patrick.net

Feds cut rates a half a point.

zzyzzx says

Feds cut rates a half a point.

S&P 500 had priced this is, but its up 0.24% and hit an all time high today.

.

The housing collapse happens by the end of Q2 2025.

Homeloaners are expecting millions to start bidding on houses and it's not going to happen. Those who are able and willing to buy are saying "Ah... they Fed will cut rates MOAR next year, and what's the hurry with all the inventory piling on?"

AmericanKulak says

The housing collapse happens by the end of Q2 2025.

Homeloaners are expecting millions to start bidding on houses and it's not going to happen. Those who are able and willing to buy are saying "Ah... they Fed will cut rates MOAR next year, and what's the hurry with all the inventory piling on?"

We shall see when the 30 year mortgage drops to 5% and if there is enough competition among buyers next March, and how that translate to number of sales and inventory.

Recall the 30 yr mortgage rate was around 3% when prices peaked around 1st half of 2022.

If the rate is 5%, then that means prices should be 20% below the peak price based on the general rule there is a 10% drop in price for every 1% increase in the 30 year mortgage rate.

Granted, household income and wages increased since 2022 by at least about 15%.

.

Gold just did a fleeting kiss with $2600, before globohomo finance gave that bitch a good belly punch.

Once again, the fed does the wrong thing and lowers interest rates. This time by .25%

Yet still again, the fed does the wrong thing and lowers interest rates by .25%

Those without assets are globohomo wage slaves: "You will own nothing, eat bugs, and be happy." This Christmas, give the gift to the kids that both feeds and protects - a Remington 1100.

zzyzzx says

Yet still again, the fed does the wrong thing and lowers interest rates by .25%

Yep. Despite core inflation still a problem.

As far as inflation fighting is concerned, the Fed is now officially not much different than the Bank of Zimbabwe.

Start buying gold.

Transcript of Chair Powell’s Press Conference Opening Statement
December 18, 2024
Page 1 of 4

CHAIR POWELL. Good afternoon. My colleagues and I remain squarely focused on
achieving our dual mandate goals of maximum employment and stable prices for the benefit of
the American people. The economy is strong overall and has made significant progress toward
our goals over the past two years. The labor market has cooled from its formerly overheated
state and remains solid. Inflation has moved much closer to our 2 percent longer-run goal.

We are committed to maintaining our economy’s strength by supporting maximum
employment and returning inflation to our 2 percent goal. To that end, today, the Federal Open
Market Committee decided to take another step in reducing the degree of policy restraint by
lowering our policy interest rate by 1/4 percentage point. We also decided to continue to reduce
our securities holdings. I will have more to say about monetary policy after briefly reviewing
economic developments.

Recent indicators suggest that economic activity has continued to expand at a solid pace.
GDP rose at an annual rate of 2.8 percent in the third quarter, about the same pace as in the
second quarter. Growth of consumer spending has remained resilient, and investment in
equipment and intangibles has strengthened. In contrast, activity in the housing sector has been
weak. Overall, improving supply conditions have supported the strong performance of the U.S.
economy over the past year. In our Summary of Economic Projections, Committee participants
generally expect GDP growth to remain solid, with a median projection of about 2 percent over
the next few years.

In the labor market, conditions remain solid. Payroll job gains have slowed from earlier
in the year, averaging 173 thousand per month over the past three months. The unemployment
rate is higher than it was a year ago, but at 4.2 percent in November, it has remained low.

December 18, 2024 Chair Powell’s Press Conference PRELIMINARY
Page 2 of 4

Nominal wage growth has eased over the past year, and the jobs-to-workers gap has narrowed.
Overall, a broad set of indicators suggests that conditions in the labor market are now less tight
than in 2019. The labor market is not a source of significant inflationary pressures. The median
projection for the unemployment rate in the SEP is 4.2 percent at the end of this year and 4.3
percent over the next few years.

Inflation has eased significantly over the past two years but remains somewhat elevated
relative to our 2 percent longer-run goal. Estimates based on the Consumer Price Index and
other data indicate that total PCE prices rose 2.5 percent over the 12 months ending in
November; and that, excluding the volatile food and energy categories, core PCE prices rose 2.8
percent. Longer-term inflation expectations appear to remain well anchored, as reflected in a
broad range of surveys of households, businesses, and forecasters, as well as measures from
financial markets. The median projection in the SEP for total PCE inflation is 2.4 percent this
year and 2.5 percent next year, somewhat higher than projected in September. Thereafter, the
median projection falls to our 2 percent objective.

Our monetary policy actions are guided by our dual mandate to promote maximum
employment and stable prices for the American people. We see the risks to achieving our
employment and inflation goals as being roughly in balance, and we are attentive to the risks on
both sides of our mandate.

