Currently there is about $2T in US paper money in worldwide circulation, roughly $200B more than last year. There are more $100 bills than $1 bills in circulation. Does the $100 bill make the cost of doing illegal business too low, and is it too easy for the ultra-rich to store cash reserves and limit the tools of the central bank that could force re-investment in the economy?

Rates – increased marginally this week and remain near historic lows down roughly 3/4% from last year. While the 10 year treasury has traded in a narrow range for the last 3 months, a recent upward trend has developed that could push rates up.

Jobs – 860,000 people filed for unemployment last week a huge number that is still 4X over pre-covid levels. The number of people receiving some form of unemployment benefits on an ongoing basis is now 29 million. At this time last year roughly 1.5M people were receiving benefits.


New Construction – while the headline figures look down, the drop was in the multifamily starts and permits. In the single family market (what we really need) starts are up 12% and permits are up 16% on a year over year basis.

Applications – new mortgage application volume decreased by 2.5% from last week. Purchase applications are up only 6% on a year over year basis – down from a 40% increase in May. Refinance volume is still up 100% year over year.

Fed – the press conference this week showed that the Fed is likely to keep the overnight Fed Funds Rate at the current level of 0.0% – 0.25% until 2023. As a reminder, this a rate that banks lend money to each other at overnight and is not a long term mortgage rate. Inflation dictates mortgage rates (if you expect the value of money to decrease over time, you need to get a larger return on money you lend) and continued signs of inflation will drive mortgage rates up, even if the Fed rate stays at zero.

Forbearance – the share of Mortgage Loans in Forbearance declined to 7%. Roughly 3.5M homeowners are in forbearance plans. As a reminder, if you want to get a conventional loan and your are currently in forbearance you will need to get off your forbearance plan and ‘reinstate your mortgage’ (pay off any past due balance) to get a new conventional mortgage. This can be completed by selling your home. If you are unable to reinstate you can pull out of forbearance and make 3 consecutive on-time payments and you will be elligible. Many jumbo programs will require the later step (or something more strict) and won’t necessarily accept reinstatement via a home sale. There are options such as 1st and 2nd loan combos that will allow.

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