Inflation based on the Producer Price Index (PPI), Consumer Price Index (CPI), and the Federal Reserve’s favorite Personal Consumption Expenditures all show continued improvement. That in conjunction with the moderate Job Data, kept the the Federal Reserve to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent, as they did the last meeting. Unless there’s a geopolitical malfunction or an oil spike, the next move from the Fed should be to lower their rate. Probably won’t happen till mid-2024.
In the meanwhile the mortgage and long-term rates have dropped well over the past month. The secondary money market can see the end of the tightening cycle. Will the Fed keep rates high for too long pushing us into a recession? Maybe but the long-term mortgage rates don’t correlate with the overnight Fed Funds Rate. Mortgage bond investors are more concerned about inflation eating into their yield.
7.3% 30-year fixed may not appear low, but better than the 8+% we had a month ago and the lowest in the past two months. Every drop in rate will add a percentage to potential buyers who can qualify to purchase a property.
A typical homeowner has accumulated more than $100,000 in housing wealth over the past three years. Debt consolidation and Reverse Mortgages are still potentially good options in certain scenarios, even at higher rates. I’m always available to crunch numbers and evaluate viable strategies.
As I blogged recently about the massive Federal Debt and the higher rates, it’s also put pressure on debt servicing and keeps rates higher than it would be otherwise.
Ron Henderson GRI, SRES, SFR, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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