That’s where that calm-and-steady approach is available in, yielding a model of calmness amid the meltdown: “The summer buying season could have provided a pleasant backstop to forestall lock volume from dropping further this month,” Rhodes noted. And yet Rhodes is a realist when it comes to the post-summer landscape: “If we proceed into this restrictive territory through the winter buying season, we could see additional contraction through the remainder of 2023.”
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Nobody got the memo on higher rates
Still, no one could have predicted the aggressive motion taken by the Fed in raising the federal funds rate, which has contributed to a one-year high for mortgage rates. With nonfarm payroll jobs growing barely higher than expected and the unemployment rate ticking up from 3.5% to three.8%, the Fed may reload its economic ammunition to fireplace up more rate hikes in what’s left of this yr, Rhodes said.
Those hoping for a Christmas miracle when it comes to a rates reversal should as a substitute brace themselves for a winter of discontent: “We’re going to maneuver sideways if not barely contact somewhat bit in originations for the remainder of the yr,” Rhodes said. “I used to be taking a look at the Fannie Mae projections, and so they’re showing a slight decrease in originations as well throughout the top of the yr – in Q3, $429 billion and Q4 $410 billion.”
To reiterate, no sudden turnaround needs to be anticipated for the rest of this yr: “Depending on what happens within the economy, I believe we’re going to proceed to see a slight contraction in overall originations going into the winter months,” Rhodes said. “Like the Fed keeps saying ‘it’s all data dependent.’ If something happens within the economy and rates start dropping off, then you definately’ll see a pickup in originations, but I don’t foresee that taking place. Throughout the remainder of this yr, we’re definitely going to see sideways and certain more contraction.”
