Solano Real Estate Scene: Jim Porter
Article By: Jim Porter – October 25, 2024
A head fake in sports like football, baseball, basketball, or even volleyball is a faint, a look or deceptive move by a player in one direction and then move in another. In finance, a public company can release a great quarterly report, give positive guidance and have its stock price go up for a few days with investors jumping on the bandwagon with animal spirits, buying tons of the stock only to have the stock price drop the following week down below where it was trading before the positive press release.
The Fed cut was expected to be 25 basis points last month and Chairman Jerome Powell surprised us with 50. Mortgage rates improved for six weeks in a row leading up to the Fed cut and Realtors, builders, buyers and especially lenders were fired up and excited. Some buyers were lucky enough to rate lock during August and September.
The national average for a conventional 30-year fixed rate mortgage got down near 6.125% for 720 FICO score folks and VA and FHA loans became lockable in early September at 5.50. I warned in a September column that the lower mortgage rates were already priced into the market, prior to the expected Fed cut and historically, mortgage rates do not go down immediately following a cut, but as of Wednesday, lenders across the country feel like a player trying to guard Michael Jordan. Jordan was known for his slam dunks but famous for faking out his defender and twisting their ankles with head fakes.
The market is still expecting five or six more 25 basis points Fed cuts over the next six to nine months, but keep in mind, these rate cuts are great for a better Wall Street Journal prime rate and the overnight lending rate between banks and other financial institutions, but mortgage rates don’t follow this short-term rate. Mortgage rates track in line with the yield on the 10-year treasury bond.
Since the Fed cut, the 10-year yield is up from 3.5% to 4.25% and the national average for conventional mortgages hit 6.9% this week and the stock market isn’t doing much better with a sell off two weeks in a row as the world waits to see what happens on Nov. 5. Please vote.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
