The FED to Lower Rates 6 Times in 2024? – YouTube

TODAY’S RATES & HOUSING NEWS

Interest rates improved over the past 7 days and currently mortgage interest rates are sitting at about 3 Month lows.

The Mortgage Backed Security (MBS) traded up +53 bps over the past 7 days. 

The BLS Jobs Report comes out on Friday, December 8^th. 

The Jobs report typically has a substantial effect on where mortgage interest rates will go over the month.

The lower than expected Job Growth in November was one of the items that started the trend towards lower mortgage rates.

Let’s hope this one does the same.

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

And below are Mortgage News Daily’s average interest rates across the country.

THE FED TO CUT RATES 6 TIMES IN 2024?

A big headline came out this week when ING Economics predicted that the FED will lower the Federal Funds Rate

6 times in 2024.

So let’s give some context before we jump in.

During Covid and the period afterwards, the Federal Funds Rate was near 0%.

The FED claimed that inflation was transitory which has proven to be incorrect.

Inflation numbers went through the roof and the FED started raising the Federal Funds Rate to combat inflation.

The FED raised the Federal Funds Rate 11 times over 16 months from 0% to 5.25% to 5.5%.

This rapid rise caused major disruption in the mortgage, real estate and banking industry.

The FED has paused any rate hikes over the past 2 meetings while making it very clear that they could raise the Federal Funds Rate if they feel it’s needed to combat inflation more.

Many experts believe that the U.S. economy is now starting to show the signs that the economy is drastically slowing down.

According to ING’s chief international economist James Knightley,

“The data suggests stagnant real household incomes over quite some time now.

So far, this has been offset by the running down of savings and the use of debt to fuel spending growth.

However, tighter credit conditions and high borrowing costs are likely to weigh heavily on the flow of credit to the household sector while there is growing evidence of pandemic-era accrued excess savings being exhausted for an increasing number of people.”

Many other industry experts are predicting a similar downturn in the Federal Funds Rate.  The FED futures suggest the FED will lower rates 125 bps next year.  

UBS expects the FED to lower rates by 275 bps next year.

If the FED lowers the Federal Funds Rate like many experts predict,

WHAT DOES THAT MEAN FOR THE CONSUMER?

My prediction is this:

1. Although the FED rate doesn’t directly correlate to mortgage interest rates, I expect mortgage interest rates to come down in 2024.
2.  The FED rate has a more close association with Home Equity Line of Credit rates (HELOCS).  I expect HELOC rates to dorp.
3. Housing Prices to increase

Here is the full article from Business Insider:

https://www.businessinsider.com/economy-slowdown-interest-rates-outlook-federal-reserve-cuts-next-year-2023-11#:~:text=The%20Federal%20Reserve%20is%20poised,and%20extend%20well%20into%202025.

(14) Mortgage Rate and Housing Update – YouTube

TODAY’S RATES & HOUSING NEWS

Interest rates remained stable to slightly lower on the week of Thanksgiving. 

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc. Please call me to go over your specific scenario so we can price your loan out accurately.

And below are Mortgage News Daily’s average interest rates across the country.

FREE $5,250 GRANT WHEN PURCHASING A HOME

Purchase Plus is a Fannie Mae Program designed to assist residents living in certain areas to purchase a home.

Unlike many programs, the program is based on where a client is living today not where they are buying.

To be eligible, a client must live in certain tracts designated in the below areas across the country.

If you or your clients live in these areas, please contact me and I can check to see if the address is in an eligible tract for Purchase Plus.

Purchase plus details include:

Free $5,250 Non Repayable Grant Towards Down Payment

Reduced Mortgage Insurance

Must Be a First Time Home Buyer

No Max Income

Client has to live in certain eligible tracts – it does not matter where they are buying.

We can look up if client’s current residence is eligible. 

TODAY’S RATES & HOUSING NEWS

Mortgage rates remained stable this week as we go into Thanksgiving.

