Hope you’re having a great week! Let’s check in with your weekly dose of market insight and encouragement.
You know I always want to keep you informed about what’s going on in the world of home financing, and this past week was a little… spicy.
The Fed’s “Hawkish” Rate Cut: Don’t let the headline fool you!
The big news was the Federal Reserve cutting its key interest rate by a quarter-point. Typically, a rate cut sounds like great news for mortgage rates, right? Well, in a bit of an “it’s the same old song and dance” situation, mortgage rates actually ticked higher afterward.
Why the opposite reaction? It comes down to what’s being called a “hawkish” rate cut. This means the Fed is still very focused on keeping inflation in check, and comments from Fed Chair Jerome Powell suggested that another cut in the near future isn’t a guarantee—far from it. This created nervousness in the bond market, which is what directly influences our mortgage rates, causing them to move up for a bit.
A Positive Signal for the Future: Quantitative Tightening Ends
There was a piece of news that offered a positive outlook for the future: the Fed announced it will end Quantitative Tightening (QT) on December 1st.
In simple terms, QT is the process of the Fed pulling money out of the financial system. Ending it means they’ll stop actively shrinking their bond holdings. For the mortgage market, this is generally a good thing! It can help stabilize demand for the long-term bonds that dictate mortgage rates, potentially creating a more stable rate environment heading into the new year.
Rates Trending Down (Despite the Wiggle!)
Even with the Fed’s moves last week, the overall trend has been positive. According to Freddie Mac, the 30-year Fixed Rate Mortgage actually averaged down .02 percent as of October 30th, and is significantly lower than this time last year.
The underlying market for mortgage bonds continues to show an upward trend, which, as the old saying goes, means the “trend is your friend” for potentially lower rates ahead!
Are We Becoming a Nation of Homebodies? A Look at Mobility
I found this next bit fascinating. America was once a nation of constant movers, but that’s changing! A recent analysis found that only about one in nine people change residences each year, which is a historic low.
• What’s behind the slowdown? A big factor is economic instability and high housing costs. Also, with remote work becoming so common, many people no longer need to move across state lines for a new job.
• Who is still moving? The movers we do see are often making big changes, frequently moving to a different city or across state lines, indicating a real uprooting. Renters also remain much more mobile than homeowners—almost two-thirds of all movers are renters.
It’s a reminder that buying a home is a long-term commitment, and for many, being tied to the home they own is a choice they’re happily making!
What to Watch Next: The Labor Market
The market will be watching the labor reports very closely this week, as the strength of the job market is a key factor in the Fed’s decision-making. We’ll be keeping an eye on the new weekly private payroll numbers and the official Employment Situation report, which includes nonfarm payrolls and the unemployment rate. Any big surprises here could impact the bond market and, in turn, mortgage rates.
As always, my commitment is to keep you informed! If you’ve been thinking about what these rate changes mean for your long-term goals—whether it’s refinancing, buying your first home, or purchasing an investment property—please don’t hesitate to reach out! Simply reply to this email or call/text me at 818.307.6072. A quick, confidential conversation can make all the difference.
