Running feels great unless you compare it to not running. While here in Northern California for a board meeting, I received, “I read your capital markets section every day because I can understand it, but can you please knock off using ‘basis points’? They are confusing.” I admit they take a while to understand, but easy to compare & convert the two. 1 percent is 100 basis points. 50 basis points is ½ of one percent. 75 basis points is ¾ of one percent. I mention this because “seventy-five basis points is the new 50 basis points.” Everyone was expecting ½ percent increases in Fed Funds, but no more. A relentlessly hawkish Federal Reserve is ramping up market expectations for big interest rate hikes that would have been considered unthinkable (and market crippling) just two months ago. Nomura says that the FOMC will hike the fed funds rate by 75-basis points in June and July after a 50-basis point rise in May. That would bring the rate up to 2.25 percent, a phenomenal amount of tightening given that the Fed was still easing by buying assets as recently as March. With mortgage rates at the highest in 10 years, lenders are more likely to see requests for pricing exceptions. STRATMOR Group is conducting a short survey to better understand how lenders are handling pricing exceptions in the face of new regulations and the current market. The results of the survey will be shared with participant lenders. (Today’s podcast is available here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology, and other services in the mortgage industry and in banking.)
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