Are Lower Rates on the Horizon? What You Need to Know!

Hello everyone! The past couple of weeks have been packed with political twists and turns! We’re here to break down what these developments could mean for the real estate and mortgage industries. Let's dive in!!

Read time: ~4 minutes

Rates ended FLAT compared to last week, and volatility was HIGH. Rates remain in the high-6 range for most loan types without paying discount points. Paying discount points can get you in mid to low 6’s.

September Rate Cut Looks More Likely! 😍

Finally, we might be seeing the light at the end of the tunnel for high interest rates!

The past couple of years have been rough. The Fed started hiking rates back in March 2022, and by June 2022, inflation had hit a peak of 9.1%. In July 2023, the Fed implemented what seemed to be its final 0.25% hike, setting rates between 5.25% and 5.50%. Since then, we haven’t seen any cuts 🙁

However, the market is now predicting a 98% chance that the Fed will start cutting rates in September.

Fed Chair Jerome Powell has noted that recent economic data is boosting confidence that inflation is moving towards their 2% target. Additionally, there are increasing signs of a weakening job market. With rates at their highest levels in decades for about a year now, the Fed is worried that keeping rates elevated for too long could negatively impact employment. This growing concern is why the likelihood of rate cuts is increasing so rapidly.

Rate Cuts: Understanding the Short-Term Impact

The buzz about an upcoming rate cut has created quite a stir. It’s fantastic that we’re potentially moving towards lower rates! However, it's essential to grasp how these changes will truly impact you and your clients.

Just last week, a colleague of mine spoke to a couple buyers who decided to pause their home purchase plans because they heard the Fed was planning to cut rates soon. What they didn't realize is that the expected rate cuts are already reflected in the current market rates. Over the past month, we’ve seen interest rates improve by about 0.25% to 0.375% due to the anticipation of a Fed rate cut in September.

This means that when the Fed officially lowers the Fed Fund Rate in September, there likely won't be a significant change in mortgage rates because the market has already adjusted for it.

Biden Steps Down: Market Impact and Trump’s Potential Policies

My Team and I strive to remain non-partisan, focusing solely on market impacts. With President Biden announcing he won’t seek re-election, the spotlight now turns to the Democratic party's potential candidates and their possible influence on the real estate and mortgage market.

On the Republican side, Trump is firmly established as the nominee. In a recent interview with Bloomberg, he shared his plans should he win the election. Here are some key points from that discussion and how they might affect the real estate market:

• Jerome Powell’s Future as Fed Chair - Trump has indicated that he would let Jerome Powell serve out his term as Fed Chair, which lasts until May 2026. Despite his past criticisms of the Fed’s prolonged high rates, Trump has historically supported lower rates. While the Fed operates independently, political pressure to reduce rates could emerge under Trump's administration. However, rate cuts must be handled cautiously to avoid sparking inflation and driving up home prices

• Restricting Immigration - Trump argues that strict immigration policies are crucial for boosting wages and employment, especially for minorities who, he claims, are most affected by current immigration levels. However, there’s skepticism about whether those legally in the country are willing to fill the jobs typically held by migrants. Should unemployment rise due to tighter immigration, we might see a drop in rates to stimulate the labor market.

• Tariffs on China and Europe - Trump has proposed imposing a 60% tariff on Chinese imports and a 10% tariff on other imports. This move aims to encourage American companies to produce domestically. While it might boost local manufacturing, it could also raise domestic prices due to less competition, potentially leading to higher inflation and rates.

• TikTok’s Fate - Trump has indicated he no longer plans to ban TikTok, which is good news for those using the platform for marketing purposes.

These are just a few highlights from Trump’s interview that could impact the mortgage and real estate markets. I will provide similar insights once the Democratic presidential nominee is confirmed.

Best ChatGPT Prompts for Agents in 2024

For those of you who use ChatGPT or are considering it, I wanted to give everyone something of value. I recently came across an insightful article in Inman and summarized it into a downloadable document just for you.

I have been using ChatGPT for some time now, and I've found that crafting the right prompts is essential for ChatGPT's effectiveness, guiding the conversation toward meaningful and accurate responses. This document is designed to help you save time in your business, allowing you to focus more on your money-making activities.

Download our guide and see how these tailored prompts can transform your engagement strategy and keep you ahead of the curve.

Two Ways My Team & I Can Help

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