I hope you have a blessed Thanksgiving with family and friends. 

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

And below is Mortgage News Daily’s average interest rate across the country.

HOME SALES FALL TO 13 YEAR LOW AS PRICES INCREASE

See CNBC article below. 

https://www.cnbc.com/2023/11/21/home-sales-fell-to-a-13-year-low-in-october-as-prices-rose.html

TODAY’S RATES & HOUSING NEWS

Interest rates gave back some of their gains for most of the past 7 days until Tuesday morning.

On Tuesday Morning, the CPI Inflation came out and inflation dropped from 3.7% to 3.2%.

Core inflation dropped from 4.1% to 4%.

This has had a major effect on Mortgage Interest Rates.

The Mortgage Backed Security market is up a whopping 66 bps as of writing this.

Your Green Home Loans Rate Sheet has hit the 6% figure if you want to pay a point.

Let’s Go!

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

BRIDGE LOAN – BUY BEFORE YOU SELL

With homes sitting on the market for longer, it’s become a more common occurrence that consumers are wanting to buy a new home but haven’t sold their old home yet.

Here are the normal solutions for this situation.

1. Buy a Home Contingent on Your Home Selling.  This is where a seller accepts that you can’t close on the sale until your home sells.

This can work but the seller can’t be in a hurry to sell and it’s not as strong of an offer as a non-contingent offer.  This means that all things being equal, a contingent offer isn’t as competitive if the seller has multiple options.

2. HELOC on Existing Home.  This is where a consumer takes a 2^nd mortgage or HELOC on their existing house before they sell to help them with the down payment

on the new home.  The consumer would have to income qualify with the monthly payments on both houses which can be difficult for many consumers.  The customer can likely recast their new mortgage (bring down payment with a large payment towards principal) once they sell and have more funds. 

3. BRIDGE Loan.  This is a temporary loan to help the customer purchase a new home before their existing home sells.

Here is how this loan works.

-A 0% Mortgage for Home they are trying to sell at up to 75%-80% of the value of the home.

-Customer would be able to use these funds to purchase new home.

-Customer would not have to income qualify with both home mortgages.

-The customer would then sell the home after they purchase and pay off the Bridge Loan.

So let’s give a real world example.

Customer wants to purchase a home.  Their existing home is worth $500,000.

They currently owe $200,000.

A Bridge Loan would give them a 0% $200,000 2^nd mortgage on their existing home.

They would use these funds as a down payment on new home – buying the house before they sell with a non-contingent offer.

Customer would then sell their existing home after purchase of new home.

This is a very popular product in this market as homes are sitting on the market a bit longer than normal.

Call me if you would like to discuss the details.

GRADUATED PAYMENT MORTGAGE

A Graduated Payment Mortgage helps keep a consumer’s initial mortgage payment low without the need of large seller concessions.

Here is how it works.

1^st Year – Mortgage Payment is 15% Lower Than Normal

2^nd Year – Mortgage Payment is 10% Lower Than Normal

3^rd Year – Mortgage Payment is 5% Lower Than Normal

4^th Year – Mortgage Payment is Normal

The goal would be to refinance or get out of the loan before mortgage gets to normal payment.

This is a Non QM Product that can be used for a purchase, rate and term refinance or cash-out refinance.

This loan’s maximum loan to value is 75% of the home’s value.
Contact me to get more details.

There was a lot at stake for interest rates last week and finally we got some good news!

Interest rates improved about .5% last week. 

That may not sound like much but that is a huge movement in a short window of time.   

That’s $132 payment per month / $1,592 per year on a $400,000 loan amount.

Not too Shabby.

Below are average interest rates across the country according to Mortgage News Daily.

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

So why did rates improve so much?

#1 – The FED did not increase the Federal Funds Rate. 

They did state that the FED’s current fiscal policy will likely weigh on increased economic activity.

In reading the tea leaves, it seems unlikely that the FED will raise again barring some major event or higher than expected inflation.

