9/19/24 – Fed slashes rates! WTH does that mean? All my dreams have come true! The Federal Reserve lowered interest rates, which are now .50% lower. The crazy part is that none of the bond and mortgage-backed security traders saw this coming, and now everything is .50 lower! All kidding aside, everyone seemed to know that the Federal Reserve would cut rates this week. Some thought it would be .250%, and others thought it would be .50%! The traders hedged for .50%, and when Powell spoke at the end of the day, he made his stance neutral, which is a wait-and-see approach to where we will go at future Federal Reserve meetings. The .50% cut does not affect 30-year mortgage rates! 30-year rates were lower before the Federal Reserve cut rates! Interest rates will now head into a new chapter where economic news will determine where interest rates will go. The Fed also said the rates will likely settle higher than before the pandemic. So what does this mean? It means that rates will float up and down with the economy. Rates will go up if the economy is strong and inflation is high, and rates will go down if the economy struggles and inflation is low. Bad economic news is good for rates. Good economic news is bad for rates! The fed cut rates because inflation is lower and the economy is struggling. Remember the Great Recession when we had 10% unemployment? Every sector was affected by the housing crash! Retail, restaurants, travel/tourism, leisure/hospitality, service purveyors, real estate, & manufacturing/warehouse were some of the hardest hit industries. Mortgage companies were closing daily, affecting IT, landlords, cleaning people, gardeners… What we have right now is decent inflation, with higher unemployment than we are used to, but nothing like what brought interest rates into the 3’s! Do I think we can get there again? Yes, but not in 2025. This will be a slow ride down, and we will have bumps along the way. The Federal Reserve is methodically moving rates down as they still fear inflation, but again, the Fed does not affect 30-year mortgage rates, especially not on the day he cuts rates, and we all knew it was coming! In my 34 years in the Mortgage industry, I have seen a few times when the economy was sputtering, and the Fed would hold an emergency meeting to cut rates and spur the economy. Those were good days for rates as the Fed would only do that because there was a deeper problem, and they could not wait for the next meeting to lower rates! I also remember a few times when the Emergency Fed meeting was called to raise rates, and those were pretty rough days. We often saw rates go up more than the .50% increase because the traders were expecting future rate increases! Here is the good news! Your credit card interest rates and the rates on a variable mortgage will likely drop. The rates on a variable rate HELOC will go down immediately, along with rates for cars, boats, and other things we like to spend money on. Here is the bad news! If you have money in a savings account or CD and you go to renew it, that rate will likely be less than the last time you renewed it! Everything will not always go in our favor, but if we keep at the game for long enough, we will see both sides win and learn from the past. It’s about convincing those clients that now is an excellent time to buy, and it is. If these rates go lower, we will have more buyers, and prices will rise. Waiting to buy would have paid off in 7 of my 34 years in this industry! Five of those seven years were my first years in the industry. I don’t think waiting will pay off this time. If you look ahead 5-10 years, do you think prices will be lower than today? I highly doubt it! I am available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is 661-2 1-2222. When you text me, please text (661-714-6258) or email me at Mike@AugustaFinancial.com. But wait, there’s more! Interest rates increased slightly yesterday before and after the Federal Reserve announcement. Rates are somewhat better today, but not as good as where we ended on Tuesday! 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge We do loans in all states, so call me with anything you need. Government Loans (FHA / VA/ USDA) are in the high 4’s to low 5’s Conventional Loans up to $766,550.00 are in the high 5’s to low 6’s High Balance Loans $766,550.01 – $ 1,149,825.00 are in the low to mid 6’s Jumbo loans above $1,149,625 are in the mid to high 6’s Bank statement loans - They are available with 10% down again! Starting in the mid-6’s. Profit and Loss Statement loans – 20% down – You don’t need bank statements, just a profit and loss statement! No income qualifier – 40% down with r serves! In the 8’s! 0 down loans are in the high 6’s – 620 credit score min right now, up to $1,191,000.00. Private Money lenders - Hard Money Loans – 35% down! No Ratio Loans 30% down DSCR – Debt Service Coverage loans with as little as 15% down Bridge Loans - typically 7.99% with limited fees – and they get you where you need to go! 