Jobs & housing drive the economy, and yesterday we learned that Existing Home Sales fell 3.2% in January, according to NAR. Lawrence Yun, NAR's Chief Economist said: “The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month.” Buyer traffic is strong, but sales have lagged last January’s pace. “It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.” Industry observers ask, “Baby Boomers are going to move… where?” Mark W. observed, “The MBA tells us that refis are still 44% of all new loan apps. That is fascinating to me since it should be closer to 25-30%. Why so high? Equity stripping? Those VA shops are going to get hammered! Why refi to 4.625%? I can think of cash-out, eliminating MI, or going to a 15-year term from a 30-year term.”

Upcoming Events and Training

Register for the String February 22nd webinar, “Zillow Consumer Insights for Mortgage Lenders” with Mary Kaye O’Brien, Director of Customer Insights at Zillow Group. This presentation will provide you insights from the Zillow Group Consumer Housing Trends Report. It’s the most comprehensive research ever completed about home buyers, sellers, owners and renters, as well as their financing.

Register for the String February 27th webinar, “Cybersecurity and You” with special guest, former Special Agent Scott E. Augenbaum of the FBI’s Computer Intrusion/Counterintelligence Squad. With our inevitable move towards interconnectedness, cyber criminals have adapted to this digital realm along with the rest of us. Cybersecurity Ventures predicts cybercrime will continue rising and cost businesses globally more than $6 trillion annually by 2021.

2018 will be the most challenging year for the mortgage industry since 2008, with a significant decrease in volume. String is hosting an exclusive webinar on March 5th featuring industry guru, Joe Garrett, “Top 10 Mistakes Made By Underperforming Lenders & How to Avoid Them”. You will walk away with specific steps you can take to improve margins, shorten cycle times and reduce risk.

Freddie Mac’s redesigned Learning Center offers instant access to training topics. Loan Advisor Suite® − Find resources for each of the tools in our online risk reduction toolbox − for every step of the loan manufacturing process. Originate & Underwrite − Access resources on underwriting, Freddie Mac mortgage products, quality control and fraud prevention, and collateral representation and warranty relief. Sell & Deliver− Maximize your use of Loan Selling AdvisorSM − our tool for integrating secondary marketing functions − with resources on topics like cash pricing and contracting, the Uniform Loan Delivery Dataset (ULDD), and more. Servicing− Make servicing Freddie Mac loans easier with resources on investor reporting and remitting, foreclosure and bankruptcy, and loss mitigation. New Users − Are you a new Freddie Mac customer? Helpful resources will get you started. Plus, targeted training will orient you to underwriting, selling, and servicing.

Capital Markets

Yup, the current rate of economic growth could exceed initial estimates. Several economists are betting the Federal Reserve will raise interest rates four times this year, with up to three more hikes next year based on the recent federal government spending package. Will higher rates negatively impact the economy? UBS economist Seth Carpenter, a former Fed and Treasury official, says while he doesn't forecast a recession, "we believe the risk is material and rising."

Think back to last week, a busy week for economic releases and one standout was stronger than expected consumer prices for January. CPI jumped 0.5 percent in January and 2.1 percent year-over year while core CPI increased by 0.3 percent, reaffirming the headline number.  Inflation was also observed on the producer side with PPI registering a 0.4 percent increase at both the headline and core levels. On a year-over-year basis, PPI increased by 2.5 percent with goods, services, and construction all showing strength. All this feeds into the current narrative for monetary policy tightening and higher rates in the coming months.

Yields on three- and six-month Treasurys shot up to the highest levels since 2008 as the government sold $179 billion in debt to replenish its cash stockpile. The Treasury Department is scheduled to sell $258 billion in debt this week. Last week's rise of the 10-year Treasury yield to a four-year high of 2.91%, combined with a stock market rally, has been widely taken as a sign that the recent economic recovery is robust and sustainable, which could influence Federal Reserve thinking on setting interest rates and managing inflation.

As most of you know, the headline news was the release of the FOMC minutes yesterday from the January 30/31 meeting. The minutes showed the Fed has a positive view on the economy, namely regarding the impacts of tax reform as the expectation is for local businesses to increase capital investment this year, but members remain concerned about inflation. The inflation discussion centered on there being more potential for inflation with the core figures remaining at or below the Fed’s 2 percent target, especially as labor markets continue to tighten.

