Make sure you check with your clients’ lenders to confirm how the government shutdown may impact their loan. The main culprit during shutdowns is the IRS and inability to obtain IRS transcripts for the borrowers. Most lenders will waive this condition or require a post-close condition for transcripts once the government re-opens. Other issues that could arise are related to FEMA flood insurance. It’s always prudent to check with your respective lender to make sure you plan ahead.
Jobless Claims Strong
The number of Americans filing applications for jobless benefits fell more than expected last week, pointing to sustained labor market strength that could further ease concerns about the economy’s health. The report from the Labor Department on Thursday followed data last week showing employers hired the most workers in 10 months in December and increased wages for their workers. Surveys showing steep declines in consumer and manufacturing activity in December had stoked fears that the economy was rapidly losing momentum. “There are increasing risks and caution over the economic outlook in 2019, but jobless claims say the seas are calm and it looks to be smooth sailing for the economy for now,” said Chris Rupkey, chief economist at MUFG in New York. Initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 216,000 for the week ended Jan. 5. Data for the prior week was revised up to show 2,000 more applications received than previously reported.
Future Rate Hikes Less Clear
Fed Minutes from the December FOMC meeting show the Fed was slightly more dovish than Chairman Powell’s speech. Key take-aways here should be that the Fed is more cautious on the interest rate outlook, with the timing of futures hikes now ‘less clear than earlier’. Many of the policy makers said the Fed ‘could afford to be patient’. The word ‘judges’ in the statement was intended to drive home the point that the Fed is now more dependent on economic data, rather than a pre-determined course for raising rates further. The Fed also capitulates that ‘downside risks to the economy may have increased’. This is all good for interest rates AND stocks, which have found some solid footing since the Fed reversed the ‘not even close to being done hiking’ bit by Powell in October.
Credit Cycles Laid Out
Courtesy of Sotheby's International Realty's in-house Lender Simon Atik, 310.880.8414, Simon.Atik@grarate.com, Vice President of Mortgage Lending, Guaranteed Rate Affinity.
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