A Look Into The Markets: December 2023
December 14, 2023

A Look Into The Markets: December 2023

"You only live once, but if you do it right, once is enough." - Mae West


As a homeowner, you're responsible for a variety of expenses, including homeowners insurance. You can save money on this insurance with a few simple steps. In this issue, we'll cover these tips, as well as the following:


What to Watch - The Federal Reserve has signaled that it may have contained inflation by hiking rates. The last hike in July to the Fed Funds Rate, which brought it to 5.5%, could be the high point of the cycle.


How To Save on Homeowners Insurance - Discover various ways you can lower the cost of your homeowners insurance to save money.


4 Home Improvement Projects for Winter - Get some ideas for home improvement projects you can do in the colder months.


Q&A: How Do You Know How Much Home You Can Afford? - When determining your budget for a new home, there are many factors to consider, such as your debt-to-income ratio and ongoing expenses.


Please feel free to forward this newsletter to friends, family or co-workers who may find it helpful.

What to Watch


Fed Signals it May Have Contained Inflation


What a difference a few weeks make in the financial world. Near the end of October, the closely watched 10-year yield rose just above 5% to highs not seen since 2007. At the same time, the 30-year fixed rate mortgage flirted with 8%, the highest since the turn of the century. Rising interest rates, heavy borrowing from the U.S. Treasury, inflation pressures and a hot job market were factors that helped to push borrowing costs higher.


But since the historic rise in yields and home borrowing costs, a sort of pivot has taken place as the Federal Reserve has signaled that it may have contained inflation by hiking rates. The last hike in July to the Fed Funds Rate, which brought it to 5.5%, could be the high point of the cycle.


Why? The closely watched Consumer Price Index, which hit multi-decade highs in June 2022 of 9% annually, has fallen to 3.2%. As inflation has declined, the bond markets have responded positively as prices increased and yields fell. As yields fall, so do mortgage rates.


The hot job market is now showing signs of cooling evidenced by the recent decline in monthly job growth while weekly initial jobless claims have been increasing. Also, the number of jobs available has been slowly decreasing.

The canary in the coal mine for the mortgage market and yields is the increasing debt load of the U.S. government. As the debt load grows, the Treasury must issue more and more Treasury Bills, Notes and Bonds to pay for the debt. More supply could lead to lower bond prices, higher yields and higher borrowing costs.


The takeaway ... falling inflation and a cooling job market should help to push home borrowing costs lower over the next several months and if the Federal Reserve cuts rates in 2024, mortgage rates could push even lower.


Source: Mortgage Market Guide

Housing News


How To Save on Homeowners Insurance


Homeowners insurance is a necessary expense to protect your home from weather, theft, and other damage. But the cost of this insurance can quickly add up, especially when you're paying for other expenses, such as a mortgage and property taxes. Here are some tips to help you save money on your homeowners insurance.


Bundle your policies. Many insurers will offer discounts if you purchase multiple policies from them. For example, you may bundle your auto and homeowners insurance policies to receive a discount. Ask your insurance company about the bundling options.


Ask for a discount review. If you've made changes to your home recently, ask your insurance company for a discount review. For example, you might get a discount if you've installed a new home security system. Renovations you make to your home, such as new plumbing or wiring, may also qualify you for a lower insurance rate.


Research discount options. You may qualify for a discount on your premiums without even realizing it. Research different discount options you may have. Many insurers offer lower rates to loyal customers, military members, retirees, and even certain types of professionals.


Compare quotes from different companies. If you believe you're paying too much for homeowners insurance, get quotes from a few different companies. Compare these quotes to see if you could save money by switching to a different provider. It's a good idea to review your homeowners insurance and compare quotes every couple of years or so.


Knowing about different discount options can help you save money on homeowners insurance. Use these ideas to lower the cost of your premium.


Sources: Forbes.com, Policygenius.com, Bankrate.com

Home Improvement


4 Home Improvement Projects for Winter


In the winter, it can be tempting to hibernate in the warmth of your home, choosing to save home improvement projects for the spring. However, winter can be an excellent time to tackle some projects on your home to-do list.


Replace hardware. Take advantage of the extra indoor time by replacing hardware on your kitchen cabinets and bathroom vanities. You can even swap out a sink faucet to make a statement. These small changes can have a big impact in a room.


Remodel the laundry room. Winter is a great time to give some attention to neglected spaces, such as the laundry room. Make your laundry space feel more inviting with a fresh coat of paint or peel-and-stick wallpaper. Add functional items, such as shelves and bins, to make the room work better for you.


Paint the walls. If there's a room in your home that's desperately in need of a paint job, tackle this task in the winter. The cooler air allows paint to dry more quickly than in the summer. Use low-volatile organic compounds paint so you don't have to open the windows on a cold day.


Upgrade the lighting. Winter brings shorter days and more darkness, making it essential to have the right lighting in your home. Make your home bright by swapping out dull or old bulbs for new ones. You can also upgrade your lighting with apps or dimmers so you can control the amount of light in a room.


You don't have to neglect the projects on your to-do list just because the weather gets colder. Use these ideas to make some updates to your home in the winter.


Sources: Houselogic.com, Angi.com, Forbes.com

Q&A


How Do You Know How Much Home You Can Afford?


QUESTION: How do I set my budget for a house?


ANSWER: When you purchase a home, you never want to spend more than you can afford, otherwise you'll end up house poor. Before you start shopping for a new home, set a budget by calculating your debt-to-income ratio, determining a down payment, and planning for ongoing costs.


When lenders review your mortgage application, they'll typically consider your debt-to-income ratio, which is how much you pay in debts compared to how much you make each month. You can calculate your debt-to-income ratio by dividing your total monthly debt payments by your gross monthly income. As a general rule, experts recommend your mortgage payment shouldn't exceed 28% of your monthly income.


Your down payment will also have an impact on how much you can afford to spend on a new home. A good goal is to make a 20% down payment in cash so you can avoid paying private mortgage insurance. If you can't afford a 20% down payment on a home, it might be worth looking at less expensive houses where your money will go further.


Finally, don't forget to account for ongoing expenses when setting a budget for a new home. Homeownership comes with many ongoing costs besides your mortgage payment. For example, you'll have to pay for property taxes, homeowners insurance, and utilities. Plus, you'll be responsible for maintenance and upkeep, such as lawn care, pest control, and appliance repairs.

Buying a home is a big investment. Take these steps to set a budget so you purchase a home you can reasonably afford.


Sources: Myhome.freddiemac.com, Nerdwallet.com, Investopedia.com

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