At today’s meeting, the Committee decided to lower the target range for the federal funds
rate by 1/4 percentage point, to 4-1/4 to 4-1/2 percent. We have been moving policy toward a
more neutral setting in order to maintain the strength of the economy and the labor market while
enabling further progress on inflation. With today’s action, we have lowered our policy rate by a

December 18, 2024 Chair Powell’s Press Conference PRELIMINARY
Page 3 of 4

full percentage point from its peak, and our policy stance is now significantly less restrictive.
We can therefore be more cautious as we consider further adjustments to our policy rate.
We know that reducing policy restraint too fast or too much could hinder progress on
inflation. At the same time, reducing policy restraint too slowly or too little could unduly
weaken economic activity and employment. In considering the extent and timing of additional
adjustments to the target range for the federal funds rate, the Committee will assess incoming
data, the evolving outlook, and the balance of risks. We are not on any preset course.

In our Summary of Economic Projections, FOMC participants wrote down their
individual assessments of an appropriate path for the federal funds rate, based on what each
participant judges to be the most likely scenario going forward. The median participant projects
that the appropriate level of the federal funds rate will be 3.9 percent at the end of next year and
3.4 percent at the end of 2026. These median projections are somewhat higher than in
September, consistent with the firmer inflation projection. These projections, however, are not a
Committee plan or decision.

As the economy evolves, monetary policy will adjust in order to best promote our
maximum employment and price stability goals. If the economy remains strong and inflation
does not continue to move sustainably toward 2 percent, we can dial back policy restraint more
slowly. If the labor market were to weaken unexpectedly or inflation were to fall more quickly
than anticipated, we can ease policy more quickly. Policy is well positioned to deal with the
risks and uncertainties that we face in pursuing both sides of our dual mandate.

On a technical note, we lowered the offering rate on our overnight reverse repo facility to
align it with the bottom of the target range for the federal funds rate—its typical configuration.
Technical adjustments of this kind have no bearing on the stance of monetary policy.

December 18, 2024 Chair Powell’s Press Conference PRELIMINARY
Page 4 of 4

The Fed has been assigned two goals for monetary policy—maximum employment and
stable prices. We remain committed to supporting maximum employment, bringing inflation
sustainably to our 2 percent goal, and keeping longer-term inflation expectations well anchored.
Our success in delivering on these goals matters to all Americans. We understand that our
actions affect communities, families, and businesses across the country. Everything we do is in
service to our public mission. We at the Fed will do everything we can to achieve our maximum
employment and price stability goals. Thank you. I look forward to your questions.

https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20241218.pdf

That's nice Powell, but lenders are behaving otherwise.

AmericanKulak says

That's nice Powell, but lenders are behaving otherwise.

Mortgage rates went up instead of down on the fed news?

GNL says

Mortgage rates went up instead of down on the fed news?

Yes. Because Powell basically transmitted, "Suck and swallow inflationary cum, markets!"

GNL says

Mortgage rates went up instead of down on the fed news?

Happened a few months ago too.

Lender Vigilantism!

Interest rates unchanged today.

Interest rates unchanged again today.

The Fed forecasts 2% inflation in 2027. The Federal Funds rate now is 4.5% (upper limit) with annual inflation indicators CPI at 2.8% and PCE at 2.5%.

I guess they may lower the Fed Funds rate 25 basis points if annual inflation remains below 3% for 6 consecutive months.

Rates unchanged after fed meeting!

zzyzzx says

Rates unchanged after fed meeting!

zzyzzx says

Interest rates unchanged today.

Good. I think this will help bring house prices down a bit.

High house prices penalize the young, preventing family formation.

Patrick says

zzyzzx says

Interest rates unchanged today.

Good. I think this will help bring house prices down a bit.

High house prices penalize the young, preventing family formation.

High monthly mortgage payments prevent family formation. "Prices" are set by price + rates.

GNL says

High monthly mortgage payments prevent family formation. "Prices" are set by price + rates.

Yes, but lowering rates increases house prices. For the same mortgage payment, it is better to have a low price and a high rate as that allows more of any extra payments to go to paying down principle. Also, higher prices mean higher assessments and thus higher taxes. The solution to affordability is not "affordable rates," it is the prices coming down from the lofty highs caused by the ZIRP era.

HeadSet says

GNL says
High monthly mortgage payments prevent family formation. "Prices" are set by price + rates.

Yes, but lowering rates increases house prices. For the same mortgage payment, it is better to have a low price and a high rate as that allows more of any extra payments to go to paying down principle. Also, higher prices mean higher assessments and thus higher taxes. The solution to affordability is not "affordable rates," it is the prices coming down from the lofty highs caused by the ZIRP era.

You got it. I personally want lower rates being selfish. I know the overall market is more healthy right now. Sucks for the young, but they'll figure it out. Everyone does. I bought in 2006 and ate shit on that one. Live you learn.