Now the question is, when will they cut?

#2 – The  BLS Jobs Report came in below estimates.

According to the report, there were 150,000 jobs created in October 2023, well below the estimates of 180,000 jobs. 

There were also 2 downward revisions of prior months of 101,000 jobs.

Unemployment rose to 3.9% and average hours worked hit the lowest levels since April 2020.

Unemployment has risen .5% from it’s low of 3.4%.  Historically when unemployment rises .5%, we are likely headed into a recession.

See below for CNBC article on all the signs that a recession is coming.

https://www.cnbc.com/2023/11/02/kelly-evans-uh-oh-the-fed-is-done-hiking.html

The likely outcome of a recession? Lower mortgage rates and modest home appreciation. 

HOME SELLERS DROP PRICES

According to Redfin, almost 7% of homes on the market dropped prices during the month of October.

This is the highest number on record and shows that high interest rates affect home values.

Rates hit some of their highest levels in 20 years during October, which made the buyer pool shrink and affordability tighter.  

See full article here.

https://www.redfin.com/news/housing-market-update-price-drops-record-high/

I believe we will see home prices drop in the short term during Quarter 4 in 2023 and possibly part of Quarter 1 of 2024.

High interest rates will lower demand during a Season that is already low on demand.

This will cause houses to sit longer which will increase housing inventory.

I expect the home price drop will be short-lived as more buyer demand will increase during the spring and summer buying season.

I also predict mortgage rates to come down sometime next year which will bring a lot of pent up demand off the sidelines.

This will increase demand, lower inventory and home prices will move higher again.

Now is an amazing time to get a great deal on a home.

Many of our clients are getting sellers to pay for a 2/1 Buydown which is:

A 2% lower rate in the first year.

1% lower rate in the second year.

Regular rate third year and on.

This dramatically lowers a client’s payment for the first 2 years and hopefully they will be able to refinance to a permanently lower rate during those 2 years.

In order to refinance to a permanently lower rate, the client would still need to qualify from an income, credit, and equity perspective.  

(76) 10/31/23 Mortgage Rate and Housing Update – YouTube

TODAY’S RATES & HOUSING NEWS

Interest rates stayed pretty tame this week.

The Mortgage Backed Security (MBS) market traded up + 6 bps on the week and mortgage interest rates stayed relatively the same.

This week has a bunch of events that could move the market.

On Wednesday, the FED will hold a press conference and announce if they will raise the Federal Funds Rate.

Almost everyone is predicting another pause, but as we saw last time – the statement and press conference on what’s ahead in the future is just as important to the market.

Perhaps of more importance is the US Treasury’s Borrowing Needs. 

On Monday, the US Treasury announced that they will borrow $776 Billion in Quarter 4

and $816 Billion Quarter 1 of 2024.

On Wednesday, the Treasury will announce the size of these auctions, the duration being issued, and their timing. 

The U.S. Government is borrowing at a time when the economy has robust growth and unemployment is low which should translate into more revenue and less borrowing.

The U.S. ran a $1.7 Trillion deficit from October 2022 to September 2023.

According to Amerivet’s Faranello – “We are running outsized deficits for an economy at full employment.”

On top of the massive borrowing, rates for borrowing are very high and could go higher.

There is concern that there won’t be enough demand for Government bonds which would push up yields/rates for the bonds higher (mortgage rates would likely follow).

Below is an excerpt from a great article on this subject from Morningstar you can find here: 

https://www.morningstar.com/news/marketwatch/20231030156/why-treasurys-borrowing-needs-could-overshadow-the-federal-reserve-decision-this-week

“Fiscal spending has gotten out of hand and is not sustainable, especially now with higher interest rates and the additional cost of interest to pay for those large deficits,”

said Sterner of Apollon Wealth Management, which manages $5.3 billion from Mount Pleasant, S.C.

