Mortgage Market Update - "Bargain Hunting" - Free Money (recap 9/16-22/24)

Almost exactly one year after we saw #rates hit 8%, #homesales reach 1995 lows, and #housing #affordability reach a 40-year low (and became a national talking point), everyone was excited to see the Fed's first #ratecut in 4 years...the #realestate world was excited to hear #theFed #cutrates by .5%!? Most are running with the easy narrative that rates are falling.? In this week's Mortgage Market Update, we discuss the reality behind the narrative so that you can be well informed on current real estate, #finance, and #mortgage market trends (beyond the headlines).? Learn why rates remained flat following the announcement.? Read how these cuts are already?impacting #homebuyers and #sellers.? Enjoy a funny story of how an 8-year-old had me running out of Target...and how you can be ready for some bargain hunting of your own this fall/winter!

• Since July, markets have been preparing for a well projected September #Fedratecut.? The question was how much .25% or .5%.? By early last week, most of Wall Street was pricing in a .5% reduction.? On Wednesday, the much anticipated #fedmeeting met expectations with the Federal Reserve cutting rates by .5%.
• Last week, #mortgage #applications peeked?for the month of September, likely related to the narrative around the Fed's .5% rate cut announcement.?
• Last week's #rates held at their lowest levels since February 2023.
• According to a recent @bankrate survey, only a tiny fraction of #homeowners — just 5% — feel comfortable selling their homes with #mortgagerates at 6% or higher. The survey revealed that more than a third of homeowners (35%) would be willing to sell their homes if #mortgage #rates dip below 6%.? (For context, last week I quoted rates ranging from 5.25% to 6.625% —?variation based on product and qualifications.)
• According to Realtor.com , the best time to buy a #home in 2024 is the week of September 29 through October 5, which offers a balanced, buyer-friendly mix of marketing conditions, including a potential cost savings of over 3% compared to the summer's peak #homeprices.? Obviously, these averages vary by #local market and you should consult with a #localrealtor about trends in your area.

Ryan and Evan are obsessed with football #tradingcards.? We don't buy cards for them anymore (because those two would bankrupt us).? We make them save their money and buy them for themselves.? A few weeks ago, Ryan was in Target looking at packs of cards when he noticed a wall of gift cards.

Ryan: "Dad, let's just get these it is worth $100!"

Me: "They are gift cards."

Ryan: "How much are they."

Me: "That one is $105."

Ryan: "What!?! Why would I pay $105 for a $100 card!?!"

Me: "Some don't have fees and some do.? I guess since you can spend that one at any store it has a fee.? Maybe you want to give it as a gift, but don't just want to give the person $100 so you think this seems nicer."

Ryan: "That's stupid! That's a scam!!"

We left with him yelling "It's a scam!" like we were there to warn the town of trouble in our tin hats.? A few weeks later, I was buying some gift cards for a fundraiser donation.? When I rang them up, I learned they were on sale.? The $25 gift card was $21.25 (15% off).? So, I went back and bought a few more...I mean it was literally FREE MONEY!

The Federal Reserve cutting interest rates by .5% did not mean mortgage rates fell 5% nor does it mean they are giving out free money. The easy narrative is cut rates = lower rates.? It is true, kind of.? The Fed controls the #fed funds #rate, which impacts #shortterm borrowing and savings.? Basically, you have or will notice your credit cards, saving accounts, car loans, HELOCs, CDs and other short-term rates going down.? However, #theFed does NOT set #mortgage rates.? #Mortgagerates follow other markets (which are tangentially impacted by the Fed's actions) and vary by a #bank's risk variables and/or borrower's qualifications.?Call me if you want to understand this more...it is odd, but I genuinely love discussing it!?

Fed actions are typically no surprise and well anticipated. So, following Wednesday's cuts, markets actually held steady?(some mortgage rates even went slightly up). But this is a good thing!? It means that Wall Street's speculation was correct, and trading remained balanced.? A sign to the Fed that the market is ready for #ratecuts and opens the door to future rate cuts!? Most still project at least one more cut in 2024 (Europe has taken a smaller step approch with two .25% cuts).? Most expect a slow trickle down over the next few weeks and months as markets start pricing in anticipation of future cuts.

If you purchased a #home from March 2022 - Aug 2024...if you want to buy in 2024 or 2025...now is the time to call a trusted #lender.? Discuss your goals and set up a plan with your #loanofficer to watch rates and catch your ideal savings.? That way you are ready to buy or refinance when the gift cards go on sale!??

#Realtors, work with your #lending partners to run numbers and show potential sellers how #rate movement impacts their pool of potential buyers (potentially creating more competition).? Engage the #lender during the offer process to ensure that your clients are fully #preapproved and running updated figures prior to each offers.? This ensures that your clients can make their most current and most competitive offer.? ?

Oh, I didn't tell Ryan about the discounted gift cards because Ryan loves a bargain, and I didn't want to risk the meltdown reaction when he learned he could have saved a few dollars.? Ryan got a $5 pack of cards and got a Josh Allen card...so, he was happy...and best to just leave it at that.