Market Update as of May 3, 2019

Trump Calls for 1% Rate Cut
President Donald Trump took to Twitter as the Federal Reserve began its April-May meeting on Tuesday. He called for the group to cut the federal funds rate by 1%. This would put the rate at levels not seen since the first quarter of 2018. Trump also proposed additional stimulus in the form of quantitative easing — when the Fed buys mortgage-backed securities to send rates drastically lower. If instituted, these policy changes could pull down mortgage rates, even below levels seen during the early-April dip that caused a mini refinance boom. The Fed doesn’t take orders from the president, but it is undoubtedly feeling pressure today as it adjourns its third meeting of the year. It’s unlikely the Fed would institute such a large rate cut. However, the Fed could hint at future rate cuts during its post-meeting press conference. Even the suggestion of stimulus could send rates lower. Home buyers and refinancing homeowners should watch rates and be ready to lock as things develop today. This could be the opportunity many mortgage shoppers have been waiting for.

Pending Homes Sales Bump
The number of U.S. existing homes going under contract increased in March, a positive sign for an otherwise hiccuping housing market. The National Association of Realtors on Tuesday said its pending home sales  index, which tracks contract signings for purchases of previously owned homes, climbed 3.8% from the prior month to 105.8 in March. Sales, unless they fall through, typically close within a month or two of signing. Economists surveyed by The Wall Street Journal had expected a 1.5% gain last month. Still, the index was down 1.2% in March from a year earlier. Despite the weakness, Lawrence Yun, the trade group’s chief economist said, “we are seeing a positive sentiment from consumers about home buying, as mortgage applications have been steadily increasing and mortgage rates are extremely favorable.” U.S. existing home sales fell 4.9% in March from the previous month and were down 5.4% from a year ago, marking 13 straight months of annual declines. Home prices for years have risen faster than wages and inflation, making it difficult for many consumers to afford homes. A rise in mortgage rates and a shortage of homes for sale, especially at the low end of the market, created additional challenges.

Jumbo Homes Sales Hurting
Because homeowners can’t deduct as much mortgage interest as they used to be able to, the calculus has changed when it comes to buying a home, especially an expensive one," said Redfin chief economist Daryl Fairweather. "Although the new mortgage rule applies to everyone in the country, high earners in states with high income taxes like California and Massachusetts saw their tax bills surge." "Not only do the new rules make it less desirable to purchase a multimillion dollar home in high-tax states, it has also motivated some people—especially those with big incomes and big housing budgets—to consider moving to places like Florida, Washington or Nevada, which have no state income tax," Fairweather added.

image013.jpg

Buy or Rent?

image014.jpg

Courtesy of Sotheby's International Realty's in-house Lender Simon Atik, 310.880.8414, Simon.Atik@grarate.com, Vice President of Mortgage Lending, Guaranteed Rate Affinity.

#JeffreyShore #JeffreyShore.com #Sothebys #SothebysInternationalRealty #SIRcleTheGlobe #SothebysHomes #SothebysRealty #Mortgage #MortgageRates #30YearMortgage #LuxuryRealEstate #GuaranteedRate