Congrats on your youngest kicking off what sounds like a challenging graduate program. PhD? or MDPhd? Enjoy your time dropping her off. I know what it feels like. Cheers!
I think another aspect investors might be missing, is the composition of the mortgage stack. It cuts both ways. It was great everyone locked in low 30yr rates. It won’t be great when the fed cuts rates because the cuts won’t stimulate the economy as it did in previous cycles. To refi your 4% or 4.5% mortgage, the ten year treasury rate will have to be close to 3% and that implies the 2yr in the low 2% range. Cutting fed funds to fine tune the economy won’t have much impact. I believe roughly 50% of outstanding mortgages are 3.5% or lower. The ten year will have to be sub 3% to get those in the refi range.
Congrats on your youngest kicking off what sounds like a challenging graduate program. PhD? or MDPhd? Enjoy your time dropping her off. I know what it feels like. Cheers!
Thanks! PhD in Astrophysics. Excited for her because she is following her dreams. More worried about how the emotions for my wife and I hold up!
I think another aspect investors might be missing, is the composition of the mortgage stack. It cuts both ways. It was great everyone locked in low 30yr rates. It won’t be great when the fed cuts rates because the cuts won’t stimulate the economy as it did in previous cycles. To refi your 4% or 4.5% mortgage, the ten year treasury rate will have to be close to 3% and that implies the 2yr in the low 2% range. Cutting fed funds to fine tune the economy won’t have much impact. I believe roughly 50% of outstanding mortgages are 3.5% or lower. The ten year will have to be sub 3% to get those in the refi range.
Excellent points!
Another fine letter. Thanks much. :-)
Soft landings are historically uncommon, correct? For that reason alone, the soft landing scenario is unlikely.
I believe it has happened once in the last 40 years