Could the US interest rate cut boost the housing market?23 minutes agoDanielle KayeBusiness reporterEPA-EFE/REX/ShutterstockA picture taken with a drone shows single-family homes in Woodbridge, Virginia, USA, 02 January 2024.Aileen Barrameda is planning to buy a house in Los Angeles in the coming months. Stubbornly high mortgage rates - twice what she locked in at the start of the coronavirus pandemic - are not putting her off."If I have the means to get in the market, I might as well get in now, because ho ...

Core Viewpoint - The current liquidity level in the US remains healthy, but the focus should shift to the effectiveness of monetary policy stimulus, particularly the transmission of interest rate cuts to long-term rates, which is crucial for the recovery of the real economy [2][4][22] Group 1: Liquidity Status - Following the Silicon Valley Bank crisis, there has been no large-scale financial risk exposure in the US, and the stock market has recovered and reached new highs [4] - The US liquidity stock level is healthy, with concerns not stemming from insufficient liquidity but from potential mismatches and increased risk exposure due to further liquidity injections [4][11] - The current excess reserves in the US are approximately $900 billion, significantly higher than the $80 billion level during the 2019 repo market crisis [7] Group 2: Monetary Policy and Economic Impact - The effectiveness of interest rate cuts in stimulating the real economy is under scrutiny, as the transmission to long-term rates remains weak, limiting recovery in sectors like manufacturing and real estate [22] - The average duration of assets on bank balance sheets is increasing, raising concerns about interest rate sensitivity and liquidity risks [22][18] - The low supply of non-bond assets, such as commercial loans and residential mortgages, has led banks to allocate more to bond assets, further increasing average duration and interest rate risk [18] Group 3: Structural Changes in Financial System - The proportion of US Treasury securities in banks' loanable assets has increased by nearly 8 percentage points to 53%, primarily due to an increase in held-to-maturity assets [13] - The overall losses in the US banking sector amount to $410 billion, with approximately $260 billion stemming from held-to-maturity assets, which limits banks' credit supply capabilities [17] - The distribution of reserves has become more even, with the largest banks bearing the brunt of the Fed's balance sheet reduction, indicating a more resilient financial system [8][10]

Core Viewpoint - The article highlights that the average rate for a 30-year fixed mortgage in the United States has decreased to 6.74% [1] Group 1: Mortgage Rates - The current average rate for a 30-year fixed mortgage is reported at 6.74% [1]

Core Viewpoint - The article highlights that the average interest rate for a 30-year fixed mortgage in the United States has risen to 6.75%, indicating a significant increase in borrowing costs for homebuyers [1] Group 1: Interest Rate Trends - The current average interest rate of 6.75% represents a notable increase compared to previous rates, impacting the affordability of mortgages for potential buyers [1] - This rise in mortgage rates is likely to influence the housing market dynamics, potentially leading to a slowdown in home sales and affecting overall housing demand [1] Group 2: Implications for Homebuyers - Higher mortgage rates may deter first-time homebuyers and those with tighter budgets, as monthly payments will increase significantly [1] - The increase in borrowing costs could lead to a shift in buyer preferences, with more individuals considering adjustable-rate mortgages or lower-priced homes [1]

Core Viewpoint - The article reports that the 30-year mortgage rate in the United States has risen to 6.75% according to Freddie Mac [1] Group 1 - The increase in the 30-year mortgage rate indicates a trend in rising borrowing costs for homebuyers [1] - This rate change may impact the housing market dynamics, potentially leading to decreased affordability for buyers [1] - The rise in mortgage rates could also affect refinancing activities among existing homeowners [1]

Group 1 - Mortgage rates have seen a slight decline for the first time in a month, with the 30-year average rate at 6.85%, down from 6.89% the previous week, and the 15-year average at 5.99%, down from 6.03% [1] - The Mortgage Bankers Association (MBA) reported a 4% week-over-week decline in purchase applications, although they remain higher than the same period last year, with refinancing applications also down by 4% [1] - The decline in mortgage rates is closely linked to a drop in the 10-year Treasury yield, which fell significantly following weak service sector activity and a sharp decrease in private sector job growth [1] Group 2 - The Federal Reserve does not directly control mortgage rates but influences them through expectations regarding benchmark interest rates [2] - The upcoming non-farm payroll report is anticipated to provide insights into the health of the job market, with economists predicting an addition of 128,000 jobs last month [2]

Core Insights - The article highlights that U.S. mortgage rates have risen to a three-month high, leading to a decline in both home purchase and refinancing applications [1] Mortgage Rate Trends - As of the week ending May 16, the 30-year fixed mortgage rate increased by 6 basis points to 6.92% [1] - The adjustable-rate mortgage (ARM) with a fixed rate for the first five years also reached its highest level since February [1] Application Trends - Mortgage Bankers Association (MBA) reported a decrease of approximately 5% in both home purchase and refinancing applications [1]

Core Viewpoint - The mortgage market experienced a rebound in sales in March, coinciding with a temporary decrease in financing costs, with the 30-year mortgage rate dropping to 6.67% at the beginning of the month [1] Group 1: Mortgage Rates - Despite the temporary decrease, mortgage rates remain high, with the rate rebounding to 6.89% since early March [1] - The fluctuations in mortgage rates, even if minor, have the potential to stimulate buyer interest [1] Group 2: Housing Prices - The median price of existing homes is 44% higher compared to March 2020, indicating a significant increase in housing costs over the past three years [1]