Portland Mortgage Market Update — November 8, 2024

Whew, we made it. In a week that felt like a month, we had a lot of volatility and a lot of big events. I will focus on the Big Two in the below:

First, the election. Mortgage rates immediately shot up with the Trump victory. Trump's policy of a blanket 20% tariff across all imported goods is viewed as inflationary since it would drive up prices. Inflation, real or perceived, is bad for interest rates. But is the Trump Tariff a reality? HousingWire had a couple of great podcasts this week breaking things down, and the gist is basically Trump will want lower rates for three reasons:

• To lower the value of the dollar, which would make it easier to export more goods out of the country (helping the economy) • To avoid a housing construction recession, which is already showing housing starts at recessionary levels • To help balance the budget since a record 1.2 TRILLION dollars will go just to Interest payments in 2024. Lower rates = less interest paid

He also has beef with current Fed Chair Powell and will likely replace him with a less dovish Fed Chair that more aligns with his policies

Speaking of the Fed, they gave us a 25 point cut yesterday! Even more exciting was during Powells Q+A session afterwards, he sounded like the Fed was being a bit more pragmatic with their thinking. When asked about the concerns that inflation was stalling, he cited the 3 and 6 month run rates of 2.32% and 2.28% respectively. So they are looking at more "immediate" inflation data than the 12 month sum that has been the norm for the CPI and PCE reports. He also was looking forward to further improvement when we get through January where we will be replacing the .5% reading from last January's numbers. (As an aside, I cannot believe we are already talking about January 2025!) The market is currently pricing in a 70% chance for another rate cut in December, then pausing in January.