FED Likely to Hike Rates 25 BPS


Interest rates have drifted slightly higher over the past 7 days, but remain in the same range we’ve seen for the past couple weeks.

It’s a big week for U.S. economic news. 

The FED is meeting on Tuesday and will announce any FED rate changes on Wednesday.

Most are expecting a 25 bps rise in the Federal Funds Rate. 

Remember that the Federal Funds Rate does not have a direct correlation to mortgage rates.

It does affect consumer loans like HELOCs, car loans, credit cards, etc.

We also have the US Jobs Report on Friday. 

This should be an interesting week but I’m expecting interest rates to stay in the same range,

barring any economic news that is way out of expectations. 


If you missed our Housing Update with Barry Habib, Dan Habib, Neel Dhingra, and Steve Jacobson – we got you.

Click on link below for recording.  Lot’s of great information here to make you a better professional for your clients.

Barry Habib – “There is No Housing Bubble”


My favorite slide from the presentation is below.

Barry constantly preaches that inflation drives mortgage rates and the stats support his position.

We expect rates to fall as inflation drops in 2023.

Barry Habib is specifically referencing May 10th, 2023.

He states that the CPI report on May 10th will be the date when housing data will start to cooperate with inflation. 


Barry Habib predicted in June 2022 to watch the date on November 10th, 2022.

November 10th, 2022 was the best day for mortgage interest rates of the whole year and mortgage interest rates dropped 1% since then. 

The man knows what he is talking about!


During the writing of this update, The Case-Shiller Home Price Index was released measuring U.S. Home Appreciation.

The National Index reported a 7.7% year over year gain in home prices in November 2022, down from 9.2% in October of 2022. 

What does this mean? 

We are seeing the yearly home appreciation numbers dip as home prices in most markets have decreased since mid 2022.

We look at this as a window. 

The US has seen 121 consecutive months of home appreciation and 5 months of modest price decreases. 

We are already seeing a major increase in buyer activity in 2023 and I expect this to continue during the spring buyer season. 

Recession = Lower Mortgage Rates

Interest rates have drifted up about .1% in the past 7 days.

MBS Highway highlighted the Leading Economic Indicators (LEI) Index in their daily update.

The LEI is down 4.2% in the past 6 months and has gone down 10 months in a row.

Another big indicator is an inverted yield curve.

This happens when a longer maturity treasury bond gives you a lower rate of return than a short term treasury bond.

Both the LEI drop and the inverted yield curve are historically accurate signs of a recession. 

A recession = lower mortgage rates.

Leading Mortgage Prognosticator, Barry Habib, expects mortgage rates to drop to 5% in 2023.

Also a reminder that historically housing does very well in a recession.


Mortgage applications have increased 27.9%!

That is a huge swing higher and we’ve been feeling it.

Buyers activity has increased substantially and we’ve even run up against a few multiple offer type situations.

See video below.


Spring is typically a high buyer season and we expect this trend to continue as more home buyers come into the market and I expect mortgage rates to slowly move lower.

Listings Under Contract Show Increase In Home Buyer Activity


Mortgage interest rates hit 4 month lows after the Consumer Price Index Inflation Report on Thursday, January 12th.

They have since moved up some, but are about .1% lower than the week before.

December’s inflation numbers fell in line with estimates and show that inflation is coming back down to earth.

Year over year inflation dropped from 7.1% to 6.5%.

As inflation goes down, interest rates should follow.

Many experts are currently giving a LOCK recommendation as the Mortgage Backed Security Market has a level of resistance on the 200 day moving average that may be difficult to surpass.  This means that rates have a higher likelihood of going up some verses going down in the short term.

We are also seeing an inverted yield curve when comparing the 10 year treasury and 3 month treasury.

This data typically signals a recession, which usually results in a drop in the stock market and improvement in interest rates.

I still expect interest rates to come down in 2023, but it won’t be a linear process.

More down than up days over a period of time = gradual rate improvement.



Mortgage Rates Near 4 Month Lows


Mortgage interest rates are down approximately .2% from last week and rates are near 4 month lows.

Friday was a great day for rates with 2 important economic reports.

