The extraordinarily low rates of 2020-2021 were a response to the pandemic. Unless something equally devastating happens, we are not likely to see them again. There's another opportunity you could miss today.

Homebuyers waiting for tomorrow's lower rates may miss out on today's prices.

Home prices are rising at a slower pace than before. If rates fall and the market heats up, prices are likely to soar. The cost of rates today may be lower than the cost of price increases later. Buying the home you can afford now – even if it's not the one you want forever – can work in your favor.

You'll build equity through your regular payments and any value increases. Should rates fall, you can put equity earned toward another purchase or a favorable refinance.

Nobody can tell the future. Remember the plans we made in 2019?

Yet, history offers homebuyers two important lessons:

• Real estate values typically grow over time.
• People who purchased homes at rates much higher than today's still benefitted in the long run.

Bottom Line

We have programs to help first time buyers and repeat buyers move into new homes no matter the rate environment.

Reach out to explore your options today. 888-616-9885

There could be more flexibility in fees!

The National Association of Realtors (NAR) recently settled a global lawsuit regarding agent compensation policies and home listing requirements. With court approval, the changes are scheduled to go into effect in mid-July 2024.

What are current practices?

Home sellers typically pay commissions to both their own agent and any buyer's agent. Commissions vary but are commonly 5% to 6% of the sales price.

Selling agents using the NAR's Multiple Listing Service (MLS) show the amount a buyer's agent will earn from the sale. The major changes include:

1. The seller will no longer automatically pay both agents, though they can choose to do so.

2. The amount the buyer's agent will make from a sale will no longer appear in MLS descriptions.

3. Sellers and buyers will have more flexibility in their negotiations, which could result in lower commission costs and lower home prices.

How will the changes impact the process?

• Sellers can still negotiate the commission they pay, and they may be able to secure a lower cost. They can agree to pay commission for the buyer's agent, but it's not required.

• Buyers can negotiate both the commission they will pay and how they will pay it, whether out of pocket or through other avenues.

The bottom line is that buyers and sellers will still compensate agents for the many services they provide, and these fees will be negotiable, like always.

Your real estate agent and Greenway's Loan Officers will stay up on any changes that may occur before court approval. Please reach out with any questions or concerns, and we'll be happy to assist.

The Federal Reserve Board's recent decision to keep policy rates unchanged at their latest meeting has stirred speculation about the possibility of future rate cuts in 2024. Investors are closely monitoring the situation, particularly as board members projected up to three rate cuts this year.

Looking for Future Rate Cuts

Before the January meeting, the consensus among investors was divided on whether the first cut would occur at the March meeting. The December projections suggested potential adjustments to the rates, keeping the financial market on edge.

The Federal Reserve's guidance, as always, hinges on incoming economic data. However, concerns about potential inflationary pressures have dimmed hopes for a rate cut in March. Despite this, mortgage rates may exhibit movement in anticipation of future Fed actions.

Mortgage Rates Can Move In Anticipation of Future Fed Action

The unique nature of the mortgage market allows rates to respond to even subtle hints of future Fed cuts. The demand for long-term mortgage-backed securities can influence mortgage rates before any official Fed announcement. This opens up opportunities for borrowers to secure lower rates ahead of potential rate cuts.

It's essential to recognize that mortgage rates can be dynamic and responsive to market sentiments. The possibility of rate cuts creates a window of opportunity for borrowers, enabling them to access more favorable rates before official Fed decisions.

Mitigating Higher Rates

For those concerned about the potential delay in rate cuts or uncertain about the direction of rates, various programs can help mitigate the impact. Hybrid Adjustable Rate Mortgages (ARMs) offer a lower initial rate, providing financial flexibility before adjusting to market rates. Additionally, fixed-rate buydowns and Home Equity Lines of Credit (HELOCs) can empower borrowers to move forward with their financial plans, even if rates don't fall as swiftly as anticipated.

