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Good News! Fed Says Rate Increases May Halt

fed rate increasesWe have almost 1,000 pre-approved borrowers in our pipeline and all of them breathed a sigh of relief yesterday.

The reason?

Two top officials from the Federal Reserve recently implied that the Fed may be done or close to done pushing up rates (a December increase is still likely).

Our pre-approved borrowers should be delighted b/c we pre-approve them for their maximum purchase price and another 1% increase in rates would significantly decrease their purchasing power.

Stock market investors were even happier than our borrowers, as stock indices rose yesterday in direct response to comments by the Fed Chairman, Jerome Powell.

The Fed is putting on the brakes b/c global growth is slowing and b/c Fed officials believe the goals of “full employment and 2% inflation” are within hand.

So, after finally seeing rates climb a full percent over the last year, we may now see a leveling off with our new normal being closer to 5% in contrast to last year’s 4%.

LESS UNCERTAINTY IS AS GOOD AS LOW RATES

This is very good news for the real estate world not just b/c everyone loves low rates and b/c we can all still thrive in a 5% rate environment (still very low by historical standards); it is good news b/c investors and consumers dislike uncertainty and often sit on the sidelines when there is too much uncertainty.

When the constant threat of more rate increases is removed from the equation, the entire economy will likely move faster.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646