“With the economy growing and unemployment near historic lows, this is a time when we should be cutting deficits, but instead we are adding to it,” Sterner said via phone.

“If the economy potentially slips into a recession next year, the Fed and the government aren’t going to be in a position to provide stimulus or cut rates as they have in the past due to these large deficits and stubborn inflation.

It’s concerning that the deficit is growing in a higher interest-rate environment, and also at a time when we are trying to fund two wars [in Ukraine and the Middle East] with no end in sight.”

We also have the BLS Jobs Report for October on Friday.

Last month, job creation blew out estimates which isn’t good for mortgage interest rates.

Average interest rates in the U.S. according to Mortgage News Daily as of 10/30 is 7.92%.

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

NET WORTH OF HOMEOWNER VS. RENTER

TODAY’S RATES & HOUSING NEWS

Average interest rates across the country surged to 8% and then came down substantially on the afternoon of Monday 10/23.  

Average interest rates started Monday 10/23 at 8.07% but ended the day at 7.91%.

That’s a huge swing in one day.

The Mortgage Backed Security (MBS) market is down -90 bps since our last weekly update.

Average interest rates started Monday 10/23 at 8.07% but ended the day at 7.91%.

Below is Mortgage News Daily’s average interest rate across the country as of 10/23/23. 

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

THE BENEFITS OF BUYING A HOME DURING THE HOLIDAY SEASON

This is probably the worst time in the world to purchase a home, right?

Let’s ask my friend Google what he thinks.

Hey Google, what season is historically the best time to buy a home?

Interesting.  Very Interesting. 

So why in the world is this?

The answer is quite simple.  Purchasing something when other people are not will typically get you a better deal.

It’s supply and demand economics.

Homes being put up for sale will usually slow during the Holiday Season, but since demand is lower, houses will typically sit on the market for longer.

This will cause housing supply to increase.

An increase in supply at the same time demand is down = lower prices or better terms.

If you want to purchase a home and can stomach home shopping while most people are focused on other things, you could just celebrate the Holidays with a screaming deal on your home.

Here are 6 reasons why you may want to purchase this Holiday Season versus waiting until Spring and Summer when the rest of America is looking to purchase.

1. Motivated Sellers: Many people who list their homes for sale during the holiday season are often motivated sellers.

They might need to sell quickly, perhaps due to a job relocation or financial reasons.

This motivation can work to your advantage, potentially leading to more favorable negotiation terms and prices.

2. Less Competition: Since the holiday season is traditionally a busy time for people with holiday preparations and festivities, there is typically less competition among homebuyers.

This means you might face fewer competing offers and less pressure to engage in bidding wars, giving you a better chance to secure a property at a reasonable price.

3. Lower Prices: Sellers who list their homes during the holidays may be more willing to negotiate on the asking price.

As the market slows down, sellers may become more flexible with pricing and terms, potentially leading to cost savings for buyers.

4. Tax Benefits: Purchasing a home toward the end of the year can have tax benefits.

Depending on your local tax laws, you may be able to deduct property taxes, mortgage interest, and other expenses when you file your tax return for that year.

Consult with a tax professional to understand how this may apply to your specific situation.

5. Faster Closings: Because there are typically fewer transactions occurring during the holiday season, lenders, real estate agents, and other professionals

involved in the home buying process may have more availability and quicker response times. This can lead to a faster and smoother closing process.

6. Potential for Deals: Real estate professionals and sellers may be more inclined to offer incentives during the holiday season to attract buyers.

These incentives can include covering closing costs, providing home warranties, or including additional appliances or furniture in the sale.

https://m.bixel1.net/kwcxpi

TODAY’S RATES & HOUSING NEWS

It’s been a mixed bag with mortgage rates over the past 7 days.

The market has been very volatile on a daily basis, but has evened out over 7 days.

See Mortgage Backed Security (MBS) end of the day trading numbers over the past week.

