Welcome to my August newsletter, where I bring you the latest mortgage rate trends, economic updates, and insights on the Los Angeles housing market.
Mortgage Rate Update & Fed Outlook
Mortgage Rates
Based on yesterday’s trading activity, I expect mortgage rates to drop by at least a quarter point within the next 30 days. Current rates for a 30-year fixed, agency paper loan (up to $807,000) are hovering between 5.875% and 6.25%. Meanwhile, I’m offering long-term adjustable-rate loans below 5.50% (details below). Given the economic developments over the last 24 hours, borrowers can feel more confident navigating this evolving and increasingly favorable interest rate environment.
If the property fits your budget, act now. Rates won’t drop much further soon, and real estate prices are currently subdued. This is the window to take advantage before conditions change.
Here’s a snapshot of current rates on our top loan products:
• 5.25% on 7YR jumbo ARMs up to $10M with verified income documentation, banking relationship required.
• 5.46% on 10YR jumbo ARMs up to $10M with verified income documentation, banking relationship required.
• Bank statement loan rates vary from the mid to high 6% to low 7% range, depending on loan-to-value (LTV) ratios and creditworthiness.
Federal Reserve Policy & Interest Rate Prediction
It’s increasingly probable the Fed will cut rates at the September meeting. The softer jobs report (see below) has effectively pushed the Fed’s hand, as the market is already pricing in a rate reduction. This comes despite inflation remaining slightly above the Fed’s 2% target, underscoring the Fed’s current focus on supporting the economy amid cooling labor conditions.
Jobs Report
Yesterday’s jobs report was a reality check. The economy added just 73,000 new positions, way under expectations, and the unemployment rate inched up to 4.2%. Wage growth is also slowing. The market isn’t falling apart, but the air is cooling.
For the Fed, this is exactly the data they need to watch, and if the trend accelerates, maybe we get at least two rate cuts before year-end. But don’t mistake softening for panic. We’re moving from overheated to normal, not from boom to bust.
On a local level, California’s most recent unemployment data showed a slight uptick to 5.4%. While job growth has slowed, the state’s labor market remains stable with ongoing gains in key industries like health care and leisure. Overall, the unemployment rate reflects steady economic conditions that continue to support our housing market.
Local Activity & Recent Transactions
Local Activity
The Los Angeles housing market continues to adjust beneath the surface. While prices hold close to record levels, sitting in the $925,000–$975,000 range through July, inventory is now at multi-year highs, rising 40%–50% from a year ago in some neighborhoods.
This increased supply has begun to shift the balance, affording buyers more negotiating power and choice than at any time since the pandemic began. Despite the growing leverage for buyers, the market hasn’t tipped decisively in their favor; prices remain sticky, propped up by still-solid demand, while affordability constraints and mortgage rates cap how far they can climb.
Unless a major economic shift emerges, lower rates on the immediate horizon should stabilize the housing market and create more demand — a net positive.
Recent Closed Loans
Here are some recent examples of how CFG closes loans quickly and efficiently, often with the best rates and terms in the industry.
New Home Purchase | Santa Monica | $4.95M
80% LTV financing
7YR ARM
5.33% interest rate | 5.43% APR
21-day close
New Home Purchase | Pacific Palisades | $9.75M
$5M loan, approved in five days, closed in 21 days with $1,000,000 more in financing and a
point lower on the interest rate than the previous lender was able to obtain.
New Home Purchase | Manhattan Beach | $6.5M
60% LTV financing
7YR ARM
5.75% interest rate | 5.85% APR
The loan was originally declined by the wealthy family’s private bank because of the way
income was structured.
New Home Purchase | Calabasas | $1.25M
85% LTV financing
30YR fixed-rate | 10YR interest-only
7.25% interest rate | 7.35% APR
12-day close
National Housing & Economic Reports to Monitor in August:
August 19: Building Permits and Housing Starts
August 21: Existing Home Sales Data
Los Angeles County is at the heart of California’s economy. This region’s economic diversity and dynamic population continue to drive sustained demand and make local real estate one of the most reliable investments available.
If you are considering a move, whether buying, selling, or refinancing, approach it with confidence and a clear, informed strategy. I’m here to provide straightforward advice and expert guidance tailored to your objectives in this competitive market.
Mark Cohen