The US housing market is preparing for a potential surge in mortgage rates to 8%, a level not seen in the past 20 years, according to Cris deRitis of Moody's (NYSE:MCO) Analytics. This increase is likely influenced by anticipated rate hikes from the Federal Reserve and the current 4.8% yield on 10-year Treasury notes. The ultimate trajectory of these rates may be influenced by upcoming data from the Bureau of Labor Statistics.
In a survey conducted by the New York Federal Reserve, Americans are already anticipating mortgage rates to exceed 8%. This expectation has led to comparisons with the global financial crisis and discussions about potential rate cuts in the next year.
The article recalls a series high of 18.6% mortgage rates back in 1981. It also highlights how homeowners took advantage of low rates during the pandemic years, locking them in for their mortgages. The anticipated rise in rates is expected to impact new home buyers the most.
This unfolding scenario is reminiscent of the global financial crisis, prompting discussions about possible rate reductions next year. As future data from the Bureau of Labor Statistics could potentially sway this trajectory, it is important to keep an eye on the performance of key players in the industry, such as Moody's Corporation (MCO).
According to InvestingPro data, Moody's Corporation currently has a market capitalization of 57.33 billion USD, a P/E ratio of 40.2, and an adjusted P/E ratio for LTM2023.Q2 of 41.69. The company's revenue for LTM2023.Q2 stands at 5529 million USD, showing a quarterly growth of 8.18%.
InvestingPro Tips suggest that despite a declining trend in earnings per share, Moody's Corporation yields a high return on invested capital and has raised its dividend for 13 consecutive years. It's also worth noting that the company has maintained dividend payments for 26 consecutive years, a sign of its financial stability. However, the company is trading at a high earnings multiple and a high Price/Book multiple of 18.84 for LTM2023.Q2.
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The next earnings date for Moody's Corporation is slated for 2023-10-26, and with the company's past performance and current financial standing, it is predicted to be profitable this year. However, as the situation evolves, investors should stay informed and consider these factors in their investment decisions.
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