For What It’s Worth
This week’s “pop” hit is Buffalo Springfield’s March 1966 hit “For What It’s Worth.” Many of the same things that were going on in 1966 are going on once again today. The two political parties currently are at the farthest ends of the political spectrum from each other; conflicts in the world are on the rise, and economic growth is falling… People are carrying signs and speaking their minds.
We are now two weeks from the election, and if you believe the polls… there is not a true front-runner. However, the “market” and our “Warriors of Wall Street” have picked their winner, and for now… it is Trump and a Republican sweep of the House and Senate. They believe a Republican sweep will ignite the economy, which will increase employment. The employment thing sounds pretty good, right? Well, not if you want lower rates. The ideology is that if employment improves, people have more money to spend, and if they have more money to spend, this will reignite inflation, and rates (mortgages) hate inflation, and thus mortgage rates will rise. We have already seen this mentality begin to play out with what has happened with mortgage rates. Mortgage rates have risen almost .75% in just several weeks. Mortgage rates were nearing 6% prior to the FED cut but are now pushing 6.875% on 30-year fixed-rate mortgages. Some will say we got a little “hotter” employment number last month and inflation is not as low as some expected, but still heading in the right direction. Bottomline… the economy does not move in straight lines, and this is also true for unemployment and inflation. While I am not a fan of our current Federal Reserve, they are trying to steer us into a “soft landing,” bringing down inflation while keeping a stable labor market. While I believe they should have started their “rate cut march” a little earlier, you cannot complain that inflation has fallen while keeping us in good employment range. But why let rational thought get in the way of our “experts” on Wall Street?
Other than the “Warriors of Wall Street’s” current mentality that the economy will turn on a dime if the Republicans were to sweep, we still are seeing housing sales at their lowest levels in years, inflation is at its lowest point in years and unemployment has risen from 3.4% to its current level of 4.1%. Not the picture of a robust economy and not one that will be cured in just a few months.
So, just maybe, they will come to their senses soon. These are the same folks who drove rates down to their lowest levels in over a year but have totally reversed their mentality in less than a month and have pushed mortgage rates to levels we saw just before the FED cut. However, they are still projecting an 87% chance of another FED cut of .25% in November while pushing mortgage rates up close to .75%. So, what changed? Nothing!
Remember… the BEST RATE… IS A LOCKED RATE… with a float down… ask me about our program that allows you to lock your rate and then float down if rates move lower.
Make sure you (or your buyer) get pre-approved before looking at homes so we can determine if you are looking in the correct price range and have you armed to submit an offer with a pre-approval letter!
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Blog post date: Thursday, October 24, 2024
