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David Skid, executive director of Vantage Wealth Management at Morgan Stanley, joins our hosts Todd Schnick and Bryan Nonni to discuss Morgan Stanley’s Investor Pulse Poll. The Poll is conducted regularly and surveys high net-worth investors between the ages of 25 and 75 that have invested $100,000 or more. The Poll compiles information from this demographic on a variety of topics including real estate and interest rates.
The Poll is aimed at high net-worth investors nationwide and the September 2015 Poll included 313 Atlanta investors. Based on the survey results, David observes that the interest rate status has had much impact on the vitality of the market. He explains, “I think home buyers are looking at the probability of rates going up, and they’re thinking that if they are looking to buy between now and the next 12 to 24 months, it ‘s in their advantage to do it today to lock in a lower mortgage payment. As an example, a home bought now with an interest rate around four percent on average would see a six percent increase in monthly payment amount if the interest rate were to go up even half a percent!
David also mentions that the Poll observed that confidence in the real estate market translates into a rush to buy and lock in low interest rates, which tells us that home buyers are purchasing aggressively because of what might be coming in the way of interest rates. Since the Federal Reserve System decided not to raise interest rates in September, the end of October may prove to have us all at the edge of our seats, waiting to see what happens.
The Fed’s decision to raise or lower interest rates has historically been an indicator as to how good or bad the U.S. economy is performing. However, more recently, Federal Reserve Chair Janet Yellen has started to consider the global economy and stock performance in other countries as it has become apparent that the Fed’s decisions affects the global economy as well.
David also adds that when rates do rise, it won’t be the initial increase that makes in impact, “Once the Fed decides that we are on more solid ground both domestically and abroad, they will need to continue to raise rates. It’s not that they need to attract liquidity, but the way to guard against a recession and to help work through a recession, which at some point in the future will happen, is to have the ability to promote liquidity by lowering rates. It’s important to come off of a base line of zero, so that when we need it we are able to pull things back in the other direction.”
Customers in the Atlanta-area who are interested in obtaining financial services and wealth management advice can contact David Skid at his direct number, 404-459-3839, or email David.Skid@MorganStanley.com.
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