The first was the U.S. Jobs Report showing there were 223,000 jobs created in December.

Most of the December jobs appear to be part time or seasonal jobs.

The report also gave a negative revision to October and November numbers by 28,000 jobs.

Although job growth was stronger than expected, wage growth and average weekly earnings were down.

Less money to buy goods/services helps inflation. Less demand equates to lower pricing.

Also on Friday, the Institute of Supply Management’s Index fell way below projections signaling more economic weakness.

With these 2 reports, interest rates had a fantastic day on Friday and are hovering near 4 month lows.

This week’s big report is the Consumer Price Index Inflation Numbers which comes out Thursday.
Low inflation numbers will be positive for mortgage interest rates.


Our team is seeing a substantial increase in home Buying activity in January.

I’m hearing the same things happening from my Mortgage colleagues and Realtor partners.

Our mortgage applications are up 47% and our contracts accepted are up 60%.

We are also seeing higher consumer confidence in housing.

Interest rates are lower

Home prices are lower

And Seller Concessions are up.

According to Redfin, 42% of sellers offered seller concessions in Q4 of 2022.

It’s too early to say that this is sustainable, but we are seeing a shift in mindset and home buyer activity.

See consumer confidence in housing article below:



Below is the audio of the report and my favorite slides.


Rates should be 5.48% if the spread between rates and 10 Year Treasury Yield were normal. 

Rates are higher because Lenders think consumers will refinance.



Buy Now , Refi Later


The mortgage markets are starting off the week nicely after having a down week last week.
At the time of this writing, 7:00 am Tuesday morning, the Mortgage Backed Security market is up 33 bps.

Check out the chart below to see how far we have come since about October 20th, 2022.

The lower the graph, the higher interest rates.
Interest rates are over 1% better than October.

The below survey for average interest rates across America is .2% higher than my last update. Sometimes, when you have light trading around the holidays, markets can move more than they would with normal trading activity.
Hoping for a good week.
On Wednesday we have the FED Minutes and Friday the US Jobs Report. 

2022 saw perhaps the largest rise in mortgage rates in history.
Glad to close that chapter and excited for what I expect to be a much better year for rates in 2023.
Here is an article from Mortgage News Daily about where we’ve been and where we are going.

I’m re-highlighting the Freddie Mac Borrow Smart Program and our Buy Now Refi Later Program in case you missed it over the Holidays.
Happy New Year!


Fairway is one of only a handful of Mortgage Lenders in the nation piloting this new program from Freddie Mac grant program.
The program is called Freddie Mac BorrowSmart and the program allows a borrower to get a free $1,000-$2,500 in Grant Money (client never has to pay back) based on the area median income.  The grant money can go towards down payment or closing costs and does not result in the client getting a higher rate. 
If clients make > 80% of AMI to 100% of AMI =             $1,000 grant
If clients make > 50% of AMI to 80% of AMI =               $1,250 grant
If clients make 50% AMI or less =                                      $2,500 grant

You can look up AMI in specific areas here:  https://sf.freddiemac.com/working-with-us/affordable-lending/home-possible-eligibility-map
Client must qualify with the Freddie Mac Home One or Freddie Mac Home Possible Product, and the program can be used with city and county Down Payment Assistance options that do not involve a bond.
Below are the standard guidelines for these programs.
This is a great way to get a deal and have Freddie Mac contribute towards your closing costs and/or down payment.


Many clients are hearing that interest rates are expected to go down in 2023, so they want to hold off on purchasing a home until financing costs are more affordable.
While that sounds like a good idea on paper, there will also likely be an influx of demand if rates drop to the low 5%’s like many mortgage analysts predict. If you look at when demand started to go down from it’s peak in May, there is almost a direct correlation to the timing of when interest rates went up in March and April.
We are now offering a Buy Now/Refinance Later program which allows clients that purchase before March 31st 2023, the ability to refinance with no lender costs should rates drop after they purchase.
A client does have to stay in purchase mortgage for 6 months and client does have to qualify for the refinance based on loan to value, credit score, and debt to income ratio requirements.
If you buy now, we will get you a big discount on the refinance should rates drop in 2023