Orion’s management, our account executives, and our brokers who are watching rates, are watching the Federal Reserve, and along with it its Federal Open Market Committee (FOMC). This week the FOMC, which is the Fed’s policy-making committee, will hold a two-day meeting with expectations high that the central bank will put in place an interest rate hike of .5 percent (50 basis points) in its overnight Fed Funds rate. It is important for our brokers to be able to explain to your clients why the Fed may do this.

The U.S.economy is driven by jobs and housing. Recent readings from the labor market continue to be strong, with the unemployment rate still low, nonfarm payrollnumbers strong, and weekly jobless claims steady.

But the housing slow down is garnering a lot of attention. Brokers know that houses and not homes, and there is a difference. House prices can’t go up 20 percent year after year, of course, and some slow down in appreciation was expected. But this psychology appears to be spreading into manufacturing and economists have differing opinions (of course) on how high the Fed will raise overnight rates.

The next FOMC meeting is not until February. Among those watching and forecasting, there is almost an even split between a 25-point or 50-point interest rate increase at the February meeting. Many believe that Fed Chair Jerome Powell is likely to push back once more against the idea of a “dovish” pivot, meaning that he will want to continue raising short-term rates. Powell could reiterate his commentsfrom a speech last week when he noted wage inflation plays a large role in coreservices inflation ex-housing and the only way to bring inflation back towards the target rate is to slow down the labor market.

But regardless of the direction of interest rates, Orion’s AEs have some very helpful products to offer our brokers to help your borrowers. Not only do we offer products from Fannie Mae, Freddie Mac, FHA, and VA, but also loans for manufacturing housing, adjustable rate products, and USDA rural housing loans. And we do this because every borrower is unique!

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