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Fed prepares to pivot balance sheet, with potential ripple effects for mortgages

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A growing number of economists believe that the Federal Reserve is close to announcing the end of its quantitative tightening (QT) program — a move that could have wide-reaching implications for the mortgage industry.

Over the past few weeks, central bank officials have signaled they are prepared to wind down the policy aimed at shrinking the Fed’s balance sheet, prompting expectations of an announcement as soon as Wednesday.

Earlier this month, Fed Chair Jerome Powell said the winding down of QT could happen “in the coming months,” while other officials have shifted their language from describing reserves as “abundant” to “ample.”

The Fed’s balance sheet has expanded dramatically over the past decade, doubling from about $2.2 trillion in 2008 to $4.2 trillion in 2020, just before the COVID-19 pandemic.

It peaked near $9 trillion in 2022 when QT began, but it has since declined to $6.5 trillion — composed of roughly $4.2 trillion in Treasury securities and $2.1 trillion in mortgage-backed securities (MBS).

Questions remain about how the Fed will manage the end of QT. The prevailing view is that the central bank will use mortgage repayments to reinvest primarily — if not entirely — into short-term Treasurys.

“Our house forecast is that they take the MBS paydowns, which are roughly about $16 billion a month, and reinvest those into Treasury bills,” said Jeana Curro, managing director and head of agency MBS research at Bank of America. “That aligns with a lot of the rhetoric from this Fed. They’ve said they ideally want to hold a Treasury-only portfolio.”

BofA analysts expect the Fed to announce the end of QT on Wednesday, paving the way to begin the transition by late October. The shift from MBS to Treasurys should be $10 billion to $20 billion per month.

If that’s the case, Curro said, the market reaction will likely be muted, as the change is “largely priced in.”

In the mortgage sector, secondary market executives expect a positive impact, largely due a decline in 10-year Treasury yields. These tend to move in tandem with 30-year mortgage rates due to their similar long-term nature.

“I do believe this will be a rising tide that lifts all boats,” said Scott Ferrell, executive vice president and director of capital markets at AnnieMac Home Mortgage.

“Mortgages should follow along nicely. It’s sort of Econ 101: There will be less supply out there with an equivalent demand. The overall implications for the mortgage market is there will be some decrease in rates, which, of course, would be favorable for refinance activity.”

Winding down QT for MBS later?

Some market participants floated the idea earlier this year that the Fed might reinvest MBS paydowns into new MBS, citing housing market pressures and the need to lower rates. But most economists don’t see that as a base-case scenario.

“I think there’s a preference to have the balance sheet at zero MBS, from what a couple of the Fed speakers have said in the past and all of their holdings in Treasury at some point in time,” Ferrell said. “I don’t think they’re rushing to get to that point, but I believe that’s the ultimate desire.”

Others question whether the Fed might first end QT for Treasurys while maintaining its MBS runoff for longer.

Nash Paradise, director of sales at UMortgage, said the end of QT will nevertheless be a boost for the mortgage industry, which has faced a wide spread of about 2.2% between 10-year Treasury yields and overnight 30-year mortgage rates.

“We’ve already seen the 10-year yield drop, and that’s what we need — to hold below 4%,” Paradise said. “As we get to the end of QT on MBS, we will start to see that margin between the 10-year yield and the overnight average on the 30-year really tighten up.”

Rick Roque, corporate vice president of new growth at NFM Lending, said it remains uncertain whether the Fed will reinvest halted MBS runoff proceeds back into MBS or shift entirely to Treasurys. The first option, he said, would be more favorable for mortgage rates, but the latter seems more likely.

“Overall, this development is a net positive for the bond market,” Roque said. “It could bring the 10-year yield down to test technical floors in the 3.6% to 3.8% (range). With spreads normalizing toward 1.8%, the 30-year mortgage rate could move closer to 5.5%.”

Curro added that ending QT could also signal a return of domestic banks as MBS buyers, which would help narrow spreads. She remains cautious, saying that banks have been anticipated to reenter the market for a while, but it hasn’t happened.