Background on the Fed

Understanding the Federal Reserve's role in setting rates is crucial for predicting market trends.

• The Federal Reserve Board (the Fed) controls the federal funds rate and discount rate, which are charges for overnight loans from bank to bank or from the Fed to member banks.

• This rate was lowered to near zero in March 2020 in response to the pandemic. 

• The Fed has a standing goal to maintain inflation within a 2% range. When historic inflation hit in March 2022, they began a cycle of rate increases to slow spending and bring it down.

• As inflation slowed and came nearer the goal, the Fed paused its cycle. January was the third consecutive meeting with no increase. 

Don't Let Uncertainty Hinder Your Homebuying Plans

Whether you're considering buying a home, refinancing, or accessing cash from equity, it's crucial not to let uncertainty about rates slow you down. Preparation is key, and this could be an opportune time for a qualification consultation or mortgage pre-approval to position yourself for favorable rates when the time is right.

Despite the ongoing speculation and uncertainty, we're here to assist you every step of the way. Our commitment to helping clients achieve their financial goals remains steadfast, and we continue to close loans daily. If this is your time to make a move, we're ready to help you navigate the financial landscape.

The Federal Reserve Board left policy rates unchanged at their most recent meeting, as expected. Mortgage rates had already fallen in anticipation.   

Looking ahead to 2024

In conjunction with their meeting, the Fed released its most recent set of economic projections. Officials expect inflation to fall more quickly than previously anticipated, reaching their target of 2% in 2026.

While individual board members have been saying that further rate increases are still on the table, the projections showed expectations for up to three cuts in 2024.

If rate cuts are expected, should you wait to buy, refi or access equity?

Not necessarily.

Mortgage rates move based on demand for mortgage-backed securities, and investors typically act in anticipation of Fed actions. You may be able to access lower rates before the Fed makes a move.

We also have programs that can help mitigate higher rates if they don't fall as fast as you'd like. A hybrid ARM, for example, offers a lower initial rate before adjusting to market rates later. Fixed rate buydowns and HELOCs can help you move forward with your plans, too.

If you want to wait a little longer for more favorable rates, this is a good time to start preparing so you’ll be ready when the time is right for you. 

Background on the Fed:

• The Federal Reserve Board (the Fed) controls the federal funds rate and discount rate, which are charges for overnight loans from bank to bank or from the Fed to member banks.
• The Fed has a standing goal to maintain inflation within a 2% range. Over the last year, they hoped to slow spending and inflation by making borrowing more expensive.
• The rate was lowered to near zero in March 2020 in response to the pandemic. These historic measures are now being reversed.

The Fed raised rates for 11 of the last 15 meetings, with pauses in June, September, November and December. 

Bottom Line:

If this is your time to buy, refi or access cash from equity, don't let uncertainty about rates slow you down. We're here to help, and we're still closing loans every day!

The FHA Raises Loan Limits 2024

The Federal Housing Administration (FHA) has just increased the amount of money that can be borrowed through its mortgage programs by more than $26K in most areas. In high-cost locations, the increase is even greater. New limits will take effect in 2024.

This news could make a big difference for homebuyers!

The increases will allow more borrowers to take advantage of FHA’s benefits:

• Low down payment options
• Lower total cash-to-close requirements with gift or seller contributions
• More lenient and streamlined refinancing
• Ability to combine purchase and rehab financing
• In some high-cost areas, higher loan limits than conventional mortgages

Here are the specifics:

• In most areas, the FHA loan limit will be $498,257, a 5.56% increase over 2023’s limit of $472,030.
• In most high-cost areas, the limit moves to $1,149,825, a 5.56% increase over 2022’s $1,089,300.
• In some lower-cost areas or those with higher costs of construction, limits will vary.

If you have questions about what this change could mean for you, please reach out at 888-616-9885 or click here to contact us.

And if you have friends who may benefit from the news, please pass it along. We would be honored to help them too.