March jobs numbers came in stronger than expected Friday, with the economy adding 175,000 positions across manufacturing, healthcare, and other sectors, but veteran mortgage professional David Hochberg told the Chicago’s Morning Answer team that the headline figure deserves significant skepticism given the Bureau of Labor Statistics’ consistent pattern of subsequent downward revisions and the fact that a substantial portion of the gain reflected workers returning from a concluded California strike rather than genuine new hiring.
Hochberg, who has spent twenty-five years in the mortgage industry and has facilitated tens of billions of dollars in loans, said the ADP private sector payroll report, which is generated by the company that actually processes paychecks for American businesses, is a far more reliable indicator of labor market conditions than the government’s Bureau of Labor Statistics figures. He called on policymakers and financial media to shift their focus toward ADP data, noting that the BLS consistently releases numbers that get revised substantially in subsequent months while markets and politicians treat the initial release as definitive. Both parties, he said, exploit the attention-grabbing initial headline while the quieter revision that often tells a different story goes largely unnoticed.
The conversation on interest rates produced a spirited exchange in which Hochberg pushed back on the conventional explanation that Federal Reserve rate decisions drive mortgage costs, arguing that the more honest explanation for the dramatic run-up in mortgage rates from roughly two and a half percent to seven and a half percent in ten months during 2022 and 2023 was bond market behavior driven by investor skepticism about government spending discipline. The ten-year Treasury yield, which is the actual benchmark for thirty-year fixed mortgage rates, moved independently of Fed decisions as bond traders priced in concerns about fiscal sustainability. He noted that the ten-year yield was in the low threes just thirty-five days before the interview and has since climbed to the four point three range, with mortgage rates rising roughly three quarters of a point since the Iran campaign began, a move he attributed to market anxiety about government spending rather than inflation or Fed policy per se.
On the current affordability crisis facing American homeowners and buyers, Hochberg offered a vivid example from his own practice. He described a couple in their late sixties and seventies carrying approximately one hundred and twenty thousand dollars in combined debt including student loans, sitting on substantial home equity, and paying thirty-six hundred dollars a month more than they need to because the husband refuses to refinance out of a two and a half percent thirty-year fixed mortgage secured during the August 2020 rate trough. The wife is contemplating returning to nursing work in her sixties to manage the debt burden while her husband clings to a rate that was genuinely extraordinary but that is costing the household far more in high-interest debt service than it saves in mortgage interest. Hochberg said conversations like this have become common as consumers who locked in pandemic-era rates face a painful psychological barrier to making financially rational decisions about their overall debt picture.
His sharpest criticism was directed at Federal Housing Finance Agency Director Bill Pulte, whom he called a major disappointment for failing to eliminate loan-level price adjusters put in place by his Biden-era predecessor Sandra Thompson. Those adjusters, which Hochberg said he was publicly critical of the moment they were introduced, add between a quarter and a full percentage point to mortgage rates for many borrowers, ostensibly in the name of equity in the mortgage market. He said eliminating them would immediately lower borrowing costs for American homeowners without requiring any congressional action, any new legislation, or any complex policy process. Pulte has been in the position for over a year and has thus far taken no action on the matter while generating attention for reviewing mortgage documents of Democratic elected officials, a priority Hochberg described as irrelevant to the financial well-being of the people the FHFA is supposed to serve.
He also weighed in on the broader inflationary context, arguing that the current price pressures affecting consumers at the gas pump and grocery store are the predictable result of keeping short-term interest rates artificially low for far too long after the pandemic, flooding the economy with money through PPP loans and other programs that faced no clawback requirements, and then allowing the Federal Reserve to pursue quantitative easing at a scale that monetized government debt. He said the June 2021 CPI print showing inflation already running above five percent made the characterization of inflation as transitory not merely optimistic but indefensible, and that the decision to keep stimulating the economy at that point was a policy choice to inflate rather than a navigational error.
On a lighter note, Hochberg closed by announcing that he intends to run for village president of Northbrook in 2028, citing the deterioration of the former Northbrook Court mall site, which he said has stood abandoned and overgrown for roughly a decade while village leadership has failed to develop an economic redevelopment plan. He said the current village president’s statement at a recent state of the village address that Northbrook Court is dead and that unhappy residents should get off the couch and get involved amounted to a personal challenge he decided to accept.