QUESTIONS?

CALL US: 703-319-2198


Market Risk as it Relates to Housing and Interest Rates

Market Risk as it Relates to Housing and Interest Rates

I have been keeping a close eye on the housing market and the path of interest rates in conjunction with what the chairman of the Federal Reserve has had to say since early this year.  Last week, it was reported that the volume of transactions through July for housing was down six months in a row.  The Fed has been very vocal that they want housing prices to soften.  The problem with the current data is that housing activity may be declining but housing prices are not.  Herein lies the problem.  Housing is connected to large swaths of the economy.  The Fed wants housing prices to soften to help them with their war on inflation.

The Fed’s current plan is not yielding any signs of progress toward their telegraphed objective with housing prices.  The risk, as I see it, is that the Fed may seek to press rates higher to force their objective and adversely affect housing prices.  This will occur through additional short term rate increases, jawboning to the media their intentions, and the outright withdrawal of liquidity through Fed balance sheet reduction expected to double in September.  This means that the risk this Fall is for higher mortgage rates.  I see a possibility that rates for mortgages could rise a percent to a percent and a half over the recent peak.  This could put the rates in the seven plus percent range.  This, in my opinion, would definitely affect housing and I believe also pressure supply and demand to the point that prices would also soften. 

What does this mean for you?  If you are in the market for a home, regardless of the mortgage loan type, there may be an increased sense of urgency.  Again, the Federal Reserve has telegraphed their expectations.  Home prices are the issue.  It is odd that prices would not be affected at this point in the cycle of Fed tightening.  It is clearly related to the extreme amount of excess liquidity in the system.  It’s the Fed’s next move.  I see rate risk to the upside.  What are your thoughts?  Comment below.

 

George H. Omilan
President-CEO - NMLS# 873983
Jefferson Mortgage Group LLC

Reverse Mortgage Specialists - Virginia, Maryland, Florida & Pennsylvania (Jumbo Reverse Mortgages - VA, FL & PA only)

Other Programs:  Alt-A Investor loans-80% Full doc & 75% No Income-No Employment, FHA & VA with Lower Score Options, Fixed & Variable Jumbos-Traditional & Private Label Reverse, Self-Employed Bank Statement & Asset Dissipation Programs. Full range of Non QM Loans for expanded qualification.

 

 

Comments

Error:
Please enter this text

Comment Submitted!

Recent Posts

Blog Tags

Reverse Mortgage Retirement Planning Annuity Traditional Mortgage Fiscal Cliff Medicare Short Sales Debt Mitigation supplemental retirement income Reverse to Purchase Mortgage Retirement income insecurity forgiven mortgage debt mortgage debt forgiveness act solutions for underwater properties home equity access HECM Reverse Mortgage Government insured mortgage lifetime income with a Reverse Loan modification modify your loan with your lender Home Care foreclosure Mortgage Loan Process FHA HUD Construction Loan Hard Money Loan mortgage debt relief act FINRA HECM to Purchase HECM for Purchase Long Term Care Rentership Real Estate Economy Financial Assessments Mortgage Deliquency Seniors Social Security Sandwich Generation Financial Planning private label reverse mortgage growth factor reverse credit line LESA Retirement security assisted living Eligibility for Reverse Mortgage Estate Plan Age in Place downsizing Trump Treasury occupancy requirements Senior Advocate mortgage debt Senior Care Gray Divorce Jumbo Reverse Mortgage Principal Limit Factor Non-recourse loan investor financing No Doc Investor Loans Specialized Forward Mortgages Jefferson Mortgage Group Non QM bankruptcy QM Commercial Real Estate Investor Loans Real Estate Investment Loans self-employed borrower bank statement loan Jumbo Mortgage Loan MIP HECM Changes mortgage Asset Qualifer Asset Based Mortgage VA Low Score VA LOAN manual underwrite Unrestricted Approval success story 2021 Changes Inflation cashflow Blanket Loan Reverse Mortgage Eligibility 55+ Fed Interest Rates Housing Market Housing Prices Mortgage Rates Real Estate Market Diversification Diversification Diversification