Good afternoon everybody!
We will start with the good news, depending what you take away from it. We are currently touching the record percent rate of homes being sold above asking price. The current record was in the summer of 2013 at 14.5%. We are now at 14.4%. While many people point to the statistic as proof that we are in a housing bubble, others claim that today’s 14.4% is not comparable to the past because record low interest rates over the past year have made the monthly payments affordable.
On to the bad news. Yesterday’s Fed meeting went the way that we were expecting but not the way we wanted. We have talked about the nonchalance attitude that Jerome Powell showed toward inflation in the last Fed meeting. In yesterday’s, he didn’t even bring it up. Both him and Janet Yellen seem to be ignoring the massive elephant in the room. In response to this inaction, the 10 year treasury shot up, blowing through the 1.67 ceiling to 1.73. This morning, Mortgage Backed Securities are down 48 bps to their lowest point since March 23rd of last year.
We continue to hold a locking bias as treasuries have no ceiling in sight and have momentum to push MBS pricing lower.