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The Fed isn’t done with rate hikes this year

Money sent this email to their subscribers on September 23, 2023.

Utopia has been in Denver all along
͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ 
September 23, 2023 • Issue #110
Money Moves

Happy Saturday!

This week, we’re discussing the latest news on interest rates and a Denver home that's pretty much see-through.

There’s one more rate hike to go
Fed
Getty Images

As just about everyone expected, the Federal Reserve decided not to increase the federal funds rate this week, opting to hold short-term interest rates steady at 5.25%. No surprises there.

But here's the kicker: The Fed also says it will need to do another rate hike before the end of 2023 if it wants to achieve its goal of slowing inflation. The rate is now expected to end the year at 5.6%.

What’s more, analysts have been anticipating the Fed to announce a series of upcoming cuts to the federal funds rate next year, implementing a total of four cuts by the end of 2024. That’s not going to happen: The Fed’s latest economic outlook calls for only two rate cuts, which means rates are going to stay higher for longer.

In a press conference on Wednesday, Fed Chairman Jerome Powell said the agency is "in a position to proceed carefully," regarding future decisions.

As Dan Richards, executive vice president of mortgage and title at Flyhomes, tells me, "There's simply too much risk and not enough benefit for the Fed to tell us there are no additional hikes coming."

What does this mean for the housing market?

Well, it’s not exactly good news. Mortgage rates are likely to hover between 7% and 8% for now, and buyers “shouldn’t expect a major decrease in 2023,” Richards says.

They should steel themselves for high rates into next year as well, though how high is still up in the air.

For house hunters, this is yet another kick in the pants. Buyers are already in a tight spot: Home prices keep climbing, and the average mortgage payment is nearly $400 higher than it was a year ago. Real estate sales are stalling and available inventory is nowhere near where it needs to be. 

The silver lining is that things will probably get better soon. Fannie Mae analysts predict that the Fed will decrease the federal funds rate by 0.25 percentage points next summer, meaning mortgage rates will also likely fall. And the Fed’s own economic projections are anticipating two rate cuts next year.

Still, we have to take all this with a grain of salt. The economy can take a sharp turn in either direction and even the best-researched forecasts can go up in smoke (we've definitely been burned before). For now, anyone venturing into the housing market better prepare for a wild ride.

Listing of the week
Exterior
Astra Studios
A home fit for The King

This Denver-area home, which previous owners nick-named "Utopia," was once a party hot spot for celebrities vacationing in the Mile High City. According to local lore, Elvis wanted to buy it back in 1976 but got cold feet when he learned he couldn't build a security fence around the property.

Today, it's got five bedrooms, seven bathrooms and two kitchens. There's also floor-to-ceiling windows in every one of those rooms which, you know, puts the King's gripe about the place into perspective.

Don’t worry about privacy, though. The nearly one-acre lot is lined with trees, so you can dance around the home's porcelain fireplace, and up and down its floating staircase, without fear of the paparazzi's prying eyes. (Just take it easy on the peanut butter and banana sandwiches). 

Listed by Compass agent Mike McCabe, this would-be Graceland can be yours for $5.575 million.

Collage
Astra Studios

’Til next time,
Leslie
P.S. Have you seen a unique listing on social media I should feature in this newsletter? Or have a question about housing or mortgages you desperately want answered? Let me know on Twitter at @LeslieLCook or via email at [email protected].

P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page.

Money’s Essential Home Buying Resources: Fall

On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates.

Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips.

Key question: How much house can I afford?

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Copyright ©2023 Money Group, LLC. All rights reserved.

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Text-only version of this email

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  September 23, 2023 • Issue #110 Money Moves Happy Saturday! This week, we’re discussing the latest news on interest rates and a Denver home that's pretty much see-through. There’s one more rate hike to go Fed Getty Images As just about everyone expected, the Federal Reserve decided not to increase the federal funds rate this week, opting to hold short-term interest rates steady at 5.25%. No surprises there. But here's the kicker: The Fed also says it will need to do another rate hike before the end of 2023 if it wants to achieve its goal of slowing inflation. The rate is now expected to end the year at 5.6%. What’s more, analysts have been anticipating the Fed to announce a series of upcoming cuts to the federal funds rate next year, implementing a total of four cuts by the end of 2024. That’s not going to happen: The Fed’s latest economic outlook calls for only two rate cuts, which means rates are going to stay higher for longer. In a press conference on Wednesday, Fed Chairman Jerome Powell said the agency is "in a position to proceed carefully," regarding future decisions. As Dan Richards, executive vice president of mortgage and title at Flyhomes, tells me, "There's simply too much risk and not enough benefit for the Fed to tell us there are no additional hikes coming." What does this mean for the housing market? Well, it’s not exactly good news. Mortgage rates are likely to hover between 7% and 8% for now, and buyers “shouldn’t expect a major decrease in 2023,” Richards says. They should steel themselves for high rates into next year as well, though how high is still up in the air. For house hunters, this is yet another kick in the pants. Buyers are already in a tight spot: Home prices keep climbing, and the average mortgage payment is nearly $400 higher than it was a year ago. Real estate sales are stalling and available inventory is nowhere near where it needs to be.  The silver lining is that things will probably get better soon. Fannie Mae analysts predict that the Fed will decrease the federal funds rate by 0.25 percentage points next summer, meaning mortgage rates will also likely fall. And the Fed’s own economic projections are anticipating two rate cuts next year. Still, we have to take all this with a grain of salt. The economy can take a sharp turn in either direction and even the best-researched forecasts can go up in smoke (we've definitely been burned before). For now, anyone venturing into the housing market better prepare for a wild ride. + This Surprise Expense Is Likely to Upend Your Budget in Retirement (Hint: It’s Not Healthcare) + More Homebuyers Are Canceling Sales at the Last Minute Listing of the week Exterior Astra Studios A home fit for The King This Denver-area home, which previous owners nick-named "Utopia," was once a party hot spot for celebrities vacationing in the Mile High City. According to local lore, Elvis wanted to buy it back in 1976 but got cold feet when he learned he couldn't build a security fence around the property. Today, it's got five bedrooms, seven bathrooms and two kitchens. There's also floor-to-ceiling windows in every one of those rooms — which, you know, puts the King's gripe about the place into perspective. Don’t worry about privacy, though. The nearly one-acre lot is lined with trees, so you can dance around the home's porcelain fireplace, and up and down its floating staircase, without fear of the paparazzi's prying eyes. (Just take it easy on the peanut butter and banana sandwiches).  Listed by Compass agent Mike McCabe, this would-be Graceland can be yours for $5.575 million. Collage Astra Studios ’Til next time, Leslie P.S. Have you seen a unique listing on social media I should feature in this newsletter? Or have a question about housing or mortgages you desperately want answered? Let me know on Twitter at @LeslieLCook or via email at [email protected]. P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page. Money’s Essential Home Buying Resources: Fall On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates. Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips. Key question: How much house can I afford? This newsletter is free because Money earns a commission when you click or make purchases from the links in this email and on our site. We also receive compensation for some of the products and services featured in this message. Offers may be subject to change without notice. Learn more about how we make money. • Advertise With Us • We're Hiring! To stop receiving these emails, or . Copyright ©2023 Money Group, LLC. All rights reserved. Metro Office Park Calle 1, Building 7 Suite 204, Guaynabo, Puerto Rico 00968, USA
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