Vital Statistics:
Stocks are higher this morning as earnings continue to come in. Bonds and MBS are flat.
Mortgage applications rose 0.1% last week as purchases rose 0.6% and refis fell 2.9%. “Mortgage application volume was little changed last week, but there was a small increase in conventional purchase volume, which brought the level of total purchase volume up almost 2 percent above last year at this time,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Mortgage rates remained near 7 percent, a key psychological level, which likely continues to slow the pace of activity for both refinances and purchases. Incoming economic data are likely to keep the Federal Reserve on hold for now, while uncertainties about economic policy are likely to keep longer-term rates, including mortgage rates, steady at these levels.”
Rent growth has seen the slowest increase in years, according to a study by Rentometer. “The rental market is undergoing a noticeable shift, as both apartment rents and the single-family rental segment – which houses 14 million Americans and has outperformed apartment rents over the past couple of years – experience a marked slowdown,” the report notes. The apartment market “has suffered due to a glut of new units coming to market,” and that those dynamics have also begun to impact single-family rents. The 6% vacancy rates have not been seen since the first quarter of 2018, according to the report.
While this is not good news for landlords (and investors in DSCR loans), it is good news for shelter inflation which has been the last mile in the Fed’s fight against inflation.
The CPI rent index was steady around 3.5% pre-pandemic. It peaked at 8.2% and has decreased back to 4.6%. We are basically 3/4 of the way back to normalcy in rental inflation. The markets might be a little too hawkish on the expected Fed Funds rate.
Speaking of a glut of new units, here are 5+ units under construction:
So the glut is going to get worse before it gets better.
Are you a mortgage originator with a bookkeeper, but no financial analyst? Are you doing without an annual budget because you don’t have the time / resources to develop one? Are you considering an acquisition, and want an in-depth analysis of the potential synergies and impact on the bottom line? Perhaps you have some projects that need to be done, but you can’t justify a full-time hire.
I am a consultant who has extensive experience in capital markets, secondary marketing, FP&A, budgeting, and servicing. If you think you might have a need, let’s set up a discovery call.
Please reach out to brent@thedailytearsheet.com
