Unless you are one of the very few people who conducts all transactions in cash, interest rates are important to you.
At its last meeting, the Federal Reserve decided to leave interest rates where they are. Alan Gin, an economics professor at the University of San Diego, said this is good for all of us.
“It's likely that in 2024 the Federal Reserve will do the opposite, loosen the money supply and provide more funds, and then that should have a dampening effect on interest rates in the sense that they will start to fall. ” he said.
This means cheaper interest rates on credit cards and car loans.
But the big issue, especially in an expensive real estate market like San Diego, is the impact all of this will have on mortgage rates, which is welcome news for Mike Hoyt, loan officer at AmeriHome Mortgage.
“I would say November was probably the quietest month I've had in my entire career,” he said.
Hoyt has been in the mortgage business for more than 20 years. He said the November lull is now in the rearview mirror.
In this July 21, 2020, file photo, a “For Sale” sign is shown in front of a home in Chula Vista.
“In the last three weeks or so – four weeks – pre-approvals have just gone through the roof,” Hoyt said. “I mean we probably get about five to 10 inquiries a week when it was zero in November. “
But he also said that there is a fly in the real estate market. In recent years, many people have locked in to very low interest rates, and this is leading to a problem that has plagued the market for quite some time – a lack of inventory.
“Why should you sell? “I'm going to leave this really low interest rate at 2 or 3% and pay 8%, twice as much for a new home,” Hoyt said.
Hoyt said the problem will likely resolve itself as mortgage rates rise back into the 5% range.
As for the broader economic outlook, predictions of a recession in 2023 have so far failed to materialize.
Gin said the elusive “soft landing” appears to be in our financial future.
“Despite these high interest rates, the unemployment rate is still pretty low,” he said. “It was supposed to slow the economy, maybe stimulate it, but the unemployment rate is still below 4%… And the inflation rate has fallen significantly. So I think it was close to 9% at one point. But now the latest reports showed that the inflation rate is around 3%.”
So as we head towards the end of the year, perhaps we can expect fewer financial chunks of cash and a better financial year.
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