Federal Reserve Accelerates Rate Hikes

To fight persistent inflation, the Federal Reserve has committed to significantly cooling demand. This approach reflects a non-monetary policy failure to fix underlying supply-side challenges that are pushing up inflation. The Fed lacks policy tools to make these supply-side fixes, so it must rely on demand-side impacts to bring down inflation by reducing economic growth….

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Credit for Builders and Developers Tightens in the First Quarter

During the first quarter of 2022, credit became tighter on loans for Acquisition, Development & Construction (AD&C) according to NAHB’s Survey on AD&C Financing.  The NAHB survey produces a net easing index  that summarizes the change in credit conditions, similar to the net easing index constructed from the Federal Reserve’s survey of senior loan officers…

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Mortgage Activity Up in ARMs

Per the Mortgage Bankers Association’s (MBA) latest month’s surveys (the week ending May 6), the 30-year fixed-rate mortgage (FRM) rate rapidly grew to 5.53%, marking the steepest interest rate increase on record. The Market Composite Index, a measure of mortgage loan application volume, increased by 2% on a seasonally adjusted basis from one week earlier,…

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Consumer Credit Increases in First Quarter

In the first quarter of 2022, non-real estate secured consumer credit, per the Federal Reserve’s latest G.19 Consumer Credit report, grew at a seasonal adjusted annual rate of 9.7%, with revolving debt growing at 21.4% and nonrevolving at 6.1%. Total consumer credit currently stands at $4.5 trillion, with $1.1 trillion in revolving debt and $3.4…

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Monetary Policy Tightening Underway

The first of many expected Federal Reserve hikes of the short-term federal funds rate was announced today. Combined with future balance sheet runoff, these monetary policy moves will lead to higher mortgage rates in 2022 and 2023 as the Fed attempts to curb elevated inflation. As widely expected by forecasters and markets, the Fed raised…

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