Morning! This is MF Lending - we’re the fool-proof way to serve up mortgage and real estate market knowledge without any of the guesswork. So you’ll look like the smartest agent in the room.

Here’s what we’ve got for you today:

1. Charted: Lock-in Effect 📊

2. Reader FAQs - Why does the jobs report affect mortgage rates? 📚

By the way, this article on ADP Report is the most clicked link in this newsletter, you should check it out if you are interested.

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Nuwave Rates Today 📉

Lock-in Effect: Charted 📊

We continue to discuss the “Lock-in” effect resulting in major inventory problems in the housing market. We have not seen any steps to solve the inventory problem outside of the potential solutions I broke down earlier this month.

Here are stats from the FHFA addressing the existing mortgages in the US today.

• 26% have a rate under 3.00%

• 70.7% have a rate under 4.00%

• 91% have a rate under 5.00%

• 96.3% have a rate under 6.00%

This will take time to sift through. Job changes, family issues, and death will slowly flow some of the homes onto the market. But without a jolt into the housing sector (such as a temporary waiver on capital gains), it will take us time to work through this issue.

Subscriber FAQs - Jobs Report 📚

After MF Lending last week, I received multiple questions from subscribers all in a similar vein.

I decided to take a moment and respond as a “FAQ” section. If you like this segment, please let me know in the comments and leave questions of your own!

Why does the jobs report affect mortgage rates?

Mortgage rates are driven by the mortgage-backed securities (MBS) market.

The traders that hold these bonds are continually trying to forecast where interest rates are going to go over time, to correctly value the bonds they hold.

Last week, the market saw strong job numbers from ADP. Simply put, that signals to traders that the economy remains strong. A strong economy means higher consumer spending, higher GDP, and, ultimately, resulting in higher inflation.

The Fed’s job is to slow this inflation.

With signals of a strong economy, it leaves the Fed no choice but to continue to raise interest rates moving forward in the face of a strong economy.

This is why the jobs report affects mortgage rates so greatly. The traders see what is on the horizon and they are getting ahead of it.

Other economic indicators that affect rates:

• CPI

• PPI

• PCE (Core PCE)

Home buyers can see massive swings in interest rates overnight from any of these leading indicators (something we saw last week).

The next swing could potentially come on Wednesday when the CPI print is released.

Instagram Threads 🧵

Instagram Threads has erupted in user growth. Have you all signed up? If so, do you have early success stories?

What have you liked or not liked about Threads? Let me know in the comments!

Mark your GCal 📆

1. July 12th - CPI Print

Thanks for reading - that is all we have for today 😎

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— Michael F DiLucchio