, which has held rates down for so long. The Fed did not provide a timeline, but financial markets anticipate that action is imminent and have begun to price in a rate hike.

    Although labor is in short supply, traders and investors are optimistic because the economy is growing and unemployment remains low. Last month, economists at UCLA Anderson School reported that this is one of the fastest economic recoveries in 50 years of recessions.

    What does this mean for rates over the next thirty days? Core loan products like the 30-YR conventional will likely rise, but I am not expecting extreme jumps. Lenders are still competing for your business and will continue to offer flexible loan terms to maintain the strong application volume from home buyers in 2021. Last year was a record for purchase originations, and experts expect a robust 2022.

    Local Trends

    I am working with a fair number of clients who chose to conserve capital, opting for smaller down payments, cash-out options, and adjustable-rate loans to take advantage of this low-rate environment while it lasts. Now is an excellent time for individuals and investors who do not have W-2 income. Terms for bank statement ( NonQM ) loans have never been more favorable. On this note, remember, I am the number one NonQM originator in the country and have lending relationships other brokers in town do not.

    Here are a few NonQM loans we have closed in the last 30-days

    New Home Purchase | Mar Vista | $2.975M
    Secured a loan with 90% financing, no tax returns, 20-day close for a high-leveraged borrower.

    New Home Purchase | Sherman Oaks | $3.95M
    Closed an interest-only loan for a client with 80% financing and no tax returns.

    Economic News Impacting Our Housing Market

    Jobs Report

    The U.S. Bureau of Labor Statistics Employment Summary reported the addition of 199,000 jobs in December, sending the unemployment rate down to 3.9%. The California unemployment rate is currently 6.9%, a YOY decline of almost two percentage points. California is not due to report December employment numbers until January 21.

    Key economic data to watch for this month:

    January 12 – Core Consumer Price Index (CPI)

    January 14 – Core Retail Sales Report

    January 19 – Building Permits and Housing Starts Reports

    January 20 – Existing Homes Sales Report

    January 21 – California Unemployment Data

    January 26 – New Home Sales and Fed Interest Rate Decision

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