Read more at Housingwire

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10 Signs Your Home Might Actually Be Haunted

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Maybe it’s a flickering light. A sudden drop in temperature. A random waft of...wait, is that aftershave? Whatever it is, something seems to be off, but how do you know whether that unsettled feeling you’re experiencing is the result of an honest-to-goodness ghost?

If you are feeling spooked, you’re not alone. According to a 2024 survey by Angi (formerly Angie’s List), the home improvement platform, 60 percent of homeowners suspect their house may be haunted. But even if those suspicions are correct, not all hauntings are created equal.

“Many hauntings seem to be residual energy, sort of like a recording playing on a loop,” says Amy Bruni, a professional paranormal investigator, television host (“Ghost Hunters,” “Kindred Spirits”), podcaster (Haunted Road), and author (Life with the Afterlife). Other hauntings seem to be more interactive. “Those usually stem from the classic idea of unfinished business,” but not necessarily anything sinister, she says. “I once investigated a home where the family had an old headstone in their backyard. It turned out it had been made years prior to correct a misspelling on a grave at a local cemetery. The spirit of that man would not rest until the correct headstone was finally put on his grave.”

Another reason a ghost might be lingering: fondness for their old home. “Spirits and ghosts tend to like to spend time in the same spaces they enjoyed while they were alive,” says Lesley Ann Hyde, medium, paranormal investigator, and founder and owner of The Southern Ghost Girls. “In my team’s research, we have found that theaters, libraries, and even restaurants have a lot of ghostly paranormal phenomenon that occurs. We think they just want to be where they were the happiest in life.”

Before you work yourself into a sage-burning tizzy, remember that those weird sounds may just be a squirrel. “I always suggest that people try to first figure out the natural causes for these experiences, like old pipes or animals in the attic,” says author Adam Berry, who is also co-star and Executive Producer of “Kindred Spirits”. “However, when you can’t naturally explain it away, then you never know if someone has decided to reach out to you from the afterlife.”

Here, according to experts in the paranormal field, are a few common indicators that you’re dealing with more than a rodent.

1) You feel like you’re being watched.

This is one of the most commonly cited disturbances of homeowners who suspect their homes are haunted. “People tell me and my team this all of the time,” says Lesley. (Is this song stuck in your head now? You’re welcome.)

2) You hear weird noises.

Strange knocks, creaky doors, unexplained footsteps, unsettling sounds in the walls—it could be as simple as that aforementioned squirrel, but then again...maybe not? “Some people report hearing conversations of people in their basement or attic and clearly no one is down there,” says Adam. “I know one person who actually caught disembodied voices on recording devices,” says Lesley. “The final straw, however, was an apparition of a boy in the house, which convinced the guy to move into a rental home.”

3) You notice odd electrical glitches.

Flickering lights may be a staple of haunted houses, but that hardly scratches the surface. of electronic interruption. “Televisions turning on by themselves, computers freezing up, and batteries draining quickly without explanation can also be signs of a paranormal presence,” says Lesley.

4) Strange things happen when you renovate.

“We find that home renovations really stir up paranormal activity,” says Lesley. “It’s like the ghosts make themselves more known and are acting up. I feel that more activity during renovations occurs because they are protesting the person or persons making the changes. The ghost or spirit liked the way things were when they were alive, and they think they still live there and are the ones in charge.”

Adam has observed the same: “We have seen upticks in activity when people renovate their home. This was fairly prominent during the pandemic, when people were at their house doing all those projects they never got time to do before. I am not 100% sure what a spirit sees on the other side, but I do know that when you change your home, you’re changing the energy of the space, and I think that can have an effect on those otherworldly spirits that might still be living in your house.”

Amy, for the record, says she kinda sides with the ghosts on this one. “I can’t blame them—the number of gorgeous Victorians I’ve seen turned into plain gray or white modern interiors inside would probably drive me back from the grave also!”

