November Real Estate Roundup: The Fed Cuts Its Rate Again

November has already been a busy month, and the holidays are on the horizon. Let’s look at what’s been going on with interest rates and some new and updated renovation products we’re offering. 

Another Fed Rate Cut 

First, the good news about rates. Mortgage rates dropped to two-year lows when the Fed cut its benchmark rate by .50% in September, finally signaling a little relief in inflation. Of course we’d like to see mortgage rates continue to go lower, and a second Fed rate cut of .25% earlier this month, though small, is promising. Analysts predict further cuts of a quarter-point at each of the Fed’s next three meetings, then a pause around May 2025 anywhere between 3.50% and 4%. 

Note that the Fed does not meet every month, but eight times a year, with its next meetings in December, January, March, and May. Also remember that the “Fed rate” is not a mortgage rate, but the fee U.S. banks pay each other to borrow or loan money overnight. Fed rate cuts can take a little time to trickle down to products like credit cards, student loans, and mortgages. 

More good news for our economy as we close out 2024 is low unemployment claims and higher worker productivity – factors the Fed considers when evaluating rates. 

All that said, with the 2024 elections now behind us, the next several months could be up and down as a new administration begins to implement its economic policies. What we do know is that markets are unpredictable in any given year, so if your clients feel now is the time to buy, or if they simply have questions, I’m here to help. 

Updates to Our Renovation Loans 

For your clients seeking to buy a fixer-upper, we’ve updated several renovation loan products and have a new USDA offering. 

To make the process smoother for your clients, all our renovation loan products will now resemble more of a construction-to-permanent process. Among other perks, only one bid is now required, we’ve removed the draw schedules, and buydowns are allowed (except borrower-paid). Also, our VA and FHA Streamline (aka “Limited”) product limits have both increased to $75,000 (VA previously $50k, FHA $35k). 

Our new USDA product allows repair costs up to $35k for eligible borrowers and properties. Here are some highlights: 

• Minimum credit score 640 

• Non-structural repairs to primary purchase, existing single-family homes more than one year old 

• 30-year fixed rate 

• Loan-to-value 100% of “as improved” appraised value. LTV can exceed 100% when USDA Guarantee Fee is financed. 

If you or your clients have any questions about rates, renovations, or anything else, just reach out!