Monday:         -38

Friday:           +20

Thursday:      -56

Wednesday:   +35

Tuesday:        +55

More and more FED members are publicly speaking that a pause in rate hikes is the most likely scenario moving forward.

This is welcome news and I now expect the FED to not raise the Federal Funds rate at their next meeting.

Could this be the events we finally need for mortgage interest rates to eventually come down?

September’s Consumer Price Index (CPI) inflation numbers came out.  Month over month inflation increased .4% and is now at 3.7% year over year.

The Core CPI which strips out food and energy is at 4.1% year over year.

Although the FED didn’t raise the Federal Funds Rate at their last meeting, their commentary on interest rates being higher for longer and many in the FED openly talking about another rise in rates in 2023 is shaping the market.

Below is Mortgage News Daily’s average interest rates across the U.S. as of 10/16/23.

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

BENEFITS OF WORKING WITH A BROKER

When you work with a direct lender, they have one rate sheet that they are pricing your loan with.

The Direct Lender has secondary market professionals that adjust their rate pricing based on profitability and other factors such as underwriting capacity, etc.

These margins can be changed at any time and the Mortgage Originator at a direct lender has no control over these changes.

As a Mortgage Broker, we shop the market for you.

Every wholesale lender changes their margins just like a direct lender.

The difference for a Mortgage Broker is if one lender ups their profitability margin thus increasing their rate pricing, we can simply pick another lender that is pricing better.  We do the shopping for you, thus we have the ability to pair you with the lender that is offering the best deal.  

Below is an example of us pricing multiple lenders with the ability to give our consumer the best pricing available on the market on any given day.

With mortgage rates at the highest levels in 20 years, would you rather work with a Mortgage Professional that has control over the rate pricing they are offering, or a Mortgage Professional that has no control over the product the end consumer is getting?  

HOPEFUL HOMEBUYERS TURN RELATIVES INTO ROOMATES

According to this survey by Realtor.com, more and more potential homebuyers are considering purchasing a home with family members to help with rising costs.

See full article here:  https://www.realtor.com/research/family-affair-survey-aug-2023/?distinct_id=ryuvIS9yM

KCM’S OCTOBER MARKET REPORT

Here is Keeping Current Matter’s Audio of the October 2023 Market Report:  https://files.keepingcurrentmatters.com/content/assets/audio/20231009/KCM-October-2023.mp3

Here are my favorite slides for the month:  

TODAY’S RATES & HOUSING NEWS

Mortgage Rates continue to move higher and the Jobs Data didn’t help.

On Friday, the BLS Jobs Report came out and the job creation numbers blew out expectations. 

The job creation figure came in at 336,000, almost double the projection of 170,000. 

On top of that, the prior 2 months had upward revisions in the job creation number. 

As mortgage rates surge to 8% for many clients, the question we keep hearing is “When will rates drop?”.

While we don’t have a crystal ball, it appears that interest rates will not drop significantly until 2024. 

The below article does a great job explaining the current rate market and the spread between the 10 year treasury and mortgage rates.

https://www.mortgagenewsdaily.com/markets/mortgage-rates-10062023

Although the FED didn’t raise the Federal Funds Rate at their last meeting, their commentary on interest rates being higher for longer and many in the FED openly talking about another rise in rates in 2023 is shaping the market.

The recent rise in rates will likely lower home buying demand in many markets and raise the housing supply in some markets.

There is no immediate cure for the housing shortage, but less demand will likely raise the time period homes are on the market.

This, along with the Holiday season typically having less activity, will give buyers some advantages in negotiating power.

If you are most concerned about getting a lower payment, I encourage asking for seller concessions to temporarily or permanently buy down the rate/payment rather than going lower on the purchase price.

This has a much larger effect on your payment than going lower on the purchase price.

Here are the max concessions for most standard products.

Below is Mortgage News Daily’s average interest rates across the U.S. as of 10/6/23.