There was nothing in the minutes to suggest that the FOMC was deviating away from the expected three fed funds rate hikes this year, but the minutes look backward and do not account for the new Federal budget agreement, February’s increase in financial market volatility, or January’s employment data - which demonstrated a notable increase in wages. Investors still expect a rate hike at the upcoming March 20/21 FOMC meeting, with Fed Funds futures pricing in an implied probability of about 78 percent. The March meeting will also see the FOMC issue a new "dot plot" and a new set of economic projections, and the first opportunity for the new chairman, Jay Powell, to preside over a meeting.

The other major news yesterday was that existing home sales for January decreased by 3.2 percent, to a 5.38 million-unit annual rate, following a decrease in December. The housing market remains very tight, as supply ticked up to 3.4 months, while the median sales price of an existing home was up by 5.8 percent in January YoY. Further increases in mortgage rates this year could be a downside risk factor for housing markets. First-time buyers are vulnerable to a decline in housing affordability as prices increase and mortgage rates go up.

This morning we’ve had initial jobless and continuing jobless claims (-7k to 222k, 1.875 million). Leading economic indicators for January are out at 10AM ET, as is Freddie Mac’s Primary Mortgage Market Survey for the week ending February 22. We also receive the Kansas City Fed’s Manufacturing and Composite Indexes for February, before some Fedspeak and more supply: The Treasury concluding the latest round of monthly auctions at 1pm ET with $28 billion of 7-year notes. We start Thursday with the 10-year yielding 2.92% and agency MBS prices are better by .250 versus last night’s close.

Employment

Stearns Retail is excited to welcome Jim Linnane as Divisional VP for the company’s retail lending activities throughout the Central U.S. Prior to joining Stearns, Jim was Director of National Sales for Guaranteed Rate. A seasoned leader who served as a Divisional Manager at Wells Fargo for more than a decade, Jim’s achievements include attaining top performance rankings for purchase business market share, renovation lending production volume and overall profitability. His experience also encompasses the creation and leadership of ten joint ventures with real estate and builder partners. Tony Taveekanjana, EVP, National Head of Retail Lending at Stearns, Lending, LLC, said “We are thrilled to have Jim join the Stearns family. He has an incredibly successful track record and understands the business at a very deep level. He is known for is genuine interest in people and being a true servant leader. He will add immediate value and accelerate our massive growth plans.”

Caliber Home Loans, Inc. produced over $43 billion overall in 2017, and has no intention of slowing down this year. We currently have over 1,200 Loan Consultants across the country, who contribute to our success as an organization. Each of our producers are knowledgeable of their market and equipped with a wide range of financing options, technology, and in-house support. Got what it takes to be a local player for a national powerhouse? Contact Jeremy DeRosa about joining our team!

“If you're reading this, you are most likely in the top group of mortgage originators in the nation and know how to see beyond the noise and hype and get to the deal. So do we. Assurance Financial is quietly growing into a nationwide leader in lending. Yes, our compensation structure is excellent, and yes, our back-office support is second to none - 16 years of working, changing, and perfecting it. And yes, we have a full-service marketing team at your disposal with a budget and commitment to helping you do what you do best. And yes, we have an unwavering mission to close loans on time, every time! We have immediate openings for proven, successful producing Branch Managers and MLOs in Wilmington, Charlotte, Denver, Austin, and many other branch locations throughout the country, as well as an Eastern Regional Production Manager for our expanding East Coast operations. For immediate consideration and more information, contact Paul Peters, CMB, Assurance Financial, Recruiting Manager (225-239-7948).

Implementing a custom digital mortgage solution for your organization has never been more streamlined or simple. Maxwell, recognized by HousingWire as one of the most Innovative Companies in Real Estate, is leading this charge. Their custom to you white-label platform, allows you to provide a digital mortgage experience on your own website, all under the guise of your brand -- helping you deliver the borrower experience consumers expect. Beyond branding, Maxwell’s digital POS was designed by leaders from Google and the Stanford Institute of Design. With a focus on design-thinking, embedded in behavioral theory, driven by powerful algorithms, the Maxwell experience is second-to-none. To learn more about how teams using Maxwell are closing loans 45% faster than the national average, request a demo at www.himaxwell.com.