Mortgage Rates Fall Again to 4%?
Mortgage Rates Fall Again, FED Not Pivoting
Mortgage Rates Fall Again to 4 % Mortgage interest rates are going to drop down in the
fours by the first quarter of 2023 all right? So, Let’s Dive Into what I see happening and what I
watch from a lot of different analysts out there.
What I see happening is that we’re starting to see a turn right now, where I think that
the rates will be probably in the high fours like low fives in that first quarter of 2023. And
then I think in 2024 is when we’re going to start, maybe seeing them back down in the fours
I believe, after the first of the year, you’re going to start seeing some breaks, we’re already
seeing a little bit. That was kind of mind-blowing to me. You know I mean look. Jerome
Powell just came out with the press release at Brookings.
You know Institute and was talking about how the FED is not pivoting they’re not going to
back off. You know the uh core, PCE inflation rates are still, and they by the way like the
PCE is better than CPI.
Loan Officers Predict that Mortgage Rates will drop in 2023
They feel it’s you know, kind of like a better gauge of where we really are in our economy,
and we know that there are three major components in housing is one of those big major
components with core PCE inflation. So you know it was interesting in our Tuesday meeting
with the LO, maybe we are just being hopeful, or maybe we’re wrong in our thoughts.
But we kind of felt that the FED would pivot, or at least mortgage interest rates, would drop
to a point in the fours by the first quarter of 2023. What are your thoughts on that? I respect
the LO, you know a lender and we hear it from a lot of lenders locally here I think they’re
Will the Fed Lower Rates to Curb Mortgage Hikes?
I think that this is what they hope for, but with all the information we’re getting, especially
with Jerome Powell, just having his conversation this week, his press conference, I’m not so
confident that that’s where rates are going, you know, I think the big thing is a big Question
here is that if they do drop the rates and here’s my kind of thought process guys and if you
think differently, I mean – or you agree – drop your comments below.
We always love hearing from you, but I think a big part here is that Jerome Powell, the fed, and everybody else on the planet really has. You know, in their opinion, felt that house
prices home pricing have really gotten out of control, and I think we’ve seen you know in a
lot of cases, 20 30 percent year-over-year increases in some markets where it’s just
ridiculous. Right now we have an affordability crisis, so we have to really look at if we
drop those rates.
Will Interest Rates Affect Mortgage Rates?
Is that really going to improve a market correction that Jerome Powell felt was
necessary and do you know one of his press releases? He said: hey, look. We need a market
correction, a market price, and a correction in housing. Is that going to be?
The answer? Is the answer to drop the rates back down again so that you know the prices
remain high or is it their opinion to try and put pressure on interest rates, at least that
will change the affordability of consumers?
You know because their interest rate doesn’t directly affect the mortgage rate, but it affects
Consumer loans like credit card debt, Automotive debt, and revolving credit types of debt
right. So if those interest rates stay high, it really will deplete a lot of the consumers.
Cash Is Restricting Loan Availability, So Consumers May Need To
Cash is going to restrict their ability to buy anyway. In my opinion, regardless of whether
mortgage rates drop or not, Lender also mentioned that what she’s advising The Borrowers
to do, whom she’s been working with, is they’re going to have to restructure their budget
they’re, going to have to put a budget and have more of housing. Expense, the monthly
payment is going to be factored in, and that’s really quite hard when a lot of people right
now, some of them are even putting groceries on their credit cards. You do have to
As I said, people are will have to shift their thinking into having more of their monthly
expect monthly budget goes to housing in general. You know that lending requirements are
allowing consumers to spend more of their income. Their gross income to qualify for a loan –
and you know that’s kind of scary too because what a lot of loan officers are saying is, you
know, drop off the car loan.
How to lower your mortgage rate by stretching your budget
If you can, you know, drop off these other expenses so that it actually lowers your debt to
income ratio so that you can apply from more of a housing cost or a larger portion of your
income towards your mortgage payment.
You know the problem with this is once we start to
stretch those budgets and take a bigger chunk out of the income that we make to go
Housing-related costs, these other things are going to happen.
