The Markets are Watching…

April 25, 2022

Orion’s management knows that our broker clients like to know what is happening with the economy. No, there is nothing to be done about it, but still we believe that educating our clients is important to help them make educated choices foryour own borrower clients. And helping clients is what we and our brokers do best, whether helping you help them finance a home or in eliminating costly debt through refinancing their home.

 

Last week stocks closed out their worst month in years. Investors battled a host of headwinds, including monetary tightening from the Federal Reserve, rising interest rates, worsening inflation, COVID lockdowns in China, and the ongoing war in Ukraine. The Nasdaq fell 13.3% in April, its worst monthly performance since the financial crisis in October 2008, the S&P 500 sank 8.8% for its biggest monthly drop since the onset of the pandemic in March 2020, and the Dow was down 3.9%.

 

We realize that our brokers are in the home loan business, and you care about lending news, but stocks impact lending. Some of your clients have put aside savings into the stock market, others have parked down payment money in equities. The Nasdaq has dropped deeply into bear territory, now 24% off its high, with tech stocks enduring the worst of the April selloff. Amazon plunged 14% on Friday inits biggest loss since 2006 after reporting a surprise quarterly loss and issuing weak guidance. Apple tumbled 3.7% after warning supply chain constraints could impact revenues in the current quarter by up to $8 billion.

 

This week,the Federal Reserve, through its Federal Open Market Committee, is expected to pull the trigger on its first half-percentage point rate hike since 2000, and it could begin to reverse its large-scale asset purchases used to help stabilize markets during the COVID crisis.

 

These things are priced into mortgage rates. That isn’t to say that mortgage rates have stopped going higher, but merely that these are the expectations of investors. And while Orion never suggests that our clients predict interest rates, having a decent basic knowledge of what is moving them is something we recommend to our brokers so that you can best help your clients.


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