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- Powell: The Fed can cut rates but it can’t fix the housing crisis
Powell: The Fed can cut rates but it can’t fix the housing crisis
Plus: Mortgage payments see highest decline in 4 years
Happy Monday! Let's do this. Today's newsletter is 807 words, a 2.5-minute read.
Disclaimer: Average mortgage rates as of Sep 20, 2024. © MND Daily Rate Index.
1. Powell: The Fed can cut rates but it can’t fix the housing crisis
Speaking to reporters on Wednesday, following the announcement of the start of the rate-cutting cycle, Fed Chair Jerome Powell stressed that while normalizing inflation and interest rates is important, it alone won’t solve the housing market's affordability crisis.
“The housing market, it’s hard to game that out. The housing market is, in part, frozen because of lock-in, lower rates, people don’t want to sell their home because they have a very low mortgage and it would be quite expensive to refinance. As rates come down, people will start to move more and that is probably beginning to happen already. But remember, when that happens you’ve got a seller but you also got a new buyer in many cases. So it is not obvious how much additional demand that would make. The real issue with housing is that we have had, and are on track to continue to have, not enough housing. And so it’s going to be challenging, it’s hard to zone lots in places people want to live. All of the aspects of housing are far more difficult, and where are we going to get the supply? And this is not something the Fed can really fix. But as we normalize rates, I think you’ll see the housing market normalize. Ultimately by getting inflation broadly down and rates normalized and getting the housing cycle normalized, that is the best thing we can do for householders. And the supply question will have to be dealt with by the market, and also by the government.”
2. Homebuyers Privacy Protection Act included in 2025 NDAA
The Homebuyers Privacy Protection Act of 2024, targeting mortgage trigger leads, has been incorporated into the 2025 National Defense Authorization Act (NDAA). This bill, introduced by Senators Bill Hagerty (R-Tenn.) and Jack Reed (D-R.I.), aims to curb abusive practices where lenders use consumer credit inquiries to solicit mortgage applicants.
Advocacy groups, including the Mortgage Bankers Association and the Community Home Lenders of America, praised its inclusion, citing protections for consumers, veterans, and active-duty service members. While the Senate NDAA includes the bill, the House version does not, with lawmakers set to negotiate the final version next month.
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3. More Nuggets
📝 Here are 4 ways the Federal Reserve's big rate cut could change the housing market. (NPR)
⛓️💥 Alabama Realtors ask NAR to decouple association memberships. (AAR)
📈 Critical defect rate rises for the first time in over a year. (ACES)
⚖️ Wells Fargo lawyers reprimanded in home lending racial bias case. (BloombergLaw)
4. Mortgage payments see highest decline in 4 years
According to Redfin, mortgage payments made their sharpest drop in more than four years during the week leading up to the Federal Reserve’s highly anticipated rate cut. While affordability is rising, the impact of the Fed's decision on mortgage rates and the housing market has yet to pan out.
The median U.S. housing payment was $2,534 during the four weeks ending September 15, down 2.7% from a year earlier–the biggest decline since May 2020. Monthly payments are falling because mortgage rates dropped to their lowest level in 20 months in the lead-up to the Fed’s first interest-rate cut since 2020.
5. NEXA wins legal battle after data theft case dismissed
A lawsuit filed by Smart Mortgage Centers against NEXA Mortgage LLC and Secured Mortgage Processing was dismissed by the Twelfth Circuit Court of Illinois due to insufficient evidence.
The case, initiated in February 2020, alleged that two former employees of Smart Mortgage, Brian Noe and Eileen Pruitt, stole confidential client information for NEXA’s benefit.
However, the court found no proof that trade secrets or proprietary data had been transferred. NEXA CEO Mike Kortas expressed relief over the ruling but noted the significant legal costs incurred. Kortas intends to seek damages from Smart Mortgage over the litigation.
☀️ You’re all caught up. See you on Wednesday!
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