5) Items seem to mysteriously move around.

If things are getting moved and showing up in places you didn’t put them, that’s another sign a house may be haunted.

6) There are strange smells.

“Atypical odors such as perfume, cigar smoke, or tobacco may signify the presence of a spirit from the past is near by,” says Lesley.

7) It suddenly feels cold.

Spirits are said to draw energy from the environment, which is what many say accounts for these sudden cold spots.

8) Your pet senses something is off.

“There is no doubt that dogs and cats can sense ghosts on a different plane or dimension than we can,” says Lesley. “Dogs will bark at what seems to be nothing; cats will bristle up and hiss or chatter.”

“I also believe that spirits are more attracted to pets,” says Amy. “Us living people can’t walk by a cute dog or cat without squatting down and saying hello—I think it’s the same for ghosts. We had a case where something showed up on one of our night cameras, and in the room opposite, there was a cat, and that cat stopped what it was doing looked toward where the anomaly showed up on our camera walked into that room curled up and sat down, right where the anomaly appeared. So I believe that cat saw what we caught on camera and wasn’t threatened by it, but actually welcomed the attention.”

9) You live in a Victorian house.

While it’s true that a lot of Victorian-style homes mistakenly fall victim to the “it’s gotta be haunted” stereotype, Amy does note that the idea of a haunted Victorian makes a lot of sense. “Many people during the Victorian era were very into spiritualism, conducting séances and such. I think it’s why we see so many Victorian ghosts—they’re from the era that was most obsessed with the afterlife and spirits. They *expected* to become ghosts.”

10) Your house has a haunted backstory.

If you suspect paranormal activity, research your home’s history. “In addition to public records, seek out records from your real estate agency,” says Lesley. “In a lot of states, homeowners must disclose if they have had any hauntings or unusual activity.”

“I always tell people to start with old deeds and land records,” says Amy. “That gives you a set of names to research associated with the house. Also, don’t be afraid to knock on the neighbors’ doors. If your house has a history of a haunting, many times people in the neighborhood will know about it.” Adam also recommends the aptly named website diedinhouse.com. “I know it sounds silly, but it lists anyone who’s ever actually died in your property.”

Read more at Country Living

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Most potential homebuyers expect mortgage rates to drop. That’s why they’re waiting

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The majority of would-be homebuyers expect mortgage rates to continue their recent decline, and it’s one of the main reasons why they’re waiting to make a purchase, according to the findings of a new CNBC Housing Market Survey.

Rates have been creeping down over the last few months and are hovering around the lowest level in a year, with the average rate on the popular 30-year fixed loan now sitting at 6.17%, according to Mortgage News Daily. But nearly three-quarters of real estate agents surveyed by CNBC said most of their buyers think rates will come down further.

“My biggest challenge is when buyers hear predictions of future rate decreases, which in turn have buyers sit on the sidelines and wait to see how low they will go instead of getting out there and buying now,” said Maureen States, a real estate agent in Pittsburgh.

The CNBC Housing Market Survey is a national inquiry of real estate agents selected randomly across the United States. Responses were collected between Sept. 22 and Sept. 30. This quarter, 54 agents shared what they’re seeing in their market.

Most agents said they consider the current conditions to favor buyers over sellers, but they still listed affordability as the No. 1 reason why buyers are delaying their purchases.

Despite optimism that mortgage rates will continue to fall, agents said rates are still buyers’ top concern. That was followed by uncertainty in the economy and then just overall affordability.

That sentiment appears at least somewhat divorced from reality, however: 44% of agents reported prices are decreasing in their areas, and just 20% said they are rising.

“Sellers are still pricing for a seller’s market, and buyers are willing to wait for prices and rates to drop. It is a bit of a standoff, and folks are only moving if they absolutely must,” said Katie Kosnar, an agent in North Carolina serving Raleigh and Durham. “Right-sizing used to be a driving factor, but most sellers I’ve encountered will be paying a higher mortgage for a smaller house and just aren’t willing to make that move.”

