The half-point hike is dead

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1. Half-point interest rate hike no longer likely

Concerns about unstable banks may bring an end to recent significant Fed rate hikes.

• Currently, the Fed funds futures market indicates no possibility of a half-percentage point increase during the central bank's announcement on March 22.

Just last Wednesday, the same market estimated an 80% chance of such a move after Fed Chair Powell's congressional testimony.

However, the collapse of Silicon Valley Bank and Signature Bank, both affected by the Fed's rate hikes over the past year, shifted the odds.

The market is still anticipating a quarter-point rate increase next week, but not a pause in rate adjustments.

Data: CME Group

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2. Borrowers shift toward jumbo loans, ARMs

Rate and affordability pressures are pushing homebuyers towards alternative loan products.

• In February, rate locks fell, but dollar volume increased due to a favorable environment for non-conforming loans like jumbo loans and adjustable-rate mortgages (ARMs), according to Black Knight.

Overall rate lock dollar volume rose 2% from January, with purchase locks up 4%. Refinance locks made up only 14% of the month's activity. Purchase lock counts were down 42% from last year and 35% below pre-pandemic levels.

Borrowers responded to rising rates by shifting towards more rate-favorable offerings, leading to an increase in the share of jumbos, ARMs, and other non-conforming products.

3. More Nuggets

🤝 Kind Lending partners with RE/MAX Results in a joint venture named Results Home Mortgage, aiming to streamline the homebuying process and expand the purchase business in Minnesota and Wisconsin by bringing all services under one roof. (MPA)

🏘️ Smaller apartments are flooding the market. New apartments in 2022 averaged 887 square feet, a 30-square-foot drop from the previous year, as more studios and one-bedroom apartments entered the market. (Axios)

👨‍⚖️ Motto Mortgage sues UMortgage for unlawfully soliciting a top-performing Cincinnati franchise to breach its contract, alleging reputational damages and loss of capital. (Lawsuit)

🏦 The FDIC named former Fannie Mae CEO Tim Mayopoulos as the new CEO of Silicon Valley Bank. He steps in after regulators shuttered the startup-focused lender on Friday after a run on its deposits. (CNBC)

4. Guild Mortgage acquires Cherry Creek Mortgage

Guild Mortgage has acquired Cherry Creek Mortgage. The merger adds 68 branches across 45 states to Guild's retail network.

Cherry Creek originated $4.07 billion on 9,884 units in 2022, while Guild's origination volume was $18.01 billion on 57,441 units. Cherry Creek also brings its reverse mortgage expertise to Guild, having originated $569.9 million in 700 reverse mortgages in 2022.

Guild recently acquired Legacy Mortgage and Inlanta Mortgage. Cherry Creek will become a division of Guild, with co-founder Jeff May continuing to lead the new division.

☀️ See you on Friday! Just for fun.

p.s. If you like this newsletter, your friends may too. Forward it to a friend, and let them know they can subscribe here. Written by Ian M.