Weekly News (June 7, 2023)

Mortgage Interest Rates Review

(Fairway Home Loan 6/7/2023)

Federal Fund Rate: 4.75% -5.25%        Prime Rate: 8.00%-8.25%

Dennis Shim registered for Ridgefield Mayor candidate: 데니스 심 전 시의원, 무소속으로 시장 선거에 도전

(Korea Daily   6/6/23)

• Dennis Shim, former councilman of Ridgefield has finished Mayor candidate registration process at the Bergen County office, as an independent.
• Mr. Shim was elected as councilman in 2013 as the first Korean councilman, and has served for 9 years till 2013, and he is familiar with town politics and public matters.
• In Ridgefield, former Mayor Anthony Suarez became a judge at the State Court and Hugo Jimenez served after him, who is running this election as Democrat. Along with the republican candidate, Javier Acosta, there will be three Mayor candidates fighting for the election in Nov.

Bank of Hope borrowed $1.4B from the Fed

(Korea Daily   6/6/2023)

• According to Investors Business, Bank of Hope has borrowed $1.4B with the interest rates of 4.49% as of 3/31 from the program BTFP (Bank Term Funding Program) which has been launched to prevent banks’ chain bankruptcy by the Fed.
• The Bank of Hope’s funding amount was 5th largest while the biggest one was $13.8B for the First Republic Bank. Typically BTFP requires collaterals such as Treasury Bonds and MBS(Mortgage backed security), and needs to pay back within a year.
• Bank of Hope said Bank’s funding flexibility has no problem and it is just precaution for the safety of customers.

Pretium to Pay D.R. Horton $1.5B for 4,000 homes: 프리티움, 4000 개 주택을 $15 억불에 사들여

(WSJ  6/2/23)

• Investment firmPretium Partnersis paying more than $1.5 billion for thousands of homes, a move that could signal investors’ re-entry to the housing market after higher interest rates drove them away.
• The New York-based Pretium has agreed to payD.R. Horton,the largest U.S. home builder by volume, for more than 4,000 homes scattered across the Southeast and Southwest, these people said. Pretium oversees a portfolio of about 100,000 rental homes and has been one of the largest buyers of American houses in recent years.
• The Pretium sale is a sign that investors still believe low housing inventory and elevated mortgage interest rates will continue to drive demand for rental housing, and especially for single-family homes.

Sunbelt Building Boom Pinches Apartment Landlords: 선 밸트지역에 아파트단지 소유주들 다소 불안  

(WSJ   6/7/23)

• Historic numbers of new rental apartments opening over the next 18 months are poised to decrease profits for the largest publicly traded landlords, who are already contending with slower or declining rent growth.
• Nationally, more than 950,000 multifamily units are under construction, according to the U.S. Census Bureau. That equals three times the number for apartment construction from two decades ago.
• Sunbelt cities are the most exposed to the recent ramp-up in new supply, in a May report from Green Street. For example, in Atlanta, rents are already flattening out. Multifamily-building values fell 12% below their year-earlier levels this April, according to data provider MSCI Real Assets.

Multifamily units under construction

Commercial Property Faces Loan Crunch: 상업용 건물들 융자 압박이 다가올

(WSJ    6/7/23)

• Unlike most home loans, many commercial mortgages are known as interest-only loans. Borrowers make only interest payments during the life of the loan, with the entire principal due at the end. Interest-only loans as a share of new commercial mortgage-backed securities issuance increased to 88% in 2021 from 51% in 2013, according to Trepp.
• Fitch Ratings recently estimated that 35% of pooled securitized commercial mortgages coming due between April and December 2023 won’t be able to refinance based on current interest rates and the properties’ incomes and values. While many malls and hotels face high default risks, the situation is particularly dire for office owners.
• CoStar estimates that as much as 83% of outstanding securitized office loans won’t be able to refinance if interest rates stay at current levels.

Wall Street Back Off Bets on Fed Rate Cuts: 뉴욕 월가, 준비위원회의 이자률 감소 예측을 철회  

(WSJ   6/7/23)

• Persistent strength in the economy has wrong-footed bets that the Federal Reserve will make large interest-rate cuts this year, potentially undermining a key element of support for the 2023 stock rally.
• Ellen Zentner, chief U.S. economist for Morgan Stanley, is sticking to her call that the Fed will leave interest rates unchanged at its June meeting and stay on pause for the rest of the year. Zentner expects the Fed to begin cutting rates in the first quarter of 2024.
• A tight labor market means the Fed might skip raising interest rates this month but consider another rate increase at its next meeting this summer, said Rich Steinberg, chief market strategist at the Colony Group.

CPI and Fed Rate expectation

Tech Layoffs Chill Coast Economies: 기술회사들 감원으로 미 서부 경제 침체

(WSJ   6/6/23)

• The West Coast tech downturn is sending a chill through the region’s economies, hitting workers and businesses in a variety of other industries.  Janitors and teachers, and restaurants and dry cleaners in California, Oregon, and Washington are feeling the cooling effects of tens of thousands of tech layoffs and other cost-cutting measures since the middle of last year. The results include higher unemployment, falling wages, pinched state budgets and slower job growth.
• California had the nation’s second-highest state unemployment rate in April at 4.5%, Washington tied for third at 4.3%, and Oregon was close behind at 4%, according to the Labor Department. Those are low by historical standards while higher than the national rate of 3.4% in April. The U.S. rate rose to 3.7% in May.

Unemployment rate in West