Fed leaves rates unchanged, flags 'lack of further progress' on inflation

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1. Fed leaves rates unchanged, flags 'lack of further progress' on inflation

On Wednesday, the Fed announced it would maintain the federal funds rate at 5.25% to 5.5%, where rates have held steady since last July.

Fed officials have said in past meetings that they anticipated rate cuts for 2024 but need more confidence that inflation is heading toward the 2% target rate. Fed Chair Jerome Powell reiterated this sentiment on Wednesday and said it would likely take longer for the central bank to gain this confidence.

The delay in rate cuts means mortgage rates will likely stay high longer. With no ease in sight, affordability will continue to be a challenge for homebuyers, who also contend with high home prices.

2. Mortgage rates increase for fifth week, hitting 7.22%

Mortgage rates have pushed further into the 7% range as the Federal Reserve seems unlikely to reverse its restrictive policy stance anytime soon, according to Freddie Mac's latest Primary Mortgage Market Survey

The average 30-year fixed-rate mortgage was 7.22% for the week ending May 2. That's an increase from the previous week when it averaged 7.17%. A year ago, the 30-year fixed-rate mortgage averaged 6.39%.

The average rate for a 15-year mortgage was 6.47%, up from 6.44% last week and up from 5.76% last year.

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3. Charted: Shift in active housing inventory for sale between April 2023 and April 2024

4. More Nuggets

🤝 Mountain West Financial sells its retail division to ML Mortgage. (HousingWire)

🏡 Congressional Renters Caucus calls for more federal rental assistance. (The Hill)

🧑‍⚖️ Two former assistants from LendUS, a mortgage lender acquired by CCM in 2022, are suing the company for failing to pay overtime compensation. (NMN)

💤 Why Banks these days are so excited about being boring. (Bloomberg)

5. HUD and FHA announce new appraisal bias protections

The U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) have introduced a new Reconsideration of Value policy to combat appraisal bias.

This policy allows borrowers in the FHA's Single Family loan program to request a reassessment of their property's value if they suspect bias or inaccuracies in the initial appraisal.

The policy requires lenders to inform borrowers about this option at both application and appraisal presentation stages and will take effect for FHA case numbers assigned from September 2, 2024 onward.

You’re all caught up. See you on Monday!

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