Fed Cuts Interest Rate by 50 Basis Points.
On September 18, 2024, the Federal Reserve announced a 50 basis point cut to its key interest rate, bringing it down to 4.9%. This decision marks a shift from the Fed's previous focus on curbing high inflation to now supporting the job market, which has shown signs of slowing. The move reflects the Fed's growing confidence that inflation is approaching its 2% target, after peaking at 9.1% in 2022. The central bank has hinted at further cuts in the upcoming months to continue balancing economic growth with stable prices.You can read the full article on the Federal Reserve website
US Housing Starts Increase to Fastest Pace Since April.
In August, U.S. housing starts rebounded by 9.6% to an annualized rate of 1.36 million, the fastest pace since April, following a sharp drop in July. The rise was driven primarily by a 16% surge in single-family home construction, while multifamily projects declined. Building permits, an indicator of future construction, also increased by 5%. Despite improved demand prospects tied to falling mortgage rates, builders remain cautious due to a high inventory of unsold homes. Although homebuilding contributed to economic growth earlier this year, it's expected to reduce third-quarter GDP by 0.3 percentage points (Bloomberg).
U.S. mortgage rates fall to their lowest level in two years.
U.S. mortgage rates have fallen to their lowest level in two years, with the average 30-year fixed-rate mortgage dropping to 6.15% as of mid-September, according to the Mortgage Bankers Association (MBA). This decline comes in anticipation of the Federal Reserve's upcoming interest rate cut, which could be as much as half a percentage point. The recent drop in mortgage rates, which followed a similar decrease the previous week, has sparked increased demand for home loans and refinancing. Applications for mortgages have surged, driven by improved housing affordability as home prices have slowed in growth.
Refinancing applications now account for over half of all mortgage applications, surpassing the historic median of 48%, indicating that many homeowners are taking advantage of lower rates to reduce their monthly payments. U.S. mortgage rates, which peaked nearly a year ago at close to 8%, have since dropped by 175 basis points as the Federal Reserve signaled an end to its rate hikes. With the Fed set to announce further rate cuts and updated policy projections, analysts expect a more significant reduction in rates in the coming years.
You can see the full article on Yahoo Finance
Benefits of buying a home in Northwest Indiana.
First-Time Home Buyer Guide for Northwest Indiana
This article highlights that buying a home in Northwest Indiana is a rewarding investment, especially for first-time buyers. It details key benefits, such as access to affordable housing, stable long-term financial growth, and tax benefits. Additionally, first-time buyers can take advantage of several programs that offer down payment assistance and competitive mortgage rates, making homeownership more accessible than ever before.(Quadwalls)
Northwest Indiana Business Magazine.
The article highlights the region's affordable housing prices compared to nearby Illinois, lower taxes, and strong community appeal. It mentions how many buyers are migrating from Illinois due to high taxes and a challenging political climate. With increased demand, home values in Northwest Indiana have remained strong. The article also emphasizes the area's remote work advantages, allowing buyers to prioritize lifestyle factors such as space and quality of life, rather than proximity to jobs. This makes Northwest Indiana an attractive option for both first-time buyers and those looking to move up the property ladder.You can read the full article on the record-breaking housing boom in Northwest Indiana here.
Snapshot of mortgage rate trends .
30-Year Mortgage Rates Hit a New 19-Month Low - Investopedia
Mortgage rates have dropped to a 19-month low, with 30-year fixed rates now averaging 6.03% and 15-year loans at 5.07%. This decline follows the recent reductions in inflation and expectations of further Federal Reserve rate cuts. While rates have fallen since the historic highs of 2023, they are still above the pandemic lows, and homebuyers remain cautious due to high home prices.
September 2024 Mortgage Interest Rates Forecast - NerdWallet
Mortgage rates have been falling steadily for the last few months, reaching 6.25% in August. As inflation cools and the labor market slows down, the Federal Reserve is expected to cut rates further, likely resulting in continued decreases in mortgage rates through September. However, despite these reductions, home affordability remains a challenge due to high property prices.
Housing Inventory Falls as Mortgage Rates Drop - HousingWire
Mortgage rates have started to decline, causing a slight reduction in housing inventory in the Midwest. Rates for 30-year mortgages dropped to around 6.03% as of early September 2024. Despite this, the high cost of homes and rising interest rates earlier in the year have kept many potential buyers out of the market, reducing the overall number of new listings.
Mortgage Rate Predictions for September 2024 - Norada Real Estate
Predictions suggest that mortgage rates could fall slightly after the Federal Reserve’s anticipated rate cut during the September 17-18 meeting. Rates, which currently average 6.53% for 30-year loans, may drop by 0.25%, offering some relief to buyers. However, rates are expected to remain above 6% through the end of the year, reflecting a steady but slow decline.
Mortgage Rates in September 2024: What to Expect - GreenSprout
As of September 2024, mortgage rates have slightly increased, with 30-year fixed rates hovering around 7.2%. Analysts expect these rates to stabilize or decline if the Federal Reserve cuts rates in mid-September. However, with high inflation and a slow housing market, it is unlikely that rates will drop significantly in the near term
The NAR (National Association of Realtors) Residential Real Estate Market Snapshot: buyer/seller behavior in 2024
Summary Generated with the help of AI.
