00:00So, Mark, the Fed cut interest rates. We've been waiting for this. The big question now is, what does this mean for the housing market? Is now the time to buy a house?
00:09Well, it's still pretty unaffordable, despite the lower mortgage rates. You know, we've got very high house prices that rose quite a bit during the pandemic period.
00:20And incomes have not kept up. So affordability is still a problem. And there's still not a lot of housing inventory in many parts of the country, although that's changing.
00:28So is it time to buy a home? Well, better than it was, but still not great.
00:35You know, hopefully mortgage rates continue to come in. But there's a you know, as you know, there's only a loose link between what the Federal Reserve is doing with short term interest rates and what that means for mortgage rates.
00:44It matters for mortgage rates. But, you know, there's so many other things that drive those rates.
00:48So, you know, I don't think we can count on the Fed by itself to get those rates down.
00:55So let's talk about that a little bit more and dig into the other factors driving things like mortgage rates, because I know there are a lot of questions about refinancing as well.
01:06So for homeowners thinking about refinancing, knowing the Fed could cut again later this year, do you lock in now or do you wait and risk missing this window?
01:15And talk to us about some of those other factors that could also play a part.
01:18Well, you know, just make it concrete. I mean, the fixed mortgage rate 30 year fixed is sitting last I looked at six and a quarter percent and that embeds the expectation among investors that the Fed will continue to cut interest rates.
01:33So, you know, they cut last week. They're going to cut in October, cut in December a couple of times, three times next year.
01:39The federal funds rate target is going to go from four percent now to three percent, you know, by this time next year.
01:44That's already embedded in mortgage rates. So if you look at the six and a quarter percent and that makes sense to refi at that rate, for most folks, that probably doesn't make a whole lot of sense.
01:54The average coupon on an existing mortgage, the average rate on an existing mortgage is probably closer to four.
02:00Refi doesn't make a whole lot of sense. Rates have to come down even more than what they have.
02:05So, you know, for most people, it doesn't still doesn't make a whole lot of sense to refinance.
02:10You need to see rates that get into the fives before that becomes a real possibility for more people.
02:15When do you think that will be?
02:18I think it's going to be a long way. You might get a window.
02:20I mean, obviously, mortgage rates, interest rates broadly go up.
02:23They go down. They go all around. They're highly volatile.
02:25So you might get a window that opens when rates are down.
02:28Maybe the economy, you know, really stumbles and say, say for this next employment report, it comes in negative and there's a lot of recession concerns.
02:37You could see long term rates come in, mortgage rates fall and you get that window.
02:41So I suggest being prepared for the possibility to, you know, go through the window if you have the opportunity.
02:47But it's one of those things that, you know, I wouldn't count on it.
02:51It seems less likely than not that you're going to get a window to open up any time in the near future, at least.
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