NOVEMBER 8, 2019 JORDANREED ANNOUNCEMENTS, ARTICLES, BULLETINS, BULLETINS 
​Last Week in Review: How Fast Rates Can Change


Right now, the biggest news story to follow is the U.S. and China trade negotiations.
This past week, home loans started inching higher but were “saved” momentarily midweek when reports came out suggesting a delay of a “phase one” trade deal signing. Remember that Bonds and home loan rates like bad news, so a disruption or delay of the trade signing was the reason for rates to improve off the worst levels midweek.
However, come Thursday, word that both the U.S. and China would roll back tariffs as a deal gets put together was very good news which pushed Stocks to all-time highs at the expense of Bonds and home loan rates.
Even with the recent uptick, home loan rates are at the same level they were at back on July 31st when the Fed cut rates for the first time in 10 years. The Fed has since cut rates two more times and home loan rates have not improved any further.
A word of caution: long-term rates like mortgages can move up very fast, and it is in a complacent environment like today when things suddenly change. Using history as an example, the 10-year Note yield has traded at 1.40% or lower on three separate occasions in the past seven years. In the two previous times — 2012 and 2016 — the 10-year yield quickly spiked to 3% and 2.75% respectively in just six months. This sharp move higher in yield also weighed on home loans, which also rose sharply.
Bottom line: for those considering a new mortgage, now may be an opportune time before this window closes.

NOVEMBER 4, 2019 JORDAN REED ANNOUNCEMENTS, ARTICLES, BULLETINS, BULLETINS
Last Week in Review: Fed Takes Action


This past week the Federal Reserve cut the Fed Funds Rate for the third time this year, by .25%. Along with the rate cut, the Fed released a statement that suggested a “pause” in further cuts, but stated they will be ready to act again should “slowing global conditions” continue or if inflation declines further.
Speaking of inflation, it is important to remind ourselves that the Fed rate cut does not affect home loan rates. Home loan rates are slightly higher than they were right before the Fed started cutting rates in July. The main driver of long-term rates is inflation. If inflation goes up, long-term rates go up. The opposite is also true.
With that said, here’s an important quote from Fed Chairman Jerome Powell yesterday: “I think we would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns.” This means that the Fed is not likely to hike rates anytime soon, and long-term rates should not go too high too soon either because there is no threat of high inflation at this time.
Bottom line: home loan rates are near three-year lows and this week’s modest price improvement can be quickly erased should good news regarding U.S./China emerge.
Tagged Market Trends