The Fed’s rate cut hasn’t done much to help the mortgage market:
1 Like
The supply is tight. Can’t sell what you do not have.
That said with tariffs and austerity I am expecting a major down turn.
The supply of houses affects prices more than interest rates.
DB2
1 Like
With more interest rate cuts coming next year they may be waiting for better numbers. But now that seems less likely.
Those with very low interest rates are likely to delay as long as they can. More space for a growing family means much higher payments.
People are worrying about the economy now. They weren’t prior to November 5th.
Losing a job just after you pick up a mortgage is not the way to do things.
Prior to November 5th, people could not afford eggs or gas, they whined. Now, the media is reporting robust holiday travel and sales.
Steve
2 Likes
Buying eggs is less of a concern than having a job at all. Some folks are going to get laid off. Others won’t be hired.
My boss told me yesterday that I do not know what is going on. She is disciplining people left and right. I am good at my job so I had no clue. She was happy to inform me. I am coming up to raise time and her management team is behind me. My anniversary is Jan 8.
I’d like to say more but then I have to represent the organization.
The Steelcase dealer I worked for had a RIF every year. The departee’s work was handed to those who remained.
Raise? Whazzat? The reward for being willing to work like a rented mule, and foregoing vacations that were supposedly earned, was not being included in the next RIF.
Steve
1 Like
That’s because mortgage duration is usually closer to 10 years (I think it is 8.3 years or something like that). Therefore the most common mortgage rates will be more linked to the 10-year treasury note than to the short-term fed rate (or any short-term rate). And even though the fed dropped short-term rates, and even though short-term T-bills have seen their rates drop significantly, the 10-year Treasury note hasn’t dropped much, so mortgage rates are where they are.
Not for… 9 8 7 6 5 4 3 2 1 POST!
The Captain
I don’t think that’s it. People don’t think “Oh, I’ll stay here 8.3 years” ( it’s a joke, son) but they do think “I have a 3% mortgage and I’m not moving somewhere and taking a 6% mortgage”, so there is a very large part of the mortgage market that is “locked in.”
Some are not, like business transfers, and yes, there are a few people who will bite the bullet and move, but we had ultra-low rates for nearly 15 years, so there are a TON of people with super-low rates, and until the rates come back down I don’t expect a lot of movement.
(That will also weigh on the home goods markets and others, because it’s when people are mobile that new couches and rugs and appliances fly off the shelves. Until then it’s just the replacement market, which is not so frothy.)
2 Likes
Makes sense. I’d never thought of that.
Don’t forget that now a third of all home buys are for all cash.
DB2
My vacation rate is .062
Basically for every 8 hour shift I get just under 30 minutes of vacation time.
They used to tell us the average mortgage lasts seven years. I suspect thats the time it takes a growing family to accumulate enough equity to get something larger.
But i notice in my neighborhood the combination of low interest rates and rapid price increases some upgraded in more like three years.
Now the pendulum swings the other way. So time is likely to be increasing. But families busting at the seams can’t wait too long.