As a result, buyers are using interest rate buydowns or turning to adjustable-rate mortgages, which offer lower interest rates, in order to offset price pressures.

Roughly 40% of survey respondents said their buyers are borrowing money from family or friends in order to afford a home. Buyers are also compromising on home size, location or features in order to bring the price down, agents said.

The vast majority of agents in CNBC’s survey said they expect home sales to either improve slightly or stay about the same in the next quarter, and about 17% expected sales to drop. Of course this varies by location, with some of the markets that heated up the most during the pandemic seeing the steepest declines, and other more affordable markets seeing bigger gains.

As for sellers, agents reported the biggest concern among that group is how long it will take to find a buyer. Some are concerned they’re pricing their home too low, and sellers, too, are watching mortgage rates closely, agents said.

About 89% of agents who took CNBC’s survey reported having at least one seller reduce their asking price, and nearly a third said more than half their sellers dropped prices.

Roughly 40% of agents said they had at least one seller delist their home, hoping to get a better price later.

Home prices continued to rise on an annual basis through August, according to several other national indexes, but the price gains are shrinking. Prices are gaining most in the Northeast and Midwest and weakening most in the South and West.

The supply of homes for sale in September was higher than it was a year ago, as were new listings after a particularly slow August, according to Zillow.

New listings usually drop from August to September, and while that was true this year — with new listings down 2% month to month — it was a smaller decline than the average 9% monthly tumble seen over the past seven years, also according to Zillow.

Inventory has made solid gains over the past year, but it is still historically tight, especially for more affordable properties.

“For buyers, low inventory and mortgage rates, from an affordability standpoint, are still a challenge,” said Holly David, an agent in Richmond, Virginia. “For sellers who are locked in to a 3% [mortgage] rate, even though they may have a housing want or need, they may not be willing or able to make a move.”

Read more at CNBC

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Buyers And Sellers Cautiously Return to the Market as Mortgage Rates Fall

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Temperatures may be dropping, but the fall housing market is heating up, with both buyers and sellers making a cautious comeback driven by easing mortgage rates.

Following a sluggish summer and lackluster early fall, buyer activity looks to be finally picking up, with homes now spending just four days longer on the market than a year ago—down from eight days seen in recent weeks, according to the latest weekly housing market trends report from Realtor.com®.

Realtor.com economist Jiayi Xu says this trend indicates that affordability has started to improve, fueled by mortgage interest rates dipping below 6.3%.

On Thursday, the average rate on 30-year fixed home loans dropped to 6.19%—the lowest level in over a year.

At the same time, housing data analyzed by Realtor.com show that new listings were on the rise for the week ending on Oct. 18—a sign that more homeowners are coming off the sidelines and putting their properties up for sale—especially those looking to relocate by the end of the year.

Looking to the future, the Federal Reserve is all but certain to reduce its benchmark rate by a quarter of a percentage point next week, with another cut possible in December.

But the central bank’s policy decisions will heavily depend on Friday’s Consumer Price Index report, delayed for more than a week because of the ongoing government shutdown.

Xu says the new data from the Bureau of Labor Statistics will serve as a critical gauge, potentially carrying major implications for future mortgage rate trends, particularly given the recent absence of key economic indicators like unemployment numbers.

Home sales pace picks up

While for-sale homes are still lingering on the market longer now than they did a year ago, the wait time narrowed to just four days last year, down from six days the week prior.

The median time on market held steady at 62 days—roughly as long as it took to sell the typical home before the pandemic.

"As homes continue to sit longer in the markets, more sellers are cutting their asking prices in hopes of closing a deal before the end of the year," says Xu.

Meanwhile, the median list price ticked up 0.4% year over year. However, adjusting for home size, price per square foot fell 0.6% compared to the same period in 2024, continuing a seven-week downward trend.

"Price per square foot grew steadily for almost two years, but the weak sales activity has finally caught up and shaken underlying home values despite stable prices," according to Xu.

