Welcome to my October newsletter featuring personal insights, advice on mortgage rates, and economic news affecting our local housing market.
Interest Rates
Benchmark Rates
Last month, the Fed continued its head-on fight with inflation by raising interest rates another three-quarters of a point for the third time in a row. Experts expect another three-quarter point increase when the Fed meets in November, which may drive interest rates to their highest levels since the 1980s.
Mortgage Rates
This week, a rocky stock market pushed mortgage rates a little higher, but homebuyers should not panic because there is still a lot of liquidity in the loan market. If you know where to look, there are lenders who are still offering aggressively priced loans with terms that can help buyers get past a high-priced, higher interest rate environment to secure the property they want.
Ten-year bond yields are within striking distance of their 52-week high, which creates a challenging environment for mortgage interest rates and the housing market. In response, I think we will see lenders and sellers begin to think more creatively about how to get individuals who are still eager to buy into a property.
Professionally, I have been in several recessionary cycles and know how to navigate a market like this. The key is using the connections I’ve developed over the last three decades to source loan products that put my clients in the best possible position. For example, I have a prime equity line of credit of up to $2M available for homeowners who want to pull cash out for renovations or other investments.
My recommendation to clients is to buy now since prices are drifting towards a slightly softer real estate market and obtain more normalized refinancing in the next 12 months.
Recent Transactions
We are proud to offer some of the best mortgage financing in Southern California and can create a variety of loan solutions for buyers. Here are some examples:
New Home Purchase | Beverly Hills | $17.5M
65% LTV Financing
Rates in the 4’s
New Home Purchase Purchase | Calabasas | $3.455M
10 YR Interest Only – ARM
85% LTV Financing
No PMI
Investment Property | Beverly Hills
60% Cash Out – $5M
No Tax Returns, No Bank Statements
Economic Reports Impacting Our Housing Market
Jobs Report
The U.S. Bureau of Labor Statistics Employment Summary on Friday reported an addition of 263,000 jobs edging unemployment down to 3.5%. The markets did not react favorably to the news yesterday because it does not send a strong enough signal that interest rate increases are tapering demand and, thus, the labor force continues to be tight. However, wage inflation has receded, and the Jobs Opening and Labor Turnover Summary (JOLTS) report on Tuesday showed that the number of available jobs has shrunk by over a million positions since July.
California’s unemployment rate rose to 4.1%, the first time since May 2020 that there has been a month-over-month increase.
Inflation
The annual inflation rate is 8.3% for the last 12 months ending August 2022. This is the lowest reading in four months and is a significant part of the data the Fed reviews when considering another increase in interest rates.
The September Core Consumer Price Index (CPI) report, the most-watched measure of consumer price inflation, will be released on Thursday, October 13, just a few weeks before the next Fed meeting.
Key Economic Reports to watch for this month:
October 13th – Core Consumer Price Index (CPI)
October 14th – Retail Sales
October 19th – Building Permits, Housing Starts
October 20th – Existing Home Sales, Fed Manufacturing Index
October 25th – Consumer Confidence
November 1-2 – Fed Meeting
While these times feel like a bit of a roller coaster, I still see well-capitalized buyers out there, and good property listings are limited. Have faith in our market. It will adjust and continue to thrive, creating wealth for those who invest.
Sincerely,
Mark Cohen