Mortgage rates have been decreasing, largely due to the Federal Reserve’s near completion of raising interest rates. This has resulted in a surge in applications for mortgages, as well as an increase in real estate contracts. According to Redfin Corp’s data, the number of people contacting real estate agents to begin the home buying process has also risen. With current rates still higher than the 3% range from a year ago, home buyers are nonetheless feeling “pleasantly happy”. The Fed has indicated, however, that rates will remain high until inflation decreases, which could lead to a risk of recession. Despite this, the national housing market is expected to be slow this year as activity is lower than last year and prices have dropped. Nevertheless, D.R. Horton Inc., the largest US home builder, has seen an increase in sales activity this year and is likely to have greater net sales during the traditional spring selling season. Moreover, refinance applications are up 50% since the end of 2019.
U.S. stocks dropped on Monday, continuing their decline after strong jobs data last week raised the prospect of additional interest-rate increases by the Federal Reserve. The tech-heavy Nasdaq Composite fell 1%, while treasuries sold off and bond yields rose, posing a threat to speculative stocks. Investors are worried that slowing inflation would mean fewer rate hikes from the Fed and no significant rate cuts later this year, as speculated earlier in 2021. Another busy week for U.S corporate earnings is ahead with KKR, Carlyle Group and Apollo Global Management among those due to post results, along with Disney, DuPont and PepsiCo; so far 70% have beaten analyst forecasts for per-share earnings which is one of the lowest rates of this decade suggesting an upcoming recession may be looming. Oil prices increased after sanctions were put on Russian refined fuels while overseas markets generally declined except Japan’s Nikkei 225 which rose slightly following news of a potential new Bank of Japan governor who could continue easy monetary policies under current Governor Haruhiko Kuroda’s term ending in April 2023.