You know you’re going to need a new car or you’re going to need to spend money on an
automobile, or you know you may not get that job raises moving forward with the state of
the economy that you hoped for.
They also mentioned there are three factors that go
into purchasing a home: its credit, income, and assets, and what she is seeing with the
income is that people with job stability, are jumping around. Some people are
losing their jobs and some people are just not having what they had a few years prior as far
as stability with their income.
High Unemployment Leaves Borrowers Struggling to Keep Up
Are you seeing out a lot of the borrowers or the people that are applying for loans? Are
you seeing a lot of long gravity on employment and a specific employer? Are you seeing that
there’s a lot of jumping around job jumping around a lot of jumping around a lot of
shakiness? A lot of people that are held back they’ve actually got their credit scores up. The
CIA they’ve got their credit.
They’ve got their income, you know, they’ve got their assets, years there was a lot of jumping around. You know where you know: Headhunters and employers were recruiting and giving sign-on bonuses for employees to jump ship.
Employees Pay Attention to Job Security
So yes, she indicated that there was a lot less time on the job amongst many of the
applicants, but I do think that that’s going to stop um and slow down because I think that
people are really thinking about their jobs. I mean there’s no secret, you
listen to the news.
Amazon laying off 10 000 plus people even doordash, is laid off 1200
people or Something like that so I think you know people are starting to realize that hey.
You know I better really start paying attention to my job, because the pressure on the
employer’s lack of sales, you know, the downward pressure on pricing in general – is
causing employers to really take a look at their Top Line.
Expenses and labor are a huge part
of that and they’re starting to assess and address whether they can get it done for less and
whether they really need those high-paid employees at all. So, for that reason, we’re starting
to see you know the employees start to pay attention a little bit more to their job.
Veterans and Home Buying Opportunity
Try and do a little better job, and not this quiet quitting that we’ve heard in the news about
people not really doing their job. So well and the employers are starting to address
that. The lender had also mentioned that you know, even though we’re in such a changing
Market, that this is a Major opportunity for different types of loans. Government loans, for
example, FHA – VA may have been bidded out before when putting an offer in and
now they can really go ahead and go after that home that they want. This is a massive
opportunity right now for every veteran and everybody who wanted to go to FHA in the last
few years and couldn’t because they couldn’t compete.
Veterans Can’t Avoid Mortgage Rates
Not only could they not compete, but they also could not put the cash difference to go over the
appraised value they couldn’t. Even get in the door to have to pay more for the house, but
right now veterans, you’re, getting no down payment, you’re, getting repairs, you know paid
for you’re getting your closing costs covered, yet they can even cover some of your old debt.
Your old bad debt. Look at all of the abilities of anybody out there who wanted to use
You know FHA or VA financing that they actually have a way to get in
here, and a lot of this is because of government-backed loans such as VA and FHA.They
have a lot higher safety standard required for that home prior to the buyer, purchasing
So, as she said in the last couple of years, there has been so much pressure on buyers to
eliminate things like home inspections and requesting repairs.
Important update on the Mortgage shopping timeline
I mean just they were eliminated and so many cash buyers and conventional buyers so
much money in the market that yeah these FHA VA buyers really their offers a lot of times,
weren’t even being considered. But you know I do want to caution the buyer.
That’s out there that is looking at these types of loan structures because I always get
nervous when people aren’t putting much or any money down on the property at all.You
know when we’re in this uncertain time, if you’re buying right now and we know, there’s a
a lot of downward price pressure. You know if home prices continue to fall and you’ve put very
little money down.
If you need to sell, you could be underwater and Lender did mention
some pointers and tips for you buyers out there there. So, let’s listen. The truth is the
scoring Models used for mortgages have a two-week two-week time frame for you to be able
to shop. Like get this lender to pull, and then this lender can pull and it would only be
considered one hard inquiry.
Finding the Right Mortgage Adviser
I feel that you should be shopping. o many little stops all along the way that you want
somebody who’s, going to, say: okay, now we’re here. Do you want to do this? If you do this,
this is what could happen. Okay, but if you do this, this is what could happen. I mean the last
thing you want is just to be trying to direct yourself through your very first home-buying
the process so finds somebody.
