Jobs Report Exceeds Expectations, CFPB Releases Mortgage Market Report, More Redfin Layoffs

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Jobs Report Exceeds Expectations

U.S. stocks took a hit this morning as investors processed a stronger-than-expected jobs report for December. The Dow Jones Industrial Average dropped half a percent, the S&P 500 fell 0.6%, and the tech-heavy Nasdaq lost 0.9%. The pullback followed a strong labor market report, showing the U.S. economy added 256,000 jobs last month, far exceeding expectations. The unemployment rate dropped to 4.1%, fueling concerns the Federal Reserve may hold off on rate cuts for longer than anticipated.

While some positive earnings reports lifted individual stocks, the broader market remained under pressure. Walgreens surged over 20% after posting strong quarterly results, while Delta Airlines saw a 9% jump on record travel demand. However, Nvidia shares dropped as the White House is expected to announce new chip export restrictions, potentially hurting the AI sector.

Meanwhile, Treasury yields continued to climb, nearing 4.8%, as investors recalibrate expectations for interest rates. The report suggests the Fed may hold off on rate cuts until at least mid-2024, leading to a cautious outlook on Wall Street.

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CFPB Releases Mortgage Market Report

Last month, the Consumer Financial Protection Bureau has released its 2023 mortgage market report, based on data from the Home Mortgage Disclosure Act. The report reveals an expected significant decline in mortgage activity, with applications dropping 30% and loan originations falling by over 32% compared to the previous year. This marks a continued decrease from the peak in 2021.

Refinance originations saw the steepest drop, down 64%, while home purchase originations fell by 21%. The rise in mortgage interest rates—up from 6.2% to 7.2% by December—contributed to higher loan costs, with borrowers paying more in discount points and origination fees. Notably, 56% of home purchase loans involved discount points, a 12.7% increase from 2022.

When looking at borrower demographics, the report highlights a notable rise in loan costs for Hispanic white and Black borrowers. The median total loan cost for home purchase loans increased by 12% overall, but Hispanic white and Black borrowers experienced even higher rates. For Hispanic white borrowers, the median cost rose by 17%, and for Black borrowers, it increased by 15%, a faster rate than for Asian or non-Hispanic white borrowers.

Additionally, average loan amounts for Black borrowers were higher than for Hispanic white borrowers, with Black borrowers taking on larger loan amounts despite facing higher costs and interest rates.

The rising costs are also reflected in monthly payments—up 12.2% from 2022, now averaging $2,295 for a 30-year fixed-rate loan.

The report concludes with continued growth in the share of loan originations by independent mortgage companies, which now dominate the market, originating the majority of both home purchase and refinance loans.

Source: Link

More Redfin Layoffs

Seattle-based real estate company Redfin has laid off 46 employees in its latest round of cuts. The layoffs, which primarily affected managers in headquarters, program, and field leadership roles, were confirmed by a company spokesperson. Redfin emphasized that no agents were impacted by the layoffs and said it continues to aggressively hire more agents.

This marks the latest in a series of job cuts for the company, which has faced challenges in a tough real estate market. With mortgage rates climbing this week, the highest since July, and home listings rising due to unsold homes sitting on the market, Redfin is adjusting to changing conditions. However, there is a silver lining for buyers—affordability has not worsened in 2024.

In recent years, Redfin has made significant changes, including laying off employees and eliminating its iBuying program in response to the slowdown. Despite these moves, the company reported a 3% revenue growth to $270 million in its latest quarter, though it posted a net loss of $33 million, up from $19 million last year.

Redfin’s new compensation model, Redfin Next, which eliminates salaries for agents, has also expanded to more cities.

Source: Link

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