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

FANNIE MAE ANNOUNCES 5% DOWN FOR 2-4 UNIT PROPERTIES

Fannie Mae decreased the down payment requirements for primary residence 2-4 unit homes to 5%.

This is great for house hackers looking to build their real estate portfolio.

House hacker is the term that describes real estate investors purchasing a home as a primary residence while renting out rooms or units to other people – thus lowering their monthly expenses and allowing them to take advantage of the wealth creation of real estate. 

House hackers can purchase a home with a primary residence rate. (typically much lower than investment rates)

Many house hackers live in the home for a year and then rent it out to purchase a new property and repeat the process. 

This allows the house hacker to build a cash flowing real estate portfolio where the tenants pay off the mortgage, and the hacker builds appreciation and equity over time.

FHA has allowed clients to purchase a 4 unit home and put 3.5% down as long as they were living in one unit.

Conventional Loans backed by Fannie Mae weren’t as progressive.

This breaking news from Fannie Mae will help Real Estate investors with higher credit scores.

Conventional loans are typically a better mortgage for higher credit score buyers as they often have lower monthly mortgage insurance premiums and no upfront mortgage insurance costs.

Below is the new chart for Fannie Mae.

Please call me if you have any questions. 

https://m.bixel1.net/8n5mjz

TODAY’S RATES & HOUSING NEWS

Rates have moved up .1% over the past 7 days.

The Mortgage Backed Security (MBS) market has had a noticeable decline over the past 2 weeks which causes interest rates to rise.  

See MBS Chart below.

All eyes are pointing to the BLS Jobs Report coming out Friday, October 6^th.

We would welcome a lower than expected job creation number which would set the table for a better October for mortgage rates.

Below is Mortgage News Daily’s average interest rates across the U.S. as of 10/2/23.

Below is the Green Home Loans rate sheet today.

There are a lot of characteristics that go into a mortgage rate – credit score, investor, loan to value, loan amount, costs, etc.

Please call me to go over your specific scenario so we can price your loan out accurately.

CONVENTIONAL LOAN LIMITS TO $750,000

Effective immediately, Green Home Loans is among the first Mortgage Professionals in the nation to offer conventional loans up to $750,000.

The reason conventional loan limits are important is because jumbo loans are much harder to qualify for.

Jumbo loans require higher down payment, lower debt to income ratios and higher reserve requirements, not to mention the underwriting process is much more stringent.

Now you could purchase a home for $773,195 with just 3% down!

Some more expensive areas in the country also have High Balance Conventional Loan Limits which exceed the National Conventional Loan Limit.

OUR 3 FAVORITE DOWN PAYMENT ASSISTANCE PROGRAMS

One of the biggest barriers of home ownership is coming up with the down payment, closing costs and prepaids for home financing.

Down Payment Assistance can help clients achieve the dream of homeownership and start gaining wealth through real estate.   

See video below for our 3 favorite National Down Payment Assistance Programs on the market.

https://m.bixel1.net/ivutde

HOME PRICES STILL RISING DESPITE HIGHER RATES

The S&P CoreLogic Case-Shiller Index was released last week for July.

19 of the 20 cities in the index showed price increases month over month.

See below for the month over month numbers for each city.    

1. Las Vegas +1.12%
2. Phoenix +0.88%
3. Cleveland +0.85%
4. Chicago +0.84%
5. New York +0.81%
6. Charlotte +0.76%
7. Miami +0.74%
8. Tampa +0.74%
9. Detroit +0.74%
10. San Diego +0.73%
11. Atlanta +0.70%
12. Los Angeles +0.62%
13. Washington +0.57%
14. Seattle +0.46%
15. Dallas +0.30%
16. Minneapolis +0.21%
17. Denver +0.18%
18. Boston +0.14%
19. San Francisco +0.14%
20. Portland -0.15%

Nationally, home prices are up 1% since last year but have risen .6% in the past month.

The annual figure is lower due to price declines in many markets over the latter half of 2022.