Welcome to my March newsletter, featuring personal insights, advice on mortgage rates, and economic news affecting our local housing market.
Interest Rates
February was tough for mortgage rates because US economic data was fairly strong across the board, dampening hope that the Fed would cut interest rates this month. That said, March has started on a far more positive note — rates edged down for the first time in five weeks, and mortgage applications are up — an excellent sign for the spring housing market.
The Fed is expected to hold off on cutting rates during its meeting on March 20th, and like many experts, I feel we will see the first cut in May/June followed by 2-3 more reductions in 2024.
Here are the rates I have available on key loan products this week.
• 6.125% for 10YR jumbo ARMs up to $5M with income documentation, banking relationship will result in a lower rate.
• 6.25% on a 30YR fixed-rate loan up to $5M with income documentation, banking relationship will result in a lower rate.
• Rates for bank statement loans, depending on loan-to-value, are in the mid to low 7’s, with a strong credit score and a lower loan-to-value. These are priced very aggressively and aren’t much higher than full documentation loans, and interest-only options are allowed.
• With a strong depository, private banking relationship rates are in the mid-to-high 5’s.
Bear in mind that these rates and loan products are only a small representation of my available loan products. Contact me to tailor a solution that best meets your or your client’s personal financing goals.
Employment Reports
Once again, employment data exceeded expectations, reinforcing the stability of the US economy. The Bureau of Labor Statistics Employment Summary reported an addition of 275,000 jobs and an increase in the national unemployment rate to 3.9%. This is the 25th month of sub-4% unemployment, which has not been seen since the 1960s. Wages also rose slightly by 0.1%. It is important to note that there were major revisions downwards to the December and January reports, which tempered the perceived strength in the job market. Overall, the market has reacted positively because they see the writing on the wall — rates are going lower.
Additionally, the Jobs Opening and Labor Turnover Survey (JOLTS) data showed little change in job openings in the US — 8.5M openings versus 9M last month. This is also a sign that the job market is slowing a bit.
On a regional level, California’s unemployment rate (which trails the US by a month) rose slightly to 5.2%. However, the California job market has expanded for 45 months in a row and accounts for over 16% of national job growth. This data underpins the strength of our local economy and housing market.
Local Activity & Recent Transactions
Investment Property Financing | La Quinta | $6M Loan
$1M cash-out
Bank statement loan
Interest-Only loan
Rate in the 7.5% range
New Home Purchase | Palos Verdes | $2.195M
90% LTV Financing
Full income documentation
6.5% interest rate, 6.625% APR
10-1 ARM
No PMI
New Home Purchase | Manhattan Beach | $3.350M
85% LTV Financing
Full income documentation
6.625% interest rate, 6.75% APR
10-1 ARM
New Home Purchase | Malibu | $5M
80% LTV Financing
5.75% interest rate, 5.88% APR
Private Banking relationship
7-1 ARM
Key Economic Reports to watch for this month:
March 12 – Core Consumer Price Index (CPI)
March 19 – Building Permits, Housing Starts
March 20 – Fed Interest Rate Decision
March 21 – Existing Home Sales
March 25 – New Home Sales
March 28 – Pending Home Sales
The rest of March should bring some additional mortgage interest rate relief. Savvy real estate investors know the winning game is to strike now while prices are lower and refinance in the next 12-18 months when rates will undoubtedly decrease. I love to see my clients thrive in a moment like this, so don’t hesitate to contact me to help put you in the best position possible to take advantage of market conditions that won’t last forever.
Sincerely,
Mark Cohen