Whether or not your clients can afford to buy a home is important to you, and to Orion. And our brokers know that affordability includes not only the purchase price of the home, but also interest rates and borrowing costs.

Last week Federal Reserve officials reinforced the message that short-term interest rates need to rise. Fed Bank of Richmond President Thomas Barkin said he favors aquarter-point move to give the central bank flexibility, and Fed Governor Michelle Bowman said the central bank should keep raising rates until there is much more progress on inflation. But former Treasury Secretary Lawrence Summersand economist Mohamed El-Erian were among noted market watchers who warned that an aggressive Fed risks damaging the economy.

And thus we have investors, economists, and bond traders debating the direction the Federal Reserve’s Open Market Committee will take during the upcoming meeting in March and the probability of changes to U.S. monetary policy. Inflation, as measured by both the Consumer and Producer Price indices, has come in stronger than expected. For example, the headline CPI figure inched down to +6.4 percent year-over-year in January, the seventh straight month of easing inflation. But the cooling is moderating. It is nice to see the pace of inflation going down, but it is still high, and the Fed will do what it takes to lower it more.

For better news for Orion’s brokers, home borrowing costs have fallen. Freddie Mac recently reported that home borrowing costs fell from the multi-decade highs seen in November while the Mortgage Bankers Association (MBA) reports the same trend in rates in the same time frame. Also, the MBA believes that if rates continue to fall and home prices cool further, it expects to see potential buyers come back into the market. And brokers may have noticed that the total costs to build homes have fallen. Lumber prices have plunged to the $500 level after spiking to $1,645 in 2021 when supply chains were locked up as the nation reopened after the pandemic. Lumber prices are now at levels seen in January 2020.

If the market sees a more normal rate of home price gains in the future, it could be beneficial to prospective homebuyers, especially those in the market for a first home. The American Dream of owning a home is within the grasp of many, and with roughly six million homes being sold each year in the U.S., now is always the time for brokers to talk to potential borrowers about considering a purchase.