Inflation Report Impact On Your Mortgage: Must-know Information For This Week

Hey folks, Dan Frio here with your market update for January 13th, 2025. So, are you concerned about buying a house in 2025 because you really don't know where interest rates are gonna go? You kinda did your research and your market is a good market to buy, now what do you do next? Well, the plan is, first off, let me introduce myself. My name is Dan Frio, I'm a loan officer. I am a loan officer, I do these YouTubes on a daily basis just to inform you guys. I work on the mornings and the evenings on those. I work as a loan officer during the day. So, my job or my goal here is to help you understand basically this whole buying process and why do rates change all the time and everything else. So, if you really need help navigating this environment, if you're looking to buy that house in 2025, I hope to be your person that you reach out to. I'm licensed in all 50 states as well as Puerto Rico, hope to be your loan officer for life and throughout the whole country. So, I'll have more about me at the end of this video and give you who I am and how I do things, but without further ado, let's get over these things. This is why you're here. So, mortgage rates, that's what we talk about on a daily basis. These are the top six mortgage programs people use, but in today's topic, we're gonna basically dissect what in the world's going on with interest rates because that's our focus for this year. Home prices, that's on your lap. So, let's get over to it. Here's what we're gonna talk about today is inflation numbers, jobs reports, and all this stuff that basically is in the wheelhouse of the Federal Reserve. So, this week, we have a few things coming out. It's the PPI and the CPI, and then initial jobless claims. So, what are these things? Well, let's get over to Steve Leisman here in a second. He's gonna break down some of these things right away, but PPI, which you have to understand there, is producer inflation. Think of the P on the front of that as producer. On the C side, think of the C in the front of that as consumer, okay? Then you're gonna have YOY, MOM, what is all these things? Well, MOM means month over month. YOY means year over year, and CORE means this. They strip out a couple components. Those components are normally food and energy. Why? Well, you ever go past the gas station in the morning and it's $2.99 and then you're on your way home and it's like, oh, I'm gonna get some gas and it's 3.50? That's why. They strip out these because they're way too volatile. So, what we wanna do is we wanna go over to Steve Leisman. Let's get his take on the market right now based on all this information. Then when we come back, we're gonna look at the Federal, basically the Federal Reserve and the Federal Government kind of at a glance on what they're looking at. We're also gonna look at some jobs numbers that he points out, wage growth, credit card debt, and a whole bunch of other things that will be infecting interest rates. And what we're trying to figure out on this video is how and why. So, without further ado, let's get over to Steve. He's gonna give us some of the data and the importance of it. And then we come back, we're gonna dissect a lot of this data specifically from websites and tools that we have from the Federal Reserve. So, take it away, Steve. Looking at the final numbers on the Christmas shopping season with the government's retail sales report. That's gonna happen on Thursday. But before that, senior economic supporter, the professor Steve Leisman joins us now with an exclusive look at retail spending from actual credit data with our CNBC NRF Retail Monitor. Good morning to you, Steve. Hey, good morning, Andrew. Yeah, holiday shoppers finished the year with a strong surge that brought retail spending in our CNBC NRF Retail Monitor up to nearly 5% combined year-over-year for both November and December. Okay, let's just look right now at December. Retail sales ex-auto and gas rising 1.74% over November. That is the strongest monthly gain in the 27 months of data we have for the monitor. Taking out restaurants as well showed an even stronger 2.2% gain. The data powered by real credit card spending from Affinity Solutions showed a 7.2% year-over-year gain for our headline index and 8.4% for the core. The late Thanksgiving meant December benefited from two key shopping days, the Sunday after Thanksgiving and Cyber Monday were both in December, they're usually in November. So we put the two together to see what the holiday season was like. The headline rising a robust 4.9%, the core up 5.1%, a good Christmas by any measure. The NRF saying in their commentary, quote, Households are in decent financial shape as the economy remains on solid footing with low unemployment, growing incomes, and continued deceleration in inflation in goods. Looking at the two months combined by sector, you can see all kinds of good Christmas shopping stuff, non-store