The average 30 year mortgage rate dropped 60 basis points briefly last week (from 7.22% to 6.62%) on news that inflation rose less than expected in October (with CPI increasing 0.4% instead of the 0.6% estimate). Inflation is still running at a 7.77% annual rate, well beyond the 2% goal, but the rally served as a bright spot none-the-less, reassuring weary investors that they worst may indeed be behind us.
Inputs into individual mortgage rates go well beyond the Fed Fund Rate, and include metrics on inflation, unemployment and jobless claims, credit scores, down payments, and demand for mortgages. With demand for new mortgages down over 40% from last year, reaching the lowest level since 1997, and refinance demand down 87% from last year, lenders are looking to buy downs and sweeteners to spark interest in the slower market. This is the opportunity many side-lined buyers had been hoping for.
Moving forward, we expect see a more cautious and less aggressive Fed focused on easing extreme volatility. After four consecutive 75 basis point hikes, it is likely we will see a moderated 50 basis point increase in December, giving Americans time to catch their breadth and monetary policy makers time to see the ongoing, rolling effects of previous decisions. It is clear that we should not interpret a slower pace of rate hikes and moderating inflation as an easing, but more of a plateau and holding patterns to curtail the stickier, long term effects of inflation.
It is very possible that we have been in the actual depths of recession for months, with a stock market bottom already fixed, and Q4 2022/Q1 2023 challenges already priced in. With this comes the nearing light at the end of the tunnel, though we can expect it to take time to unwind and rebalance excess money supply.
Current Listings (FL/NY/NJ):
•2317 Palm Harbor Drive, Palm Beach Gardens FL
$7,990,000
•3780 Lambert Avenue, West Palm Beach FL $1,200,000
•248 Cortez Road, West Palm Beach FL
$12,500/month
•Waldorf Astoria Residences, #8001, Miami FL $9,200,000
•48 Forest Road, Sag Harbor NY
$200,000+ (Summer Rental)
•18 Clay Court, Rumson NJ
$17,500,000
•163 E. 64th Street, NYC
$19,500,000
