Here Comes the Sun
This week’s “pop” hit is the 1969 hit “Here Comes the Sun” by The Beatles. The lyrics start out, “Little darlin’, it’s been a long, cold, lonely winter. Little darlin’, it feels like years since it’s been here”. It has been over 4 years since the FED made a rate cut, but they stepped up to the plate today and cut rates by .50%. The bigger news is that they could make an additional .50% by the end of the year (I predicted a total of .75% total this year… so… could be close). The “plot” graph shows that FED funds could be at 3.375% from its current level of 5% by the end of 2025. This could push mortgage rates into the high 4% range by the end of 2025.
I applaud the FED for making the right move… .50% (for those of you who follow Aikenomics, I am not a fan of our current FED but had to give them credit here for making the hard choice). This move was long overdue as the “signs” of recession were right in front of us. Housing prices were up again last month and continued a string of consecutive monthly rises for over 10 years (so much for those of you who are waiting for prices to fall). Unemployment continues to rise, and while inflation has come down notably, it’s still hard to buy something when you don’t have a job or worried that your job might be eliminated. This cut in rates should help overall prices slide down further as commercial loan rates, based on Prime, should move down, and those lower costs should filter down as lower prices for consumer goods. As I have noted before and reflected in the stats this week that refinances accounted for 24% of all mortgage applications, and this is not because they were trying to get a better mortgage rate. For the most part, this was done to lower their overall payments by paying off over-extended consumer debt, even if it meant a higher mortgage payment. I am not convinced yet that we are not heading into a prolonged recession, but today was a step in the right direction by the FED, and hopefully, they will continue to be vigilant in their upcoming moves to avoid a prolonged recession.
The Long Cold Lonely Winters for real estate sales for the past several years may be over as rates begin to move below the 6% mark over the next several weeks and have their eyes on probably a mid to low 5% mark by the end of the year (my prediction earlier this year was low 5% by year-end). The “Sun” may be truly coming out for those purchasing new homes and refinancing. Today was a good day for the US economy regardless of what side of the aisle you sit on. Here Comes the Sun…
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!
Thank you for reading this blog. I hope that the facts and insights I share provide value to you.
If you’d like to allow me to invade your inbox and receive a weekend update from me each week, please provide your name and email address, and I’ll start sending over more facts and insights like you just read, as well as current market rates and news. If you have a topic you would like me to consider covering, please feel free to send it over. Who knows… I may write about it!
Blog post date: Thursday, September 19, 2024