You trust that you feel that you can be open with that they’re
going to communicate they’re going to be available for you, I mean on at night weekends
whenever it’s convenient for you and you’re really going to be able to learn something
from, and you can Stay loyal and build a relationship together.You’ll get a lot out of
that. There is now a resource available to you.
Consumer Beware: Your Credit Score Matters
If you go to my FICO pay for the 3B report and it gives you the three reports side by side, it
does cost money, but it’s the only place you can go where it’s not an inquiry and you get
your real deal mortgage score. Your auto scores. You get 28 of the FICO scoring model scores
that they actually use for a house or a car because any of the free credit scores you’re
getting those don’t they don’t use them for anything. So it is one of those things where,
when you see the scores you want to see on my FICO move, you know move forward and
have the mortgage lender pull your credit. Something else that she stressed was the
importance of FICO score right credit worthiness for buyers. If you are looking to buy a
home, if not now, even within the next 12 months and another, you know kind of word of
caution as you, consumers are out there spending money, you know really be careful.
Debt Consolidation Tips for Those Ready to Buy a Home
What you’re buying make sure it’s a necessity and that you can pay it off, because when
you get into an environment where you’re paying in revolving debt, you know with credit
cards and you’re paying minimum payments, or you skip a payment things like that. This is
going to hurt. Your credit hurts your credit score, reduce your debt to income ratio so that, when
you are ready to buy a home, you may not be able to guys it takes a while to get your credit
back to keep making sure you’re making those payments.
When is the best time to refinance a mortgage?
Do an arm or whatever you know, and get the house, the house prices are going to continue to
rise. I hear a lot of people say this right and you know just pushing and pushing and pushing
buyers to make a decision with the hopes that later on, they can refinance when those rates
come down, and I think one of the things that we really didn’t get A clear answer out of
Lender, as you know what is the appropriate time to refinance? Is it if the interest rates fall,
a half a percentage from where you purchased or a full percentage point from where you
initially purchased and what she said at that point?
Where do you know a lot of people?
It’s just a psychology of things that it doesn’t really save a whole lot of money necessarily to
refinance, depending on how long you intend to stay in the house and also what it is going
to cost you to refinance, because there is a cost.
Buyers Prepared to Do Whatever It Takes to Get Inflation Down
Mike Paulis commented saying: buyers are putting away more cash while waiting for prices
to drop. I think interest rates will go up another two percent and will stay there for at least a
couple of years before things move down at all and Jerome Powell did a reference, Mike.
That they would be prepared to do whatever it takes to get inflation down to a two percent
level and continuing to raise interest rates will probably still be in the plans going into 2023,
and I think what Mike’s saying here you know is really important, because Buyers, my
recommendation to you is, you know, don’t give up hope on buying a house and then
just spend your money saying I’m just going to buy other things because on never buy a house bank.
That money like Mike is saying here, put it in the bank, because if interest rates do go up
and prices come down, the more money that you have to put down on a house is going to
help you significantly and I’ll. Give you an example.
Tips to save money on mortgage rates
Let’s say that mortgage interest rates are seven percent a year right and you save another
twenty or thirty thousand dollars that you can put down on your house by putting that
money into your house or into your mortgage, paying more money down you’re, essentially
making seven percent Return on your money now, loan officers May be costing you that hey,
but once you give that money up, you don’t have access to it though this is true, if
the money is specifically set aside for housing.
In my opinion, it’s the financially smart thing
to do, and finally, Lender did give some great tips but wanted to
know. You know what constituted a crash because the 20 that was referred to in the
reality was no crash.
At all – and this is something that we hear a lot of guys
you are saying you know you want to see 40 50 60 percent price decreases in the housing
market and though I would like to say you know you get your wish one day.
Mortgage Rates Remain Low, But Could Change Quickly
We didn’t really see that in 2008 unless they were significantly distressed properties and
things that most people couldn’t get loans on. Yes, we may see that kind of price reduction
again if foreclosures ever become a major thing in this market, but I think guys, really a 20
the correction would be huge and you know we’d love to know your comments.