The Fed’s Announcement
As expected, the Federal Reserve Board’s Open Market Committee met last week and announced that they would be raising short-term rates by 0.25%. Since the move was anticipated, there was no major reaction by the markets, excepting for the usual increase in rates in anticipation of the decision and subsequently a little easing as the meeting grew closer. This was the seventh time the Fed had raised rates by 0.25% in the past three years during their period of rate “normalization” from the historic lows of the recession and slow recovery.
The big concern for the markets was the statement which accompanied the announcement. As usual, the markets were looking for an assessment of the economy, as well as hints of the pace of future rate increases this year. It seems that the members of the committee are ready to continue increasing rates as much as two more times this year. Some were searching for a hint that rates are coming close to what the Fed considers a normalized level, but that was nowhere to be found. As we have discussed previously, it is an open question where that level is located. When the Fed defines that level, then we will have a better idea of where rates will eventually settle if the economy does not falter.
There was one more important meeting last week. This was the summit with North Korea. Though it was not expected that any breakthroughs were to come from this meeting, it was expected that a positive process would begin. Certainly, the statements made after the meeting were quite hopeful and the meeting itself was a breakthrough. Between international trade and other tensions in the spotlight this year, there has been a lot of caution in the markets contributing to the volatility we have seen. Any easing of tensions could be helpful in this regard.
Homebuyers carrying a lower credit score can wind up paying $21,000 more than a buyer with an excellent credit score. On a national level, recent data shows that a borrower with an “excellent” credit score could get a home loan with an annual percentage rate approximately 0.6% lower than a borrower with a “fair” credit score. The borrower with the “fair” credit score would thus spend $700 more per year for the typical home. In pricier housing markets, the extra dollars paid would be significantly greater. “When you buy a home, your financial history determines your financial future,” said Zillow Senior Economist Aaron Terrazas. “Homebuyers with weaker credit end up paying substantially higher costs over the lifetime of a home loan. Of course, homeowners do have the option to refinance their loan if their credit improves, but as interest rates rise this may be a less attractive option.” Source: Zillow — Need information on how to improve your credit score? Contact us for a free consultationBuyers — beware and curb your enthusiasm! The seller may be watching. And listening. A growing number of home sellers are using security cameras and microphones to spy on potential buyers as they tour their houses or condos. They then may use what they hear or see as leverage in price negotiations. The trend has been fueled by the spread over the past five years of inexpensive Wi-Fi enabled cameras and mics that homeowners can buy and set up themselves for home security. Motion sensors notify them by text or email that a visitor is in their house, and they can then observe a prospective buyer on a computer, laptop or smartphone through the Internet. Alternatively, they can view a recording later. “Recording devices are cheaper and more readily available,” says Leslie Walker, deputy general counsel of the National Association of Realtors. In a survey conducted by Harris Poll for NerdWallet, 15% of Americans who have ever sold a home said they’ve use surveillance cameras to monitor potential home buyers. And 67% say they would use such cameras if they were selling a home that already had them. “In a competitive housing market, everything is fair game,” says Holden Lewis, a housing analyst for NerdWallet, a personal finance website. Source: USA Today
Home features—particularly those that are technology-based—have a stronger pull on millennial home shoppers than the promotion of brand names, according to a new survey by John Burns Real Estate Consulting, conducted with 20,000 new home shoppers. Millennials tended to show a preference for tech-focused amenities that could make their lives simpler. Young adults born in the 1980s and 1990s are half as likely as their parents’ generation to rank brand as the most important factor when selecting products in the home. They do check reviews online before buying, so the survey showed online reputation is also important to them. The young adults born in the 1990s are more likely to pay an extra $3,500 for a smart-tech refrigerator than older adults. Younger adults may have less income to spend, but they showed a higher preference for technology, according to the survey. Source: John Burns Real Estate Consulting