Highest Rates Appear Behind Us 😎

Author

Kreg King
November 27, 2023

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Read time: ~4 minutes

Rates ended FLAT compared to last week, and volatility was LOW. With a relatively calm week, rates remained in the mid to low-7 range for most loan types without paying discount points. Paying discount points can get you in low 7’s and high 6’s depending on loan type and credit.

Highest Rates Appear Behind Us

The Fed released their “Fed Minutes” last Tuesday, which is a summary of their meeting that was held in early November. The takeaway from their meeting: The Fed likely won’t be raising rates anymore. Even if the economy and inflation were to show signs of accelerating, the Fed will consider how much tightening they’ve already done. Reason being, they know there is often a delay, called the lag effect, between rate hikes and slowing the economy. Each day that passes, another borrower feels the impact of higher interest rates. That lag effect can delay the impact of rate tightening up to 12+ months. We are in the thick of that timeline as the Fed increased rates from March 2022 to July 2023.

Key Takeaway : Historically, the average delay between the final rate increase and a recession has been 11 months. The last time the Fed increased rates was July 2023. Assuming that was the Fed’s final rate increase, it may not be until June 2024 before a recession occurs. As you can see from the chart, the Fed tends to lower rates at the onset of a recession.

TL;DR – Expect the Fed to begin lowering rates in the middle of next year.

Pent-Up Demand Continues to Increase

The National Association of Realtors (NAR) released a report highlighting annual life events that drive individuals to consider purchasing a home. They have indicated that over the next two years, there are projected to be:

  • 7 million new-born babies

  • 3 million marriages

  • 1.5 million divorces

  • 50 million job changes

We all know higher rates have been the main catalyst for the slowdown in the market. Yet, a significant backlog of buyer demand still exists, fueled by these ongoing daily life events. In addition to these life events, NAR predicts an uptick in market activity in 2024. The surge in activity is expected to be driven by the anticipated decrease in interest rates and a growing number of previously hesitant buyers choosing to re-enter the market.

We anticipate this to play out in a similar fashion to the COVID era. As soon as COVID hit, the market seemed to come to a complete halt. Once the Fed started to lower rates and mortgage rates dropped, the real estate market took off like a rocket.

Key Takeaway: There is light at the end of the tunnel. The pent-up demand of buyers will create a flurry of activity once rates begin to drop. Look no further than the COVID era for proof.

NEW Realtor Value Bomb | Bi-Weekly Social Scripts

We are committed to helping our partners stay ahead of their competition, save ⌚ and make more 💲. It drives every decision we make for you.

With that in mind, we want you to succeed on social media. We know first hand that it’s not easy generating consistent content for your audience. To help, we’ll be sending out 2 realtor-specific scripts every other Wednesday. Use them as-is or add your own flair, record, post. We promise they’ll be relevant and timely.

Keep an eye out on your inbox this Wednesday. The first batch will go out and then every other Wednesday after that.

This is just the beginning…

Instagram Posts from Last Week

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