Interest Rates and Mortgage Bonds (Interest Rates were down slightly week-over-week) – Mortgage bonds continued to slide finishing at 4.878% by end of the week and down from end of last week 4.938%. I would have expected more again, as the stock market increased its swings from +1400 one day and -1500 the next day. Some of this was related to politics from Tuesday Night and how that will impact real estate, interest rates, and the markets over the next two years. As of right now, Mortgage News Daily has the average 30 year fixed conventional nationally – 7.17% (Last Friday was 7.27%). 2-3 weeks with interest rates moving in the right direction and a 10 Year Bond below 5.00% is a good trend. Tuesday’s political news caused markets to have extreme volatility for the rest of the week. The political volleying is now discussing a slowing economy, conflicted policies, impeachments, and chaos – if you just listen to the headlines. Bonds seem to like the chaos and pushing yields lower. Additionally, gas has dropped by $1/gallon just since the last week. Amazing, nothing has changed and gas started to drop dramatically? Pivoting to the next Federal Reserve Meeting, chances are still elevated for a .25% hike at the December 2026 Meeting (CMEFedWatch Tool has an 80% chance of a hike on December 09, 2026 – up from 72% last week). We talked about milestones last week, one has passed – election and we had several leads or pre-approvals reengage after the election and they called the next day. Kind of weird timing, but many were paying attention to last Tuesday.
Real Estate Locally – Transactions continue to happen, some prices are dropping, and most transactions have some sort of seller-concessions ie 2/1 Buydown, buydown, and seller paid closing costs. Most transactions are now expecting those and mainly to compete. It appears Prop 37 was going to pass, giving new builds an advantage thru CALHFA by them paring 3% down with a 17% repayable 2nd mortgage to help avoid MI – yes only new construction with the higher property taxes. And the trend of higher priced properties continuing to move – continued. The thesis is those transactions are cash or large down payments – meaning interest rates are a little less impacting on these types of transactions.
National Numbers & Outside Influences on R/E and mortgage markets – 1) 165,000 new jobs created. 2) Unemployment timelines before they find a new job is about 27 months start to finish. 3) Nasdaq gets hammered. 4) AI and technology stocks got pummeled due to the political moves last week because there is now pressure to resist and fight the data centers, especially in Texas. This could reduce spending on the AI Race with other countries. 5) Fannie Mae and Freddie Mac spike last week as Bill Ackman pushes for them to be privatized and sold away from the government.
Next week Reports – 1) Consumer Price Index – CPI, 2) multiple auctions, 3) Bond Market is closed Wednesday, 4) existing home sales, and 5) all Producer Price Index readings. A big week for inflation stats.
Mortgage News – Loan limits for Riverside and San Bernardino for 2027 were increased from $832,750 to $847,400 or $850,000 depending on investor. They differ because lenders are guessing what the increase will be for 2027 and offering those higher limits now – two months early. Lastly, the direction on interest rates is currently a floating-bias by our economists we follow. If we can maintain these levels in the bond market or below this week, it will be bullish for rates to continue downward. It also all depends on inflation, inflation, and inflation.
Product Updates or Enhancements – None this week.
Overall Discussions we are having – We have passed on major milestone – the mid-terms. And folks have started to call, right after the elections. We still have 1) holiday months, 2) weather, 3) interest rates as short-term impacts. To me, the big one has passed and the rest is setting itself up like years before – clients potentially having access to larger price discounts, large seller credits, or just outright better deals the next 2-3 months. And one that isn’t talked about all the time, but less buyer competition also typically exists. We will look for other impacts and keep you apprised, some potential next milestones appear to be the certification of these election results, what happens in Iran, and Ukraine. We will continue to keep on top of this. Disclaimer – None of us have a crystal-ball and this is ultimately your decision. I am really just passing along the information. 🙂
Enjoy your weekend, hope you found this report helpful, and I am around for any questions. Take care.
