The lending industry is “pumping up” the public, claiming there will be 2-4 rate cuts in 2024 (just like in 2023).
Let’s hope so, but back here on Earth 1; the FED (see previous posts) has signaled there is “no guarantee”, and the closer we get to the election, the more likely the next round of cuts will BEGIN AFTER Nov. 5th!
By 2025, some clients may find themselves “locked” out of the market.
Here’s a list of the 2024 Federal Open Market Committee meetings.
September 17-18*…November 6-7
December 17-18*.. January 2025 (TBA)
*Meeting associated with a Summary of Economic Projections.
The Great Recession and Its Aftermath
I started my blog in 2011 to earn agent referrals by providing data, monetary policy, and market trends that weren’t easily accessible to agents or their clients.
The “Rate Cut – Election Cycle Myth”
Your ability to dispel “market myths” with “cold, hard facts” facilitates your ability to engage with clients in a more meaningful discourse than your competitors. Below are the numbers that disprove the election myth.
How do Presidential elections historically affect mortgage rates?
Historical Mortgage Rate Analysis
I reviewed the Primary Mortgage Market Survey archives from Freddie Mac as far back as they go, to 1971. Freddie Mac focuses on 30-year fixed-rate averages for the “12 months previous” and the year-end after” an election.
The numbers show no direct line between rate cuts and Presidential elections. A third of the time, rates were higher; a third of the time, rates were lower; and a third of the time, the rates were virtually unchanged.
Mea Culpa for how this graphic displays
30-Year Fixed-Rate Mortgage Averages
Election Cycle Starting Rate Ending Rate
Nov 1971 – Dec 1972 7.43% 7.44% +0.10%
Nov 1975 – Dec 1976 8.81% 8.79% -0.02%
Nov 1979- Dec 1980 14.21% 14.79% +0.58%
Nov 1983 Dec 1984 13.64% 14.18% -0.46%
Nov 1987 Dec 1988 10.27% 10.61% +0.34%
Nov 1991- Dec 1992 8.31% 8.21% -0.10%
Nov 1995 -Dec 1996 7.62% 7.60% -0.02%
Nov-1999-Dec 2000 7.75% 7.38% -0.37%
Nov 2003-Dec 2004 5.73% 5.75% +0.02%
Nov 2007-Dec 2008 6.09% 5.29% -0.80%
Nov 2011-Dec 2012 3.66% 3.62% -0.04%
Nov 2015 Dec 2016 3.75% 4.20% +0.45%
Nov 2019 -Dec 2020 3.07% 3.10% +0.03%
In Conclusion
I’m not an economist, but others are, and this SoCal housing shortage will persist (for many reasons) for (at least) the near future.
Prices aren’t going down in the short term, and now the FED is signaling it will NOT make any “meaningful” rate cuts until at LEAST Q3 2024.
