Rates improved this week…

Rates peaked last week due to the debt ceiling standoff and anticipated federal funds rate increase. Last Friday, the 30-year fixed rate for Conventional loans hit 7.14%, the highest in almost 6 months.

FHFA to update AMIs for 2023

Area Median Income (AMI) estimates are provided to Fannie Mae and Freddie Max by the Federal Housing Finance Agency (FHFA). These AMIs are used in determining borrower eligibility for loan products like HomeReady and HomePossible, as well as being used in determining eligibility for certain loan-level pricing adjustment waivers.

HomeReady and HomePossible allow borrowers to put as little as 3% down on a purchase, as well as offering discounted mortgage insurance premiums.

2023 AMIs will be effective on June 12, 2023. This is expected to provide more opportunities for low to moderate income buyers by increasing affordability and decreasing loan costs for a wider range of borrowers.

May jobs report

The Bureau of Labor Statistics (BLS) reported that were 339,000 jobs created in May, which was stronger than estimates of 190,000. There were 93,000 in positive revisions to March and April. March was revised higher by 52,000 from 165,000 to 217,000, while April was revised higher by 41,000 from 253,000 to 294,000.

The Household Survey showed that there were 310,000 job losses, while the labor force increased by 130,000. This caused the unemployment rate to rise from 3.4% to 3.7%.

Home prices continue to rise

Home prices continued their upward trend, with a 4.3% increase in the first quarter of 2023 compared to the same quarter last year, according to the Federal Housing Finance Agency (FHFA). This marks the 45th consecutive quarter of year-over-year growth since 2012.

Quick notes:

Debt Ceiling: The Senate has passed the Debt Ceiling Bill and the President is expected to sign it later today.

The drop in mortgage rates this week comes on the heels of a U.S. debt limit suspension until 2025 and signs that the Federal Reserve may delay rate hikes.

Fed Pause? At least two Fed members favor skipping a hike at the next meeting, June 14. There is currently a 64.4% chance of a pause, according to the CME FedWatch tool.

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