New listings edge up as sellers return

Last week saw new listings—a measure of sellers putting homes up on the market—increase 4.7% from a year ago, marking a faster pace than in recent weeks.

This upswing coincides with 30-year fixed mortgage interest rates dropping below 6.3%, offering homeowners hope for stronger buyer demand.

The overall number of for-sale homes climbed 15.1% compared to the same week last year, marking the 102nd consecutive week of annual gains in inventory totaling over 1.1 million properties nationwide.

Read more at Realtor.com

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Is it worth buying an investment property right now?

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Early in the pandemic, it felt like every other headline was about real estate investors scooping up homes. Low rates, rising rents, and tons of inventory turned virtually any property into a hot commodity. Fast-forward to today, and the landscape looks different: higher mortgage rates, stubbornly elevated prices, and limited inventory. So, is now a good time to buy your first — or another — investment property? Let’s look at how today’s market stacks up for investors of every ilk.

How real estate investing has changed since 2020

The days of ultra-low real estate costs rest firmly in the past. And while we likely won’t see the sub-3% mortgage rates of 2021 anytime soon, rates are far from their highest — a staggering 16.63% in 1981.

Additionally, home prices continue to rise, although not at the skyrocketing rates seen in 2021. This combination of higher rates and prices has thinned out the pool of buyers in many markets and made deals harder for investors to find. At the same time, demand for rental homes is growing.

However, if you’re considering waiting out either of those factors to invest in real estate in fairer weather, that could prove a losing strategy.

“We don’t anticipate housing prices or rates to dramatically decline anytime soon,” Tim Lawlor, CFO at the real estate investing lender Kiavi, said in an email interview. “Those wanting to invest in rental properties likely won’t see a significant benefit to waiting.”

In other words, today’s market requires sharper pencils, not more patience. Let’s dive into that idea in more detail.

The case for investing now

For a deal to make sense in today’s market, Lawlor said it needs to “pencil out” — that is, it needs to make financial sense on paper from the jump.

“Investors should consider all costs associated with rental property when doing their deal analysis,” said Lawlor. “This includes borrowing costs plus insurance costs, repair and maintenance costs, marketing costs … along with an analysis of local market rent prices.”

If the property can still provide positive cash flow when adding up all of those factors, it could be a wise investment. However, don’t forget to figure in the occasional vacancy. The best residential real estate investments today are those that put cash in your pocket from day one and prove profitable despite the occasional month without a tenant in place.

Here’s a simple example: Say a property rents for $2,500 per month. Your mortgage is $1,800, and you budget $400 monthly for repairs, insurance, and taxes. On paper, that gives you $300 in positive cash flow each month. However, a more realistic analysis sets aside money for vacancy — say one month annually without a tenant (-$2,500). If you divide that vacancy cost by 12 months, that removes roughly $210 of rental income per month. Now, your actual cash flow is closer to $90 monthly.

That slim margin might not sound appealing, but in today’s higher cost market, even a conservative positive number could prove a worthy investment, especially if rents continue to rise and you anticipate refinancing your mortgage to secure a lower rate in the future.

Looming risk in today’s (and any) real estate market

While numbers on a spreadsheet might look good, David Schneider, president of Schneider Wealth Strategies, pointed to another key factor in the investment property world: people.

“The biggest risk for landlords is a lousy tenant,” Schneider said in an email interview. Late rent, property damage, and tough eviction laws can quickly erase returns.

To put that in perspective, let’s say you’re counting on the $2,500 in rent mentioned above. If your tenant stops paying and it takes three months to remove them, that’s $7,500 in lost income, not to mention legal costs and potential repairs. One bad tenant can wipe out a year’s profits or more in a single go.

Beyond tenants, higher insurance premiums or a sudden $10,000 roof replacement can instantly turn a penciled-out deal upside down. “If a deal doesn’t make sense at current rates, pass,” Schneider said. Having a cushion built into your analyses can keep surprises from becoming catastrophes.

