https://youtu.be/MkzfYueEr0k

Hi Bill Bodnar here with the Mortgage Market Guide. Thanks for tuning in to the MMG recap.

So up on the screen, you can see another week and another week of low rates. Rates continue to hover near 14-month lows. We came a little bit off the best levels last week. But again, just another great week, and what I'd like to share with you is what I think is happening.

Right now we are into the spring home-buying season.

It's what I call the Goldilocks scenario, right Goldilocks: We're not too hot, not too cold. Kind of just right and that's what's happening in the housing market.

So, there's a list of things I think are going to really make this spring housing market likely the best in the last couple of years. You know, when we look at the last couple years, there were affordability issues. There was low-housing inventory.

This year's a bit different, so I'm going to run through these. No. 1, we know the Fed is not going to raise rates in 2019. They said that. In fact, there's a better chance of a Fed rate cut in 2019 than a hike, so that's a big change from where we were just a few months ago.

No. 2, inflation is subdued. Inflation is not a threat. if inflation doesn't tick higher, long-term rates, like mortgages, can’t tick higher.

No. 3, home prices are moderating. The gains are moderating. This is a big deal because this goes right to the affordability piece.

Home prices a few years back we're running at 10 percent, 15 percent a year, and wages were only rising at two percent, so now they're much closer. Home prices are gaining at four percent to five percent. Wages are closer to four percent, so there’s much more of an equilibrium.

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The labor market remains solid. I mean we are seeing unemployment at 50-year lows. Wages are rising because of that tight labor market. People buy homes because they have a job, not because interest rates are low.

Another one that doesn't get a lot of play: Europe can't get out of its own way. We've been talking a lot about how Europe has been struggling, and with the economy struggling, that makes their bond yields low, real low, and there's only a couple of big bond markets on the planet that investors can go to. Germany. I think of Japan and those yields are zero to negative.

So, you know, seeing the 10-year note at 2.5 percent; it's pretty darn juicy, and so that's going to keep mortgage rates at low levels thanks to what's going on in Europe.

Next, the stock market is near all-time highs. That has a positive wealth effect. People feel wealthy. You know even if it's locked up in 401(k)s and IRAs they feel wealthy. They are more apt to buy and believe me there’s a wealth effect happening right now. People feel really good.

Also, consumer confidence is rising again. Why? Pretty much for a lot of these factors. You know the Fed's out of the way. Stocks are rising. Interest rates are low. The prospect of getting a job feels good, and then finally, home-loan rates sit now at 14-month lows—for a lot of the reasons that we just mentioned.

And there's no pressure to put them up much higher, much lower, I should say. So when you look over the foreseeable future, there's a difficulty of seeing rates get much better. But at the same time, it's really difficult to see them much higher.

We have this kind of Goldilocks scenario, as you move into this housing market, and it's not just the spring housing. This is for the foreseeable future, so I think it's a really good story that you need to be sharing with not just clients, but also your partners.

And, when we take a look at the chart, you know again this peak from last week that was a 14-month high, and we're a little bit off of it, but still an unbelievable scenario.

I hope this finds you well. Have yourself a great weekend. We'll be back at it soon.

Bye for now.