Powell opens the door to faster interest rate hikes

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1. Powell opens the door to faster interest rate hikes

Federal Reserve Chair Jerome Powell told Congress that the Fed may consider increasing the pace of interest rate hikes if the incoming round of data shows that the economy is heating up.

• This could mean that interest rates will be raised to a higher peak than previously expected.

• After Powell's comments, expectations that the Fed would hike rates by a half-point later this month jumped to 60%, according to a tracker maintained by the CME. On Monday, that was 31%.

The Fed will lean on incoming data between now and the start of their policy meeting on March 21-22 for signs of whether inflation continued to reemerge last month.

The data starts streaming in on Wednesday, with the job openings and turnover report, then February's jobs report out Friday, and next Tuesday's consumer price index.

If those reports confirm the signal sent from January data, dreams of a soft landing will become more distant.

2. Rocket Mortgage offers down payment aid

Rocket Mortgage is expanding its special-purpose credit program to offer a $3,000 credit for first-time homebuyers to use towards their downpayment in select cities.

The program, BorrowSmart Access by Freddie Mac, is part of efforts to narrow the homeownership gap. It is being offered in 10 metropolitan areas — Atlanta, Chicago, Detroit, El Paso, Houston, McAllen, Memphis, Miami, Philadelphia, and St. Louis.

The credit is available to buyers who have an income less than or equal to 140% of the area median income and meet all other Freddie Mac lending guidelines.

Freddie Mac is open to inquiries about the program from other lenders.

Rocket’s first special-purpose credit program debuted in December. Dubbed “Purchase Plus,” the initiative provides $7,500 in credits for first-time homebuyers to use towards their mortgage costs in six major cities: Atlanta, Baltimore, Chicago, Detroit, Memphis, and Philadelphia.

3. More Nuggets

💸 ICE and Black Knight have agreed to sell Black Knight's Empower loan origination system to a subsidiary of Constellation Software in an effort to secure clearance of ICE's proposed acquisition of Black Knight. (NMP)

📈 Foreign buyers, who nearly disappeared during Covid, finally return to the U.S. housing market. Real-estate agents say they’ve seen an acceleration in purchases by overseas buyers amid looser Covid restrictions and political-economic shifts abroad. (WSJ)

4. What Fannie Mae's changes could mean

As reported on Friday, Fannie Mae is changing its position on property valuation requirements, now moving towards desktop and hybrid appraisals.

While the valuation profession has used desktop and hybrid appraisals in certain instances for years, the Appraisal Institute is uneasy about these revisions.

"This announcement does raise concerns and questions about increasing collateral risk at a time of market volatility," Craig Steinley, president of the Appraisal Institute, said in a statement.

"Further, the change complicates appraiser recruitment and diversity efforts through the insertion of an unregulated contingent of property data collectors into the mortgage lending process," he said.

Although it is currently too early to determine the full impact of these changes, lenders are anticipating faster appraisals, reduced costs, and a simpler and more cost-effective process.

5. CMG acquires Homebridge’s retail business

CMG Mortgage Inc. has acquired Homebridge Financial Services' retail division for an undisclosed amount. The purchase will give CMG access to Homebridge's 180 branches across more than 30 states.

Homebridge will retain its two wholesale divisions. Homebridge has grown to become one of the largest privately held, non-bank lenders in the US over the last 30 years.

CMG claims it originated $19 billion overall in 2022, while Homebridge had $12 billion in origination across its divisions.

☀️ See you on Friday! Just for fun.

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