Renowned real estate investor Grant Cardone predicts that an abrupt shift toward reducing rates to counteract a potential banking crisis is looming despite the Federal Reserve's stance against cutting interest rates because of inflation concerns.
In a May 13 post on X, Cardone lists several economic indicators that he believes will force the Fed's hand when political pressures subside:
- Consumer credit card debt: He highlights that many consumers are reaching their credit limits, indicating that financial strain.
- Mortgage applications: The application rates for mortgages are at an all-time low, suggesting a slowdown in the housing market.
- Housing market stagnation: A stalling housing sector points to economic instability.
- Revised job numbers: Employment figures are being adjusted downward, indicating a weaker job market than previously thought.
- Multiple job holders: One-third of Americans work two jobs to make ends meet, which reflects financial stress.
- Commercial debt: A looming crisis in commercial debt could lead to broader financial instability.
- Depleting savings: Americans are spending their savings, which could indicate diminished financial security for many households.
Cardone's prediction hinges on the belief that these factors will pressure the Fed, compelling a shift toward rate cuts to mitigate an economic downturn. His analysis suggests a broader concern about the economy’s fragility and the potential for drastic policy changes in response to evolving financial challenges.
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Cardone said in December that Federal Reserve Chairman Jerome Powell should "get out of the way" and let supply and demand control interest rates.
"The Fed's policies will result in more renters in the next two years than we've seen in the last 50," Cardone said, suggesting that the middle class is bearing the brunt of the central bank's policies.
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He said the Federal Reserve should let market forces dictate interest rates, which will lead to declining housing prices and increasing market activity.
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Cardone has said that high interest rates don't directly impact housing prices. Instead, prices are determined by supply and demand dynamics and higher mortgage rates only "trap" existing homeowners with 4% loans from trading up to a new home, which keeps first-time buyers out of the market.
Experts like Suze Orman say that despite high interest rates if you can afford to purchase a house, you shouldn't wait for rates to come down — because they might not.
"Just because mortgage rates were below 4% for more than a decade does not mean they will return to that level," she said.
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