Core Viewpoint - Mortgage rates are expected to experience a slow and uneven decline rather than a significant drop following the upcoming Federal Reserve meeting, according to economists and housing forecasters Group 1: Federal Reserve Actions - The Federal Reserve is anticipated to implement a quarter-point rate cut at its December 9-10 meeting, with futures markets indicating a nearly 90% probability, which would adjust the federal funds rate to approximately 3.5%–3.75% [2] - Fed Chair Jerome Powell's guidance will significantly influence the direction of mortgage rates, with expectations of cautious messaging regarding future rate cuts beyond the immediate meeting [4] Group 2: Current Mortgage Rates - The average 30-year fixed mortgage rate has decreased to around 6.2%, down from approximately 6.7% a year ago, reflecting a trend of falling rates since late July due to expectations of a Fed rate cut [3] - Mortgage rates typically respond to investor expectations and the 10-year Treasury yield rather than the Fed's short-term rate, suggesting that the recent decline may have already been factored into current rates [5] Group 3: Future Projections - Major forecasters, including Fannie Mae's Economic and Strategic Research group, predict that 30-year mortgage rates will end 2025 at about 6.3% and only decrease to around 5.9% by the end of 2026, indicating a prolonged period of elevated rates [7] - Bank of America’s Aditya Bhave suggests that a mortgage rate closer to 5% is necessary to stimulate home sales, which are currently stagnant near post-2008 lows, implying that any immediate post-meeting rate drops will be minimal [8]

All right, we are back now with President Trump's controversial new idea to help with housing affordability, a 50-year mortgage. It comes on the heels of a report from the National Association of Realtors saying the age of the typical new home buyer is now at an all-time high of 40 years old. Brian Chung is here now.And Brian, walk our viewers through how a 50-year mortgage would work. Yeah, Tom, mortgage brokers are telling me this might help a few buyers here and there. There is no question, however, that ...

Interest Rate and Housing Market - Anticipated Federal Reserve rate cut is expected to influence mortgage rates, with the rate on a 30-year mortgage already hitting a three-year low [1] - Nine rate cuts since 1980 during non-recessionary times may not significantly impact the long end of the curve [4] - Lower rates or reduced building costs are necessary to address the housing affordability crisis in the United States [7] - Lower rates will be very accommodative to the housing sector, including both single-family and multi-family [9] Housing Construction Costs and Tariffs - Survey indicates that the cost of manufacturing single-family homes has not increased due to tariffs [9] - Inflation has been removed from single-family and multi-family construction industries, with costs currently flat [10] Fannie Mae and Freddie Mac - FHFA director has focused on growing the top and bottom lines of Fannie Mae and Freddie Mac to prepare them for going public [13] - The government aims to maximize returns to taxpayers while avoiding increased borrowing costs for consumers during the IPO [14][15] - The expectation is that the federal government will maintain some form of guarantee to reassure investors and keep consumer borrowing costs stable [15][16] Commercial Real Estate - New York City is experiencing a renaissance with people returning to the office [17] - There's growing interest and potential opportunities to invest in San Francisco's commercial real estate market [20][21]

Housing Market Trends - The national median price for existing single-family homes reached a record high of nearly $430,000, up 1.7% year-over-year [1] - While homeowners are generally happy, the housing market is experiencing a slowdown in home prices and sluggish sales activity [3][6] - Mortgage rates remain elevated, impacting affordability and hindering people's ability to enter the market [3][5] - Some markets, particularly in the Midwest (e.g., Cleveland, Toledo, Rochester, New York), are seeing rising prices, while southern states like Texas and Florida are experiencing price declines [7] Affordability Challenges - The median age of a first-time home buyer has risen to 38 years old, indicating increasing affordability challenges [4] - Dramatic increases in mortgage rates, settling around 6.5%, are a primary factor hindering affordability [5] - Income growth (approximately 4%) is outpacing home price growth (less than 2%), which may improve affordability in the future [5] - Increased housing supply is needed to ensure manageable home price growth and prevent dramatic run-ups [5][6] Regional Opportunities - Declining prices in states like Texas and Florida, which have strong job growth, present a second chance opportunity for potential buyers [7] - Affordable markets in the Midwest are experiencing price increases [7]

Fed Policy & Interest Rates - The market anticipates potential rate cuts by the Fed, with a majority expecting at least one cut [1] - The author disagrees with the need for rate cuts, questioning the rationale given the current economic conditions [1] - The US economy is considered less sensitive to interest rates due to its technology and service-oriented nature, except for the housing market [2] - The Fed has raised interest rates by 500 basis points [1] Housing Market & Inflation - The US faces a housing inventory shortage, and lowering interest rates could reduce inflation by incentivizing home building [3] - High mortgage rates are forcing home builders to subsidize mortgages, hindering construction and keeping inventory low [3] - Lowering mortgage rates could address shelter inflation, a persistent component of overall inflation [4] Treasury & Debt Management - The Treasury Secretary's focus is on the ten-year yield, anticipating a parallel downward shift in the curve as inflation decreases [5] - The Treasury Secretary can influence the ten-year yield by adjusting the size and term of debt auctions [6] - Extending the term of the debt should be considered after inflation is under control and rates have come down [7] Fed Tools & Market Influence - The Federal Reserve possesses tools, such as Operation Twist, to manage the back end of the yield curve [8]

Federal Reserve Policy & Interest Rates - The market is debating whether the Federal Reserve should cut interest rates by 25 basis points [5][6] - The current Fed funds rate is floating around 425 to 450 basis points, approximately 43% [2] - Some believe the Fed is too focused on past data and risks being late in responding to economic changes [4][6][10] - Cutting rates by 75 basis points occurred last year [5] Inflation & Economic Factors - Housing costs, a significant component of CPI and PPI, are impacted by the Fed's balance sheet reduction of $35 billion [3] - Tariffs' full effect on inflation is still uncertain [2][6] - The speaker believes inflation is moderating and not out of control [5][6] - The Personal Consumption Expenditures (PCE) at 31% is not a major concern [9] Bond Market & Treasury Yields - The 2-year Treasury note yield is around 4% [2] - The 10-year and 2-year Treasury yields are at the same level as in autumn 2022 [13] - The bond market and the Federal Reserve may not be aligned in their expectations [12]