Lumber prices drop over 60%
Demand for housing supplies surged at the height of the pandemic, but lumber prices have cooled off by over 60% compared to their peak value, according to Barron’s. Based on Dow Jones Market Data, November futures contracts for lumber settled at $410.80 per thousand board feet on September 26th. This is the lowest prices have been since June 2020, and are down over 60% from the start of the year. The change in lumber prices mirrors new home starts which dropped 10.9% in each June and July.
Fewer new home starts means fewer houses available on the open market, but existing projects have already seen their prices soften. This has the potential to finally shift housing away from the current ‘seller’s market’ it’s been in for the past few years.
Mortgage refi market down?
With mortgage rates now in the 6-percent range, you might want to consider buying mortgage points to lower your rate. Typically each point costs 1% of the loan and lowers your mortgage rate by .25%.
For example, if you wanted to borrow $400,000 at 6%, but you bought a mortgage point, you’d pay an extra $4,000 at closing and your mortgage rate would be lowered to 5.75%.
That means you’d paying a lower monthly mortgage payment. Make sure you run the numbers to see how long it will take for your monthly savings to cover the cost of the mortgage point. If you’re planning on staying in your home for a while, it might make a lot of financial sense. If you know you’re moving in a couple years, maybe not.Mortgage rates have seen a lot of attention in the past few months, but what about the refinance market? Mortgage refinancing has dropped to a 22 year low with mortgage rates on the rise. Refinance applications are down 84% when comparing this past week to the previous year.
Given that most homeowners have mortgage rates that are lower than the current rates offered by lenders, a soft refinance market shouldn’t be a surprise.
Fed Chairman speaks
Federal Reserve chairman Jerome Powell gave remarks on Wednesday as part of the 2022 Community Banking Research Conference in St. Louis. The good news is that all he did was welcome attendees to the conference and highlight the importance of continued research in the banking sector and highlight how important it is to deepen understanding of the community bank business model.
He didn’t offer any significant guidance as far as the economy or interest rates, but every time he steps to the podium, the markets hold their collective breath. No news appears to be good news in this case.
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