retailers surging, 28% clothing up 9.6%, general merchandise up 6.2, health and personal care, four and a half, and gas stations, well, they've even provided some funds for that spending, they were down three and a half percent. Electronics and appliances, after a lackluster November, they had a strong rebound in December. What the monitor can't measure though, is retailer profitability and whether you had a last minute Christmas rush resulting from end of season bargains, or Andrew, if they were full price sales, we're getting some mixed commentary so far from the retailers. There's more that they go through and so forth, but what I wanted to show you is, you always can't judge a book by its cover. Remember he said, two of the biggest shopping days that we had fell in December versus November, so when you first start looking at this data, it looks really skewed, it's like, whoa, those numbers are much, much higher than expected. Then if you basically normalize it, put it into perspective, it's a good number, but it's not as high as expected. So that's why I always plead to you guys, please, don't look at the condo, and it's like a lot of times I'll get an email or a text from somebody and they're like, hey Dan, look, I just got an ad. They're telling me I can get a rate at 499 when the going rate's seven and a half. I'm like, you have to really read the details, and that's why every day when I go over our rates with you guys, not every day, but I try to explain to you what those rates reflect and who can get those rates. For example, let's get over to our rate sheets, and I do this a lot of times, but right through here you might say, okay Dan, here's our rates. These are the top six programs people use when they're buying their first house. So who gets that rate? What kind of rate is it? What's behind the scenes? Let me explain to you how these rates work. Mortgage News Daily, they survey lenders all over the country, and they ask them these five questions. So to get that rate, you have to answer these five questions or qualify with these five questions. Three of them, most likely you're gonna say, yeah Dan, that's me, but the other two, I can almost assure you that's not you. So let's get over to it. To get this rate right there at the 30 or fixed rate right up there, you have to have five components. Three of them are this. You're buying your first house. It's a single family home, and you're gonna live there. It's gonna be your primary occupant property. But the other two pieces of the puzzle are right through here. You have to read inside the book. So let's get in the book, and this is telling us right through here, these people are putting down 25% because they're getting a loan at 75%, and they have a 780 credit score. So they're putting down 25%, and they have a fantastic credit score. Well if that's you, most likely that's the rate you're gonna get. If that's not you, what's your rate? That's where I can help you. So imagine working with somebody, I'm licensed in all 50 states as well as Puerto Rico. I'm licensed throughout all those states. I work at a company called ServBank. We're the 10th largest servicer in the entire country. But here's what would work best for you guys. We're also a big brokerage. Okay, so a lot of people call me, and they're like, Dan, are you gonna help me get the best rate? Well, I'm gonna try. Okay, here's how we work. One application, one credit pool, and I'm gonna shop your loans to, at this point we have about 33 different lenders. Okay, so imagine you were putting one application, one credit report, and you're gonna get shopped by 33 different lenders. Why would you go anywhere else? So I'll give you all my information at the end of this video. So let's get over to it. Here's what we're looking at right through here is the economy at a glance after that interview. So we have the federal funds rate, the rate that the Federal Reserve controls. Right now it's four and a quarter to four and a half. Okay, this is the only thing the Federal Reserve controls. But here's the data they're looking at. Inflation rate now is 2.4. They wanted it two. It was down to 2.1 and then it ticked up a little bit. The unemployment rate they're saying is gonna be about four and a half to five. We're at 4.1 right now. So that's kind of bucking the trend. So the more people, here's what they're thinking. The more people not working, that means they can't buy stuff. So if you're not buying stuff, it's gonna bring down prices and things. Makes sense, but it's just not a good way to roll the economy. Then when you look at our GDP and it's robust right now at 3%. So the economy's growing very well. If you wanna look at right through here, here's what the inflation fears look like. This is the jobs report that came out last week. Okay, so let's go over to here. This blew away the numbers. Last week, we were supposed to get about 150,000 new jobs. It came in 250,000 new jobs. So 100,000 more than expected. So