The Fed’s preferred inflation gauge, the Personal Consumption Index (PCE), came in cooler than expected today.
This shocked the markets, given all the fearmongering about “resurging inflation,” and rates have been falling all morning as a result.
This is another reminder of (1) how volatile the markets are right now; (2) how sensitive markets are to inflation signals; and (3) how little analysts know when it comes to predicting anything.
1st/2nd Combo Loans Are Back – And This Is Why
We are again seeing 1st/2nd combo loans for the first time in well over a year.
Combo loans, once again, are financing structures with an 80% loan-to-value first mortgage and a 5% to 15% loan-to-value 2nd mortgage (usually in the form of a home equity line).
We are seeing them again because Prime Rate has fallen to 7.5% from a peak of 8.5% where it stood for a long time (from July of 2023) before the Fed cut the Fed Funds Rate in September.
Home equity lines are usually tied to Prime Rate, so a lower Prime Rate makes equity lines much more palatable.
When Prime Rate is high, borrowers often opt for single loan financing with Private Mortgage Insurance (PMI) instead.
Pending Government Shutdown – Oh My!
Our entirely dysfunctional Congress is likely bringing another government shutdown our way and…they are never as serious as the media likes us to believe.
Here is a blog I wrote about a previous shutdown: The Impact of Government Shutdowns.
TLDR: Government workers will not get paid (which is bad); most people outside of government will not be impacted at all; most mortgages will still close on time; and there will likely be no impact on interest rates.
Permanent Daylight Savings Times = 9:13 Sunrises in Michigan
This has little to do with mortgages, but I thought it was interesting. There is much talk right now about eliminating our twice-yearly time changes.
And given that I grew up in AZ where they do not change time, I am a huge proponent of it – hoping that we maintain permanent daylight savings time.
But, that pesky WSJ weighed in today with this column – Trump Tackles Daylight Saving Time – reminding us that such a policy would mean that Michigan residents would not see daylight until 9:13 AM in the winter.
That’s a lot of morning darkness for northern America – just to appease us “Sunbelters.”