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates! Interest rates are subject to change without notice! The above are LA County Loan Limits. Good news on Condos – Nothing new here! Bad news – Condo Update? – Nothing here either! Condo / Townhome – issues we know of now. Properties can be financed with 10% down and are considered NON-WARRANTABLE: American Beauty Condos - The brown ones - Insurance: 50 Million in coverage for 748 units is not nearly enough! American Beauty Gardens: 19% delinquency on special assessments due. 19% are 60 days or more late! We can do with 5% down, but others can’t! American Beauty Village West: On Fannie s List. Per Fannie, this project needs critical repairs and may have material deficiencies and significant deferred main entrance conditions. This project’s master insurance policy deductible exceeds the allowable limit. Bella Ventana – $50,000 deductible per unit is naughty. Bouquet Canyon Village – $50K deductible per unit is naughty! Briarcliff North Townhomes –7435 Shadyglade Ave #2, North Hollywood. Insurance deductible is $50K. Briarcrest – 12720 Burbank Blvd Valley Village – Insurance and repairs Bridgewater, Emeryville - On Fannie’s List! Insufficient Insurance Brookside Walk – Insufficient Insurance Cabrini Villas, Burbank - On Fannie’s List! Insufficient Insurance Calla and Rowan – 27513 Illumination – Fannie Mae Approval expired – New Construction. See Blog on 5/7/2024 Cameo Woods HOA - Per the litigation disclosure, the association is being sued by a homeowner for water heater damage and discrimination, and the damage is still ongoing. We received confirmation that the HOA’s insurance agency is not covering the lawsuit, and the claim was denied due to the nature of the complaint. Canyon Village – Reserves and 10% of the dues not going to reserves! Canyon Oaks – Insurance On Fannie’s List! Casa Marabella – 13951 Sherman Way, Van Nuys -On Fannie’s List! Cassia and Jasmine – 26949 Winding Trail Court – Fannie Mae Approval expired. See Blog on 5/7/2024 Cimmaron Oaks – Castaic – Insurance is too low! Cornerstone – Insurance -On Fannie’s List! Creekside – Insufficient insurance District Community Association – Northridge – Fannie Denied – Insufficient Insurance Encino Oaks – 5460 White Oak Ave – On Fannie’s List! Heather Ridge – Deductible too high! not enough insurance – Fannie Naughty List! Liberty Canyon HOA – 27409 Country Glen Road, Agoura Hills, CA- On Fannie’s List! Madison at Towne Center – Litigation – We can do with 5% down, but others can’t! Magnolia Manor – 12416 Magnolia – Lots of issues from insurance to repairs. Mariposa: On Fannies List. Per Fannie Mae – This project’s master insurance policy coverage does not meet the requirements. Market Street Community – Corona – No Wildfire coverage Mesa Vista North Townhomes – San Juan Capistrano – 50K deductible per unit is naughty! Orchid at Valencia – 27033 Open Sky Place – Fannie Mae Approval expired. See Blog on 5/7/2024 Penn Court HOA – 4201 Pennsylvania Ave La Crescenta On Fannie’s List! Princessa Estates – insufficient reserves Scenic Hills – Insurance – On Fannie’s list! This project’s master insurance policy coverage does not meet the requirements in Selling Gu de Sec. B7-3-03, Master Property Insurance Requirements for Project Developments. Shadow Ridge – Oak Park – Insurance -On Fannie’s List! Sherman Way Condos – 17900 Sherman Way Reseda – On Fannie’s List! Tyler Villas – Sylmar – Coverage is good, but non-warrantable for delinquencies The District Community Association – 19533 Cardigan Dr, Northridge – On Fannie’s List! Treana - Stevenson Ranch: On Fannie’s List! Per Fannie, this project needs critical repairs and may have conditions such as material deficiencies and significant deferred maintenance. Valle Di Oro is on Fannie’s List! Per Fannie Mae, this project contains timeshare, fractional, segmented, or split ownership units or other arrangements (such as mandatory rental pooling, shared interest apartments, or community apartments) restricting the unit owner’s ability to occupy the unit. Village Park Condo – It’s over the max deductible with that 50k per unit. Vista Del Canon – Insurance is too low, UGH! Walnut Gardens II – 7320 Lennox Ave Van Nuys CA – On Fannie’s List! Warner Center Condos – 5515 Canoga Ave, Woodland Hills, CA – On Fannie’s List! West Creek Condos and Townhomes: On Fannie s List. Per Fannie, this project’s master insurance policy coverage does not meet the requirements in the Selling Guide! 13801 Hoyt Village LLC – 26 units and 14 are owned by one entity! Please let me know if you hear anything new on condos or townhouses. I am still available all weekend if you need anything. Let me know if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is 661-291-2222. When you text me, please text (661-714-6258) or email me at Mike@AugustaFinancial.com. Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow! Mike Meena President | Loan Officer Click to Call or Text: (661) 714-6258 This entry has 0 replies Comments are closed.