Interest Rate Influence: The report emphasizes that interest rates play a critical role in shaping the residential real estate market. While recent rate cuts could ease mortgage pressures, it’s noted that the broader economic factors, such as inflation and job growth, will continue to influence rates.
Regional Variations: In the Midwest and other regions, housing markets are seeing more localized trends, with some areas benefiting from population migration away from expensive coastal cities. The report suggests that Midwest cities may experience steadier demand as affordability remains higher compared to coastal regions.
Inventory and Supply Challenges: Despite recent gains in homeownership rates and strong buyer demand, the report highlights ongoing supply challenges. Many regions, including parts of the Midwest, face inventory shortages, which could limit housing availability and drive up prices even as interest rates decline.
Home Price Trends: Nationally, home prices have continued to increase, though at a more moderate pace. The report indicates that price growth may slow as interest rate cuts gradually lower mortgage rates, but high demand and low inventory could keep prices elevated in many regions.
For the full report, you can visit the NAR website here(National Association of REALTORS®).
The S&P Global Ratings: 2024 U.S. Residential Mortgage And Housing Outlook, particularly focusing on the impact of interest rate cuts.
It all begins with an idea.
Summary Generated with the help of AI.
Here's a summary of the key points:
Interest Rate and Mortgage Outlook: Mortgage rates are expected to decline throughout 2024, with the 30-year fixed-rate mortgage projected to fall from 7.3% to 6.2% by the year's end. The decline is driven by a combination of easing inflation and stabilization of the 10-year Treasury bond yield, which influences mortgage rates.
Challenges to Affordability: While mortgage rates are expected to fall, affordability remains a challenge due to high rates over the past year. The spread between the 30-year fixed-rate mortgage and the 10-year Treasury bond yield remains unusually wide, but it is forecasted to narrow gradually, which may improve housing affordability.
Regional Variations: The report emphasizes regional variations in housing trends. The Midwest, like other secondary markets, is expected to benefit from continued demand as people migrate from higher-cost areas. However, housing inventory remains a constraint, contributing to rising prices even as mortgage rates decline.
Housing Supply and Demand: The market is expected to remain robust, supported by steady demand from millennial homebuyers entering their prime home-buying years. However, housing starts, particularly in the multifamily sector, may slow due to higher financing costs, which could put upward pressure on single-family home prices in the Midwest and other regions.
For more detailed information, you can access the full report on the S&P Global Ratings website here(S&P Global).
Housing affordability in America is finally improving. Not so much in these cities
It all begins with an idea.
This blog discusses the current state of the U.S. housing market, focusing on the impact of anticipated interest rate cuts by the Federal Reserve. Despite these cuts offering some relief, the market remains unaffordable, especially in specific regions.
Key points include:
Home Prices: In June, New York, San Diego, and Las Vegas saw the highest home-price growth, with New York taking the lead in May. The national Case-Shiller index shows a slowing in year-over-year price growth, although prices still reached record highs.
Rent Burden: Renters in New York City, Miami, Los Angeles, and Northern New Jersey are facing severe rent burdens, with New York leading as the most unaffordable market. In New York, renters spend about 58% of their income on rent.
Regional Variations: While some regions like Tampa, Denver, and Minneapolis are seeing declines in shelter costs due to increased housing construction, others, like Miami, continue to struggle with high costs.
Affordability Issues: New York remains the most unaffordable region, both for renters and homebuyers, with high inflation driven by rising shelter costs.
The text emphasizes the uneven nature of housing affordability across the U.S., with certain areas, particularly New York and Miami, remaining out of reach for many residents despite broader improvements in the national housing market.
Chinese tycoons are using stock to borrow from private lenders as bank liquidity dries up
South China Morning Post, Mon, September 2, 2024
Facing liquidity challenges, wealthy individuals in Hong Kong and mainland China are increasingly turning to private lenders, using stocks as collateral. Traditional banks remain cautious about lending due to ongoing property market issues and slow recovery of public capital markets. Private credit markets in Asia-Pacific, driven by distressed developers and wealthy families, grew to at least $124 billion in 2023.
Private credit lenders, like Equities First Holdings, are seeing significant demand from Chinese borrowers. Loans are typically secured with Hong Kong-listed stocks at fixed rates of 3.5% to 4.0%. China accounts for a large portion of these loans, with Equities First’s Asia-Pacific loan portfolio growing almost 2.8 times over the past four years.
Family offices in Asia-Pacific have also increased their equity allocations, reaching the highest global ratio at 40%. As interest rates are expected to fall, demand for equity-backed financing is likely to grow, with borrowers seeking low-rate financing for various purposes.
Private banks, distinct from private credit lenders, emphasize careful assessment of financing options and stress the importance of financial resilience, investment diversification, and maintaining adequate buffers against market volatility.