The pain continues for buyers of real estate and those seeking to refinance. Recently, interest rates hit a multi-year high in the real estate market.
Higher mortgage interest rates impact investors' pocketbooks, which means they have less money to spend on other items. This is one of the key goals of the Federal Reserve; to take money out of people's pockets so they can slow the pace of inflation. Thus far it seems to be working.
Remember, the labor market impacts inflation as well. The high labor participation rate means significant numbers of consumers could be ready to spend money. Accelerating spending can impact inflation.
We’ve been underweight fixed income durations, but have been unable to avoid all of the bond market pain. When interest rates rise, bonds tend to fall in price; there’s no getting around this.
On another note, I know many of you have enjoyed our in-person events as an opportunity to meet our Advisor and Research Teams along with staff. I also share what’s happening to the markets and how we are positioning our portfolios.
I wanted you to know that our in-person events are coming back next year. Covid made it necessary to postpone these events; now we’re ready to press forward. We will keep you posted!
“The average rate on the popular 30-year fixed mortgage rate hit 8% Wednesday morning, according to Mortgage News Daily. That is the highest level since mid-2000.
The milestone came as bond yields soar to levels not seen since 2007. Mortgage rates follow loosely the yield on the 10-year U.S. Treasury.
Rates rose sharply this week and last week, as investors digest more reads on the economy. On Wednesday, it was housing starts, which rose in September, though not as much as expected, according to the U.S. Census Bureau.
Building permits, an indicator of future construction, fell, but by a less than the expected amount. Last week, retail sales came in far higher than expected, creating more uncertainty over the Federal Reserve’s long-term plan.
These higher rates have caused mortgage demand to plummet, as applications fell nearly 7% last week from the previous week, according to the Mortgage Bankers Association.”