Portland Mortgage Market Update — February 14, 2025

Happy Snowy Valentine's Day! I hope you are staying safe and warm! Here is this week's market update

It was inflation week, with the CPI and PPI dropping on Wednesday and Thursday, respectively. The CPI came in surprisingly HOT at a monthly increase of .5% vs the expected .3%. We were anticipating a calmer number because it had seemed the shelter component had been trending in our favor. But then "Lodging Away from Home" (Hotels) came in and kicked the table over by jumping up almost 1.5%. This component is not weighed super heavily, but is extremely volatile and when it spikes like that it can still impact the overall inflation reading. The result of the CPI report was worsening mortgage rates on Wednesday

Thursday's PPI also came in higher than expected, and rates… completely recovered? Yes, in a surprising act of rationality, the market ignored the headline number on the Producer Price Index and dug a little deeper. The headline numbers supported the CPI findings with a .4% increase in January, but the market looked into the components of the PPI that overlap with the PCE, which is the Fed's preferred measure of inflation. In doing so, they saw that Healthcare and Airline Passenger Services (among others) were falling significantly, which bodes very well for a favorable PCE reading at the end of the month.

Today's Retail Sales helped rates improve beyond where they were pre-CPI. The market was anticipating sales dropping by .1% in January, but they plummeted 0.9% instead. This is the biggest drop in about 2 years. Some people argued this was due to the wildfires and harsher January weather, but online sales fell about 2% and are not impacted by such external forces. On top of this, the report showed that outstanding credit card debt has soared to new all time highs of $1.2 TRILLION(!). This figure saw a small dip after covid due to the stimulus packages, but is now over 40% higher than that pre-COVID peak.

0% down loan alert! Traditionally, 0% down means a headache file. We have an option that is a breeze to work with. I currently have file screaming through a Down Payment Assistance program—we submitted the loan last Thursday, got a same-day approval, and are sending out the closing disclosure today. Loan docs would have been at the title company today if not for the appraisal getting delayed due to snow. Start digging around your database and if you have anyone who is waiting to save for a down payment, tell them they do not have to and can get into a home today!