In this weekly market update, lender Jordan Keck explains why the recent Federal Reserve rate cut does not automatically lower mortgage rates, noting that mortgage rates are driven by the bond market and recent Fed commentary has actually pushed rates higher. He highlights a VA‑loan nuance that permits a non‑veteran, non‑spouse co‑borrower to join a loan with a 12.5% down payment, preserving VA benefits and avoiding mortgage insurance. Keck then reviews recent housing data: Apartment List reports a 0.8% month‑over‑month decline in new rents for October (third consecutive month) and a 0.9% year‑over‑year drop, driven by rising vacancy rates (7.1%). Pending home sales for September were flat, missing a 1.6% expected gain and down 0.9% YoY, though non‑seasonally adjusted figures show a slight rise. Home‑price indices showed modest gains—Case‑Shiller up 0.2% (raw -0.3%) and FHFA up 0.4% for August, with YoY price growth slowing to 1.5%. Finally, Keck warns that the ongoing federal government shutdown is triggering reductions in SNAP food‑benefit payments, affecting roughly 42 million recipients, and urges listeners to stay informed and advocate for a swift resolution. The video blends data, policy insight, and practical advice for borrowers and homeowners.
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Good morning, happy Friday, and happy Halloween. Jordan Keck here, your lender buddy, with your weekly market update. Interest rates a little bit spookier today, unfortunately, after the Fed rate cut, moving up from 6.19% last week to 6.28% this week. And reason for that, we'll get into here in a little bit. But please, especially if you know you've been watching my stuff, you know this. Remember and tell your clients, Fed cut rates does not mean that they are cutting mortgage rates. So before we get into that weekly mortgage tip, starting off with VA loans with a non-spouse co-borrower. So you may already know this, but the VA allows either the veteran to use their VA home loan benefits or the veteran and a spouse to be on the loan. But if you have somebody who is not a veteran and not a spouse on on the loan, who is even going to be occupying the property, say like a non-married partner, for example, or multi-generation, you've got a family member who's moving with you, the VA typically does not allow that to be on the loan. But there is a nuance where they can still allow it with exception if you have the non-veteran's portion of the guarantee coming in with a down payment, which is typically 12.5%. So if you still wanted to do a VA loan, with somebody who is not a veteran and not a spouse of the veteran, you can do that with exception at 12.5% for down payment. Still doesn't require any monthly mortgage insurance, and interest rates are typically below where conventional's at, plus a host of other benefits for VA loans. So this often makes sense if somebody is selling a home, buying a new one. Again, maybe it's multi-generation or a non-married partner. So if you have questions about this or an opportunity where it might make sense, let me know. Happy to talk through it, but a great tool that's come in handy more than a few times. Next up, the big news this week, of course, the Federal Reserve cut interest rates a quarter of a percent, but this is the overnight federal funds rate for banks. This directly affects things like home equity lines of credit, car loans, credit cards, but not mortgages. Mortgages are going to be affected by the bond market, and that trades just like a stock. And so expectations of what's going to happen in the future are baked in as soon as that information is available. So because the Federal Reserve rate cut this month was essentially baked in as a guarantee a month to month and a half ago, the market for mortgage rates already dropped a month to a month and a half ago as soon as they expect that that's going to be the case. The problem though is once they actually lowered rates, the commentary by the Fed afterwards is what made them higher. Mortgage rates were already anticipating the Federal Reserve to cut rates again at their December 10th meeting, But during the comments for this cut, the Federal Chair Powell said that that was far from a foregone conclusion, leading to a lot more skepticism about maybe there's not going to be a cut after all, especially with a lack of data. Because if we still don't have data in time for the Federal Reserve's next meeting, they're most likely not going to be cutting the rates blind. So if we get the government shutdown, we get some more reports coming out showing inflation's not as high as expected, showing that unemployment numbers are higher and actual employment rates are down, that could be the catalyst we need to see an improvement or a lower likely chance of cutting rates. And that data coming out, if it helps us, is where we would see mortgage rates start to drop again, not at the actual Federal Reserve rate cut. So hopefully that is helpful. And again, meantime, until the government reopens, there's a lot of news reports and data that we're just not getting that might be in our favor towards another rate cut. Next up, Apartment List reported rents were down 0.8% for the month of October alone and down for the third straight month. This is for new rents, not for renewals, and it's expected to continue a decline to close out the year after we see typically stronger numbers in the summer and then weaker numbers going into fall and winter. Year over year, new rents are down 0.9%, largely due to vacancy rates now moving to 7.1%. 2%, which is a new peak since they started tracking in 2017. Pending home sales for the month of September were flat, below expectations of a small gain. The market was looking for a gain of about 1.6% for the month, so now we're down 0.9% year over year on pending home sales, which are new contracts signed for September. Seasonal adjustments were also part of this, so on a non-seasonally adjusted basis pending home sales have been moving higher, but they try and make seasonal adjustments to account for the changes throughout the time of the year. Next up, Case-Shiller and FHFA showed home prices rose 0.2% and 0.4% for the month of August, respectively. This is also on a seasonally adjusted basis here, with Case-Shiller's raw number showing a decline of 0.3%, and year-over-year home prices up 1.5%, below last month's number of 1.6%, so decelerating slightly. FHFA also revised last month's figure up from a -0.1% to flat overall. So for September and August here. And lastly, due to government shutdown, you may have already been tracking this, SNAP food benefits are set to start seeing some reductions here as soon as tomorrow. Approximately 42 million people in the US are receiving some kind of food assistance benefit through the SNAP programs. There's going to be a lot of unhappy people here, hopefully writing to their congresspeople to end the shutdown sooner than later as the impact gets larger and larger. We're now at the second, second longest shutdown on record at 31 days here starting the beginning of October, with the longest on record being in January of 2019 and lasting 35 days. So if this continues to go into next week, we're looking at potentially breaking the record for the longest government shutdown. As we're just 4 days short of it right now. Fingers crossed this ends very soon. I know it's impacting more and more people here, not in a great way. So regardless of your politics, again, just be checking in with people, making sure that, you know, there's access to benefits out there. People have got to be able to eat. And anyway, hopefully this is helpful. As always, I hope you have a great Halloween, uh, great Halloween here, fantastic weekend, and we'll see you next time. Take care.
