Well, the Fed did cut rates this past week by 50 basis points, and I think for some it surprised them because the Fed was supposed to maybe cut just a quarter point. I was of the opinion that it was going to be a half point, primarily because the Fed was targeting employment and not the rate of inflation.
I think the markets got what they wanted. Rates had already come back to that level. They’ve adjusted and the markets are almost always efficient. So, in the last month, mortgage rates have come down a little bit.
In the last two weeks in particular, the rates moved lower a fair amount. Looking at the rate sheet on a day-to-day basis, it was possible to find 6%, and maybe even below 6%, on a 30-year-fixed mortgage. Obviously, that’s a lot better than it was a year ago.
I think the news is out, which is always good because now it’s going to give the public the impetus to get on the phone or send an email or whatever they need to do to inquire about a mortgage.
From a standpoint of what is it going to do for interest rates moving forward, I think the rates were baked into the market the last few weeks. Those that were paying attention to what mortgage rates were doing in the last two to three weeks, probably noticed that the Fed dropped rates but mortgage rates haven’t come down much. The market was efficient and already had a Fed-rate cut priced in.
It was interesting that in the Fed statement, Powell said after the decision was made that the Fed was looking to lower again prior to the end of the year. That could be as much as another half point. Now that’s getting aggressive.
So, I think what that means for the rest of the year is that the 30-year fixed-rate mortgage is going to be at or below where we’re at today, which is somewhere in that 6% range. Obviously, that’s a huge push for us at Police Mortgage because I think it opens up affordability for purchase transactions when it comes to police home loans.
It also opens the possibilities to more refinance transactions. Somebody who a year and a half ago obtained a mortgage loan for police officers at a rate over 7% may be a good candidate to refinance.
Anytime the Fed acts to lower rates the news is great because we will have the opportunity to have more discussions with first responders concerning mortgages for police. I think that’s going to carry momentum over into the new year.
We went from a period where we had over two years of rate increases. The rate decrease is a big sea change in that we have now flipped the script and we’re in a phase where the rates are dropping. The pace of the decrease is anyone’s best guess, but the Fed has been pretty fair in telegraphing their intent. If the intent is to continue to lower rates, then I think the fourth quarter is going to bode well for the mortgage industry.
Police Mortgage always advocates for homeownership. We do so in all markets, whether they’re up or down. But now there’s some relief for people, especially for those who were in a situation where they had to buy, or they were in a position where they had to make that decision
It’s now turning towards a lower rate environment. And you never look at gift horse in the mouth. So, I’m going to take what the market is giving me and I’m going to run with it. I think our clients should do the same.
Police Mortgage specializes in conventional mortgages, purchase money transactions, FHA loans, and VA loans. Led by founder and CEO John Aretos, Police Mortgage is known and respected for providing clients with exceptional service, customized terms, quick and easy closings, and low money down options. To learn more about Police Mortgage, call 312-499-8878.
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