We’re In the End Game Now

There is no question that while aspects of the economy look strong, Fed tightening, consumer and small business credit contraction, quickly reducing consumer bank account balances and a slowdown in retail spending are having their effects on economic growth. 

So, if an aircraft carrier moving at 25 knots takes 3.5 miles to come to a complete stop, you can easily imagine how the US economy would also take a long time to stop even with the Fed pushing hard on the breaks.

With each passing month those brakes slow down the US aircraft carrier a little more. As such we are close to end game. That end game is one in which inflation gets re-domesticated, economic growth lands somewhere between negative 1% and positive 1%, the 10-year Treasury finds a home below 3%, and mortgage rates finds a longer-term home with the 4.25% - 5.00% range.

Our forecast for this has remained consistent for the past 15 months and nothing that I see now in the data changes that. By mid-summer 2023 we’d be approaching a 5.5% mortgage rate and by year end and into Q1 we’d settle in closer to 4.25% - 4.75%.

So, despite the surge we saw in February activity that resulted in a strong March funding month, we must realize that we are still in healing phase of this cycle. BUT KEEP THE FAITH and don’t allow yourself to give in to battle fatigue. We are closing out the 8th inning of this game and modest relief in terms of refi, cash-out refi and purchase inventory are a reality…we just need enough discipline and stamina to stay focused on what we can control and remain positive about the opportunity in front of us.

Please make sure you attend the next All Company Call where I’ll continue my Educate and Elevate series on where, when, and how this will likely occur. I’ll keep it brief and provide charts and content you can share with your borrowers and referral partners. 

As always, thank you for your continue support and dedication to AnnieMac, our borrowers, our team mates and our referral partners!