05/02/2024
The FED meeting went better than expected, but still no sign of a FED rate cut anytime soon!
First and foremost, based on the comments made in yesterday’s press conference by Fed Chair, Jerome Powell, the possibility of another FED Fund rate hike to battle stubborn inflation and low unemployment is off the table! This is GOOD NEWS for mortgage rates! The FED feels the current FED Fund Rate is set at a level that is restrictive enough to achieve a balanced economy, it’s just going to take some time. The FED has repeatedly said, they will not consider a rate cut until inflation is in the 2% range and unemployment is in the 4% range. Current inflation rate as of March, is 3.5%, this is up from 3.2% in February. The unemployment rate, currently at 3.8% percent, has been toggling between 3.7% percent to 3.9% since August 2023.
What does this mean for mortgage rates, home Buyer & Sellers moving forward?
There are 5 remaining FED meetings in 2024…June 12th, July 31st, September 18th, November 7th & December 18th. If there is to be a FED rate cut at all this year, it most likely won’t happen until the December 18th meeting, here’s why. I am not getting political, but unfortunately, this is an election year. Both sides of the aisle have an agenda. They are doing whatever they can to expose, suppress and manipulate certain numbers to sway FED policy one way or another, even though the FED is supposed to be politically independent. We are seeing this happen in real time, with job and labor data. Government reporting verse Private reporting shows a big discrepancy in job openings, job starts, new and continuing unemployment claims to name a few. You need to read between lines on this next part…these discrepancy’s will “take some time” to work out, so expect to see FED policy and mortgage rates stay around current levels until year end.
What should home Buyers & Sellers be doing between now and year end?
Home Buyers…opportunity is knocking in more ways than one! Elevated mortgage rates will help keep a lid on soaring house prices and we are starting to notice a slight uptick in inventory levels as well. The best thing a Buyer can do is buy now while home prices are somewhat stable and ride the refi wave down, once mortgage rates start to trend lower in 2025!
Home Sellers…if you want to drive traffic to your property and get top dollar for your home, offer a 1-year mortgage rate buydown and/or offer to pay some of the Buyers closing cost. I am running 2 to 3 purchase applications a day, most Buyers are strapped for cash and having DTI issues. Wrap this cost into the purchase price of the home and call it a day, it’s a win, win, win for everyone involved!
I really hope this information helps you, help your clients. As always, I am here to help you in any way I can. If you have questions or clients in need of the financing services and programs I offer, please don’t hesitate to reach out. I would love the opportunity to work with you, thank you!