What first-time investors should know

For new real estate investors, the biggest hurdle isn’t just buying property — it’s being ready for everything once they leave the closing table. Schneider warned that many first-timers underestimate the day-to-day demands of being a landlord. Screening tenants, budgeting for vacancies, and knowing local rental laws are just as important as finding the right property.

Schneider recommended stress-testing your numbers. If a property only works under perfect conditions, it might not be the right choice for the first property in your portfolio. He also suggested that new investors be realistic about “lifestyle fit” — that is, how involved they want to be with the property.

Are you comfortable handling “tenants, toilets, and trash” yourself, or does hiring a property manager make more sense? Outsourcing comes at a cost, but it can help you avoid burnout from property upkeep that you may struggle to oversee.

What repeat investors should consider

If you’re looking to add a new property to your existing portfolio in today’s market, you have a different playbook in 2025 and heading into 2026. Instead of relying on traditional listings, Lawlor said you’ll likely want to hunt for off-market deals through wholesalers or personal networks, noting this shift is mainly due to tight supply.

He also highlighted that seasoned real estate investors may want to consider regions with relatively low purchase prices and steady rental demand for strong yields — notably, the Midwest. That combination can provide more predictable returns than chasing hotter, higher-priced markets.

Repeat investors can also consider diversifying the types of homes they invest in by adding single-family rentals, small multifamily buildings, or even mixed-use properties to their portfolios. Each type of dwelling has its own risk profile, but expanding beyond one category can provide stability should markets shift.

Finally, investors who already have equity in other properties may also find creative ways to leverage it to invest in new deals, whether through refinancing their mortgage, taking out a home equity loan, or using tax-advantaged strategies such as 1031 exchanges.

Pre-purchase tips for investors

Whether you're new or experienced with real estate investing in 2025, a few fundamentals can help you make smarter decisions in this challenging market.

Crunch the full costs

Look beyond mortgage payments to include closing costs, taxes, insurance, repairs, utilities, and vacancy allowances. Hidden expenses such as homeowners' association dues can easily tip a deal from profitable to precarious.

Be strategic about markets

In pricier coastal cities, the math often doesn’t work well for first-time investors. Instead, consider a nationwide search for a favorable market where you can strike a balance between purchase price and market rents.

Plan for management

Decide early whether you’ll be a hands-on landlord or outsource to a property manager. If you go the DIY route, line up reliable contractors before you need them.

Build a cash reserve

Having three to six months of expenses set aside can help keep you afloat if a tenant suddenly moves out or a costly repair comes calling.

Think long-term

Schneider noted that real estate is rarely a quick win; patience and planning are critical. The payoff typically occurs after years of steady rent growth and loan repayment.

Leverage tools

From rent calculators to After Repair Value (ARV) estimators, online resources can help you evaluate deals more accurately. Lawlor mentioned that Kiavi offers a free ARV calculator to help investors quickly crunch numbers before buying a property.

Buying real estate properties today FAQs

Is it wise to invest in real estate right now?

It depends on the deal. If a property covers its costs — mortgage, property taxes, insurance, repairs — and still generates income, now may be a good time to invest. Experts warn against waiting for a market shift, since prices and rates may not move much in the near future.

How long should you hold an investment property?

It depends on your situation, but many investors aim to hold an investment property for five to seven years or longer. The key to the ideal holding period is for the property to prove profitable and remain attractive for a new investor or homeowner. This means that the property should turn a profit at current market rates, be in a condition appealing to both investors and consumers, and provide you with a decent return on your investment at the closing table.

What’s the biggest risk for first-time real estate investors?

Tenant trouble tops the list for first-time real estate investors. A renter who doesn’t pay or damages the property can quickly turn a profitable deal into a loss. Careful tenant screening, realistic budgeting, and knowing local tenancy laws can help first-time investors avoid costly missteps.

Read more at Yahoo Finance

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