I get annoyed by people complaining about real estate prices. They are what they are. Don't buy if you can't afford it. Owning a home has never been a right. Save up to buy when you can afford it.

HeadSet says

it is better to have a low price and a high rate

and refinance at a lower rate, so I'd take the refinance bait if the rate drop from 7% to 4% (assuming I bought down 4 discount points to originally have a rate of 6%)

the general rule about 10% drop in price for a 1% increase in the 30 year mortgage rate means housing should be down about 40% from early 2022 levels , just when applying that rule and not accounting for household income increasing by about 20% since then

.

Down .25% today. Unfortunately.

zzyzzx says

Down .25% today. Unfortunately.

30 Year Mortgage conventional rate went from around 7.3% in 2022 to now around 6.1% which means FHA and VA rates are now about 5.5%.

https://www.mortgagenewsdaily.com/markets/mortgage-rates-09162025
.

AD says

30 Year Mortgage conventional rate went from around 7.3% in 2022 to now around 6.1% which means FHA and VA rates are now about 5.5%.

Yeah? Home prices still have to drop.

AD says

zzyzzx says

Down .25% today. Unfortunately.

30 Year Mortgage conventional rate went from around 7.3% in 2022 to now around 6.1% which means FHA and VA rates are now about 5.5%.

https://www.mortgagenewsdaily.com/markets/mortgage-rates-09162025
.

Yep as mentioned earlier they're usually roughly following the trend in Fed rates. 5.xx% incoming

zzyzzx says

Down .25% today. Unfortunately.

I didn’t look at much at its direct correlation and various other factors but given the current RE state over the years, it almost follows 20:80 rule in general. Only top 20% can afford to buy in most markets in the country. Top 10, 5 and 1% buy premium properties respectively.
Factors like recession, inflation, wealth diversification, debt etc are managed by professionals for them.
Based on this perspective, it’s unlikely RE prices would “crash”!
Might get stable for some time at best.
I am a firm believer that all the stupid governments never stop printing money and keep pushing inflation and looting poor and middle class people who can’t escape.
If we don’t see them printing, that means they found a trick and hiding for that period ;)
This eventually will reflect on all the real assets.

Steve Grasso, a CNBC contributor says Fed Funds rate will go down to 3%. I thought the Fed would stop at 3.75% as they usually keep a +1% margin above the annual inflation rate. I see annual inflation remaining within range of 2.5% to 3%.

https://www.msn.com/en-us/money/other/steve-grasso-fed-funds-rate-will-settle-around-3-and-will-unlock-the-housing-market/vi-AA1MLgAM

.

If the Fed doesn't lower rates dramatically, expect to see 2-5% daily price swings between major currency pairs. It won't be the US implementing capital controls, but a shit ton of foreign countries will freak the fuck out.

Misc says

If the Fed doesn't lower rates dramatically, expect to see 2-5% daily price swings between major currency pairs. It won't be the US implementing capital controls, but a shit ton of foreign countries will freak the fuck out.

Money markets at Schwab will still pay whatever the Fed Funds rate is now (I suspect about 4.1%).

This will continue to attract foreign money as it safely pays a real or inflation adjusted annual return of at least 1.5%.

Banks charging prime rate of about 7.25% for money lent; that money comes from money market fund deposits earning 4.0%. Let alone the banks make money off loan origination fees.
.

AD says

Banks charging prime rate of about 7.25% for money lent; that money comes from money market fund deposits earning 4.0%. Let alone the banks make money off loan origination fees.

Nope, those loans come from deposits and CDs. Money market accounts can only invest in very short term investments that are highly rated. Mostly US government paper.

MolotovCocktail says

Yeah? Home prices still have to drop.

HeadSet says

Yes, but lowering rates increases house prices. For the same mortgage payment, it is better to have a low price and a high rate as that allows more of any extra payments to go to paying down principle. Also, higher prices mean higher assessments and thus higher taxes. The solution to affordability is not "affordable rates," it is the prices coming down from the lofty highs caused by the ZIRP era.

Yep, the problem is the price, not the rate. The $200-400/mo. savings from a 1-2% rate cut does not begin to cover the added 30-40% increase in maintenance/repairs, insurance, property taxes, etc.

The way to lower insurance, property tax bills, make housing affordable, etc. is to pound the price down.

I predict a slight uptick in sales, followed by a continued buyer's strike.

The mortgage rate ticked back up to 6.22% after Monday's rate cut knocked it down a peg to 6.13%

https://www.azcentral.com/story/money/real-estate/2025/09/18/will-mortgage-interest-rates-drop-after-federal-reserve-rate-cut/86208818007/?gnt-cfr=1&gca-cat=p&gca-uir=true&gca-epti=z11xx35p118950c118950e009300v11xx35b0060xxd006065&gca-ft=168&gca-ds=sophi

"OMG 6% is too high". It's freakin' normal. 3-4% is the freak