There's been a quiet revolution going on in the mortgage market.
The big picture: In 2017, it took an average of 74 days to close on a mortgage, per LendingTree. In May 2019, the most recent month for which data is available, that number had come down more than 50%, to 36 days. The decline is a function of an increasing number of lenders embracing digitization. The surprise is that it took this long.
While American households don't have a lot of liquid savings, the capital markets are positively sloshing with liquidity. They're a key source of funds for companies like Opendoor and Zillow, which are building enormous businesses buying houses for cash at algorithmically generated prices.
What they’re not saying: While these companies are happy to talk about how easy they make selling a house, they talk less about the people who buy those houses. That's because, a very large part of the time, the homes never end up in the hands of individuals. Instead, they end up in massive rental portfolios.
Market participants overwhelmingly expect a 25 basis-point cut from the Fed at this month's policy meeting, but positioning has varied wildly over the last 2 months.
The big picture: Comments from Fed chair Jay Powell during a speech in Paris pushed the likelihood of a 50-point cut as high as 60% in mid-July, despite strong data prints on U.S. retail sales, unemployment and industrial production. Fed fund futures prices now show investors see just a 14% chance the central bank cuts rates by 50 basis points to a range of 1.75%–2.00%, according to data provided by Deutsche Bank Securities.
Go deeper: The case for a Fed rate cut
The housing market slump continues, and one little-discussed driver has been the increasing share of housing owned by investors who are looking for financial gains rather than a place to live.
The big picture: The supply of starter homes is already historically low and with prices continuing to rise and young potential buyers more indebted than ever, there's little sign that the struggles in the housing market will correct in the near-term, analysts say, even with low mortgage rates.