What a past decade… Society and interest rates have been on a roller coaster. The primary gyrations were caused by a pandemic, the economic effects, and the Federal Reserve’s reactions.
Back in the 2013-2019 period, we were in a generally “normal” economic environment, having come out of the Sub-Prime Mortgage Recession period.
From 2020 until April 2022, the Federal Reserve kept the Fed Funds Rate at 0% and conducted Quantitative Easing, where they purchased bonds and Mortgage-Backed Securities to artificially drop long-term interest rates. By keeping the rates too low for too long, they overly stimulated the economy and are now grappling with stubbornly high inflation and a tight labor market.
The Fed has increased the Fed Funds Rate by 5% so far over the past year and is poised to raise it another 25% on May 3. The Fed says they are data-dependent. Unfortunately, it’s like they are driving while looking in the rearview mirror. Most of the data they rely on has become obsolete by the time they react to it. If that continues to be the case, the economy will slow down, and mortgage rates will drop.
The mortgage rates over the past 6 months have been in a range of 6-7%. In my opinion, we have seen the highs of this mortgage rate cycle. On a technical level, when the rates drop below the 6% level, they can potentially go down to 5.25%. At that rate, the real estate market will be stimulated, potentially leading to an overheated market as more buyers will qualify.
If you are in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free in contacting me
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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