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The Go-To Chart for Explaining Today’s Rates
Weekly Mortgage Market Update - 09.23.2024
Michael Cassano
September 23, 2024
Hello everyone! Welcome to the next phase of the housing market. It feels like we’ve finally got some momentum behind us, and for those of you who’ve stayed the course, your persistence is about to pay off.
Here we go!
Read time: ~4 minutes
Rates ended FLAT compared to last week, and volatility was LOW. Rates remain in the low-6 range for most loan types without paying discount points. Paying discount points can get you in the high to mid 5’s.
Powell Cuts Rates by 50bps—The Pivot Has Begun!
Big news this past week— On Wednesday Fed Chairman Jerome Powell made the bold move we’ve all been waiting for, cutting the Fed Funds Rate by 50bps for the first time since 2020.
Looking ahead, the Fed is forecasting two more 25bps cuts in 2024, a total of 100bps in 2025, and another 50bps in 2026.
So why did they make the move?
Powell explained that the Fed now has “greater confidence” that inflation is on track to hit their 2% target (even though it’s currently at 2.5%). They’re also worried about unemployment rising too quickly. Lowering rates could help slow down that trend. Take a look at the chart below from ResiClub, which shows the relationship between inflation and unemployment.
You could practically hear every mortgage loan officer and realtor cheering after the announcement!
Interestingly, this decision wasn’t unanimous for the first time since 2005. One committee member actually voted for just a 25bps cut.
Key Takeaway: Inflation is cooling, but unemployment is ticking up. The Fed is trying to balance both. Powell admitted he should have started these cuts back in July, but by cutting 50bps now, the Fed is making a bold pivot. Keep reading for more insights and tips on how to talk to your clients about these changes.
The Go-To Chart for Explaining Today’s Rates
There’s a TON of misinformation floating around online since the Fed’s 50bps rate cut.
"Rates dropped 0.50%, the housing market is back!"
"Mortgage rates are higher after the Fed’s rate cut!"
One is completely wrong, and the other is just confusing without context.
Here’s the only chart you really need to pay attention to. It shows the average 30-year fixed rate since mid-April.
As you’ll notice, rates have been steadily declining over the past five months. We’re now looking at the lowest interest rates in two years. Sure, there’s been some day-to-day volatility, but when you zoom out and take a broader view, you’ll see that rates are gradually pulling back—and that’s great news.
But why?
As I’ve mentioned many times before, the market had already priced in Wednesday’s rate cut long before it actually happened. That’s why when Powell pulled the trigger, the market wasn’t caught off guard. That’s exactly how the Fed wants it.
What now?
Now, we wait for public perception to catch up. It won’t happen overnight, but soon you’ll start hearing more stories in the media about rates coming down. Once that happens, we’ll see more activity in the housing market. And when it does, be ready to take full advantage.
Key Takeaway: In any market, having the right people in your corner is critical. Surround yourself with trusted advisors—and I hope you’ll consider me as one of them.
Email & Voice Scripts for the Fed Announcement
With the Federal Reserve announcing a 50bps rate cut, now is a great time to reach out to your clients. This move could open up some important opportunities, so I’ve included email and voicemail scripts that can help get the conversation going. Whether it leads to a phone call or an in-person meeting, these scripts can help set the stage for deeper discussions.
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