Rocket Fuel Newsletter – 03/26/22

close up of male hands with newspaper and coffee

... and the award for best performance in a lead acting role goes to Jerome Powell from the Federal Reserve!

This week’s edition has hawks, Fannie forecast updates and, of course, more crosswords!  

Fuel Up! 🚀

Powell's Corner

The Fed wants to look like hawks in control.

Inflation hawks tighten policy to cool the economy, whereas doves make rates cheaper to help boost the economy.

After being the ultimate doves during the pandemic, the Fed now needs to show the public it’s serious about curbing inflation and that it has the ability to curb it.

So, we’ve seen a lot of rhetoric on rates moving higher, more quickly – the hope is that this shifts expectations and removes the need to actually hike rates that extra bit.

It’s all a game of expectations.

The markets are expecting inflation to average ~3.5% over the next 5 years.

If you’re still not convinced that inflation is coming back down, taking out a loan on a home might not be a bad move.

Caffeinated Trends

Rising Rate Environment’s Impact Now And Going Forward

Things are escalating quickly. After spending October through New Year’s Day near a 3% floor, 30-year mortgage rates have spiked to 4.42% in the latest Freddie Mac survey.

This has put considerable pressure on consumer demand for refinance mortgages, which are down 54.2% year-over-year in the latest weekly mortgage applications index.

With no relief rally in sight for mortgage rates, Fannie Mae continues to lower its quarterly mortgage refinance volume projections. The second quarter of this year alone has been revised down from $331.3B to $222.9B, a 33% decline in expectations within the span of 6 months as new information begins to feed forecast models.

However, consumer demand for purchase mortgages remains strong. The latest purchase mortgage applications index is down just 12.1% year-over-year as housing is currently acting as support for an otherwise slowing economy, even in the face of reduced affordability.

A similar sentiment continues to play out in Fannie Mae’s projections. A slowing but still robust appetite for purchase mortgages through the end of 2023 is expected to outperform recent years.

Watch the replay of Pro Performance Sales Training: Are You Getting The Point? Selling Mortgages With Points

Watch our latest sales training webinar and learn about the similarities between investing and paying points on a mortgage. When your client purchases a home or refinances, they choose the terms. Did you know that paying points upfront can lead to dramatically less interest paid and more money saved each month for clients? Your clients need to know about it. We covered the advantages of paying points, shared great tips about explaining it to clients, and gave pro tips on how to present loans with a higher upfront investment.

Hop onto the portal and watch the replay of this month’s partner exclusive webinar today!

Capital Markets Zone

Everybody already knew the Fed was going to raise rates by 25 bps this week, but why did rates jump so much more?

Kyle and James explain the nuance of the Fed's language this week and why expectations are everything.

Click here to watch!

In The Weeds Reads

Did you know Detroit boasts the most independent pizza restaurants per capita?

Ranked the #1 city in America for Pizza, no wonder the home of Hockeytown has a big pizza on the roof.

Austin and Fawaz sit down with Brooklyn native Christian Plocica from VIP Mortgage Group for a review of San Morello’s pie right across from RKT HQ.

Click here to watch Christian's pizza review!

Pro Puzzles

Matt McMahon (no relation to the puzzle’s constructor) had the fastest solve time last week at just 30 seconds!

Our average solve time on this tough puzzle was a hair under 4 minutes.

Who will win this week? Click here to solve!

This week's puzzle gets 2 Rockets out of 5 (1 = easiest, 5 = hardest).