now they're saying, well, maybe the jobs market isn't going to have to crash for us to resolve this inflation thing. Well, if you go back over here, here's what's helping quite a bit. This is the last data that I can pull from this site. And it's right through here, the Social Security Administration. But here's the average earnings for people. If you go through right through here, you have to look at, are people keeping pace with inflation? So if you're looking at this right through here, here's what we're seeing. Back in 2020, when COVID hit, wages were about 55,600. It was 2.8% higher than the previous year. 2021, it jumped all the way up to almost 9% more that people were making in 2021 than almost 5.5% in 2022, 4.5% in 2023. And wage growth was, I think, 4.7% in 2024. So wage growth is keeping up or exceeding inflation at this point. You go over to the money supply, we still have a lot of money in circulation. The M2 money supply tells us how much money is actually in these vehicles. M2 means money markets, savings accounts, things like that. If we go back to the max, here's where it was. People would save, save, save, save, save, save, save. And then all of a sudden through here, they hit right at the pandemic. And then look how this just shot straight up. This was during the pandemic. And this is why I was saying, folks, a lot of people made a lot of money during the pandemic. Even they continued to work and got a lot of benefits. So that's what really spiked this. And then what happened with the inflation, people got huge wage increases, but then we had a supply chain issue. Because of that, that's what really pushed up inflation. Then the M2 money supply started depleting and the Federal Reserve started doing what they did. And then money's going back into the coffers at this point. You go over to here, here's credit card spending. And this is the thing that's hard to really explain. But it appears that people are using credit cards, but are they keeping the balances or what are they doing with it? So here's credit card usage over time. You can see right through after the huge pandemic or the housing crash in 2008 to 2010. Basically the Federal Reserve put rates at zero and that prompted spending. And we had a huge bump up right then and there. Then it was basically business as usual and then all this stuff. So this is basically where credit cards are at this time. This number usually shocks people, but if you go over to here, people have the money and they have the wages right now. And based on what Steve Leisman says, to pay those bills. Are they gonna continue? What's gonna happen? That's why we monitor this on a daily basis. So right now, here's what we're seeing in the markets. We have the MBS market right now down five ticks. Let me get over to that signal right through here. So we have the MBS market right now down five ticks. What's that gonna do for mortgage rates? Basically nothing. I think the markets are just waiting for a lot of this data to start trickling in tomorrow because we really don't have any financial news coming in today. So that's my report for today, folks. What do I expect this week? A volatility. I hate to say it that way, but we don't know how these numbers are gonna come in. I hope that the CPI year over year doesn't jump from 2.7 to 2.9 because that will be headlines all over the place. And you'll see bond traders taking advantage of this, bumping up rates even more. So I'm suggesting people lock in before Wednesday because we don't know how these numbers are gonna come out. And if you're in the process of buying a house right now, you don't need another quarter or an eighth of a percent increase in rates in one day because that will really shock and awe your mortgage payment. So this is how the economy will affect your mortgage payments in 2025. So thanks for watching, folks. My name is Dan Frio. I do the rate update every day. And if you wanna learn more about me and my team, visit us at therateupdate.com. If you're ready to put in that application, just click the Apply Now button right up through there. But if you're not, you wanna talk to us about what do we do, how do we do things, what's your rate, what program you qualify for, schedule a consultation right through there, or give us a call. You can call us right down through here. We're gonna scroll down to the bottom of the website and you're gonna see our 800 number as well as my email address. So give us a call at 844-775-5626, or you can reach me personally. Don't leave comments down there below. If you want me to answer them, please shoot me an email with your phone number. Be more than happy to call you, go over any questions that you have, or I'll even reply just with an email if you don't respond with any phone number. So thanks for reaching out, folks. Look forward to hearing from you. Have a great day. I'll be back later this afternoon to show you how this mess ends for the day. Take care, see you then, bye-bye.