Mortgage Update - November 11th, 2024
Hello everyone! We made it through the election whirlwind! Although the results couldn’t please everyone, the sun still came up the next day!
Before we dive into this week’s newsletter, we want to take a moment to honor Veterans Day and recognize the courage and dedication of our veterans. Their service and sacrifice have protected the freedoms we enjoy, and we are deeply grateful to them. Thank you!
Let’s get into the latest updates!
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Read time: ~4 minutes
Election's Over, Fed Cut Rates - So Why Haven't Mortgage Rates Dropped? 🤷♂️
Nick and I both agree—it’s been a tough year filled with market uncertainty. We’ve heard many reasons from buyers and sellers about why they’re holding off on making a move in 2024.
Two of the most common concerns are:
"I heard the Fed will cut rates soon, so I’ll wait."
"The market feels risky with the election, so I’ll wait."
Fortunately, both of these key events are behind us! So, what’s the immediate impact on mortgage rates? Surprisingly, almost no movement at all 🙁
So, why aren’t rates dropping as uncertainty fades?
If you’ve been following our newsletter, you know that the sharp increase in mortgage rates in October was driven largely by market expectations. As Trump’s chances of winning the election grew, investors moved money from bonds (safer assets) to stocks (riskier assets), which pushed mortgage rates up. This mirrors what happened after Trump’s 2016 win, when markets expected pro-business policies—like tax cuts and deregulation—which fueled investor optimism and a rise in stocks and rates.
As for the Fed’s 0.25% rate cut last Thursday, the market had fully anticipated it, so long-term rates had already adjusted. As a result, the actual rate cut had little to no effect on mortgage rates.
This past month is a great example of how markets work based on expectations. Markets responded faster than traditional news, often anticipating events before they even happened, because that’s what they’re designed to do. You want to always follow the money!
Key Takeaway: Mortgage rates saw minimal movement after the election and the Fed rate cut because the market had already priced in a Trump victory and a 0.25% rate cut. The next shift in rates will likely be influenced by the jobs market and inflation.
How Much Influence Can a President Have on Interest Rates?
This week, Fed Chairman Jerome Powell was asked if he would step down if President Trump asked him to resign.
Powell's response: "No."
When asked if he could be fired, he said, "Not permitted under law."
This was a legit question as it is widely known that Trump is not a fan of Powell, especially over the Fed's decision to raise interest rates in 2018. Trump believed these rate hikes could slow down the economy and hurt the stock market, which was performing well at the time.
Trump's frustration has also stemmed from the Fed's independence. As president, he suggested Powell lower rates to support the economy and align more with his economic plans. However, Powell stuck to his role, making decisions based on the Fed’s goals of controlling inflation and promoting job growth.
So, for those thinking that a Trump presidency will ultimately lead to lower rates, we need to remember that the president is not in complete control.
While the president can influence economic policy, such as tax cuts or deregulation, interest rates are controlled by the Fed. The Fed operates independently to manage inflation and ensure economic stability. While the president can appoint Fed members, the actual control over interest rates remains with the Fed, which makes decisions based on long-term economic factors, not political influence.
Jerome Powell's current term as Chairman of the Fed is scheduled to end in February 2026. If their views continue to clash, we can certainly expect more fireworks between Powell and Trump. It’ll be interesting to see how this unfolds!
Key Takeaway: While a President’s policies can affect the economy, the control over interest rates lies with the Federal Reserve. Powell doesn't plan to go anywhere, which could lead to an interesting dynamic with Trump in office.
Big Inflation Report This Week 💥💥
The most recent significant move in mortgage rates tends to follow CPI Inflation reports. The September CPI inflation report is set to be released on Wednesday, November 13th.
Currently, the CPI annual inflation reading stands at 2.4%, which is close to the Fed's target range of 2%. If we see inflation increase above and beyond the current 2.4% figure, expect rates to swiftly move back into 7% range.
However, if inflation continues to decline, anticipate rates to ease, potentially kissing the 7% range goodbye.
Duplicate this Zillow Hack NOW 🫵
Almost 25% of all homebuyers were waiting for the election to conclude before jumping into the market, according to Redfin. Now that it’s behind us, homeowner’s are probably asking “how much is our home worth?” or “should we move now or wait?”
Here is an easy way to reconnect with past clients and get them talking about their home’s value:
Get Your Closed Client List: Pull up your database (CRM or Excel). Have their name, address, and phone number handy.
Look Up Their Zestimate: On Zillow, enter each client’s address and check the Zestimate.
Screenshot an image of the Zestimate: Take a screenshot of the Zestimate with your phone.
Send This Text: Copy and paste this exactly : “Hey [Client’s Name] - I have my own thoughts on this, but I was curious - what’s your take on this valuation?”
Start the Conversation: They’ll either say, “That’s low,” or “Wow, really?” Either way, you’ve got a casual way to initiate a conversation. If it feels appropriate, schedule a call for a year-end review.
Avoid being a transactional agent who only appears when there’s a deal in play. Dedicate the same energy to building lasting relationships and retaining past clients as you do to closing deals.