MORTGAGE WATCH 02/11/22

What is going on?

Well, investors have been on edge about higher inflation for months, then yesterday 2 bombs dropped. First, inflation (CPI) came in at the hottest print in 40 years at 7.5%. The second bomb was when Fed Chairman Bullard called for a 1% rate hike by July 2022. When inflation rises and the Feds increase borrowing cost, is devalues bonds, so bond holders are selling their positions because the bond holdings will be worth less in the near future (nobody wants to take a loss on their investments, right??). The flight to protect gains is creating a massive snowball selling in the bond markets.

REMINDER: when bond prices go down, rates go up (and vice versa)

In addition, the Fed is no longer buying bonds, then are selling them to clear them from the balance sheet (excess supply also drawn down prices = econ 101). See charts of mortgage bond prices since last Friday below:

 

The mortgage bond market is now down 130bps in 5 trading days. When will the selling end? Who knows, but that is the million dollar question.

Bottom Line: recommending clients lock as soon as escrows open!

 

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 43 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and son Matt, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 23 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, as well as sponsors Paper Shredding and E-Waste Recycling events twice a year.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.