30-Second Update:  Rates Are Low, Can They Go Lower?

Earlier this month, the Federal Open Market Committee announced that no foreseeable moves to interest rates were expected “for some time.”  Markets have now reversed their position, however, and now believe the Federal Reserve will likely cut rates twice in upcoming months (possibly September and January 2020).  According to CME’s FedWatch tool, futures trading indicated a 63% chance of a September rate cut and a 62% probability of another rate cut in January.  Since 1983, the average length of time from a rate hike to the next rate cut has been seven months.   With the most recent tightening occurring back in December, a September cut would be ten months apart, putting us closely in line with historical averages. 

Even with two possible interest rate cuts on the horizon, as of the week ending May 23rd, mortgage rates have fallen for the fourth straight week.  This marks the lowest level since January 2018.  This low interest rate environment is proving to be extremely beneficial to those looking to purchase a new home, in addition to homeowners looking to refinance into a lower interest rate, or pull cash out for home improvement or debt consolidation. 



Loan Applications on the Rise and Home Sales Bouncing Back

The Mortgage Bankers Association released their weekly loan application report, and we see that while weekly purchase applications were slightly lower, they are up about 7% since this time last year.   Refinances are up about 8% for the week and 30% from a year ago.  Both of these readings are very favorable since they came from a week where interest rates ticked slightly higher.

Existing Homes Sales data was reported, showing that for the month of April there were 5.19 million homes sold across the nation. This came in slightly lower than last month’s number of 5.21 and about 4.4% lower than where we were this time last year.  When digging deeper into this report, we see that even though this number is slightly lower, it appears that the trend is improving.  Since the decline is lessening, this report actually points to a favorable trend and that more homes are beginning to sell.  This report serves as a good gauge of the housing market, since there are more existing homes than new homes.

With historically low rates, strong levels of demand, and forecasts of appreciation on the rise, we are seeing a lot of strength in the housing market.  It is a great time to purchase or refinance a home.


30-Second Update:  Home Builder Confidence hits Seven Month High

The latest National Association of Home Builders Housing Market Index, which measures builder’s confidence in newly built, single-family homes, rose three points to 66 in May.  This is the highest reading since October of 2018.  To keep things in perspective, any reading above 50 is considered positive.  This report is a direct reflection of strong reported home sales, allowing builders to be more optimistic about the housing market.   Economists use this index to gauge the status of the home building industry.  If builders are more confident in the housing market, they will be more likely to break ground on more houses, which would lead to more jobs and improve the economy as a whole.

Economists continue to cite the low interest rate environment, along with a strong labor market, and rising wages as key factors propelling the housing market.  Michael Murray, Chief Operating Officer of D.R. Horton stated, “We see that some of the demand that was displaced in the fall will probably elongate a selling season this year in the spring and into the early summer as those buyers have returned and more continue to come into the market, seeing it’s still a great time to buy a home.”   


Great Time to Purchase a Home

CoreLogic has just reported their national Home Price Index, and it shows that home prices are forecasted to increase by 4.8% over the next year.  Their last annual forecast was 4.7%, so this indicates that they are seeing continued demand and strength in the housing market.

Looking in the rearview mirror, national home prices have increased by 3.7% over the last year.  This is a good number and shows strong annual home appreciation.  Based on their data, a $300,000, home on average, should have gained $11,100 in value!  (Note: This is a general example that can fluctuate depending on the region of the country, but this is a strong national increase nonetheless.)

Home appreciation is proven to be a great way for households to increase their wealth. Looking at forecasts of what is to come, the picture is getting even better.  Low interest rates and strong levels of appreciation make this a great time to purchase a home.


Week of May 6th 2019. Click the image banner below to listen.


30-second update:  Federal Reserve Leaves Rates Unchanged


At the Federal Reserve’s most recent meeting on May 1st, the Fed voted unanimously to keep its benchmark interest rate in a range of 2.25% to 2.5%.  The benchmark interest rate influences the cost of borrowing for mortgages and various other consumer and business loans.   Fed Chairman Jerome Powell went on to state that, “The Federal Reserve feels comfortable with current policy and is likely to keep interest rates steady for an extended period of time.”  In addition, President Donald Trump has even been pushing the Fed to lower rates, and that a one percentage point cut would be in order.   The President has cited low inflation as a key reason for the possible Fed cut to interest rates. 

Overall, the economy continues to grow at a solid rate, and with the welcoming news that we will most likely remain in a low interest rate environment for the rest of the year, current homeowners and those looking to buy are reaping the benefits.   With the spring housing market in full swing, now seems to be the perfect time to take advantage of these lower rates, by refinancing your current mortgage or purchasing a new home. 


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