“Things Are Turning Around” Barry Habib told us today in his morning update (that is behind a paywall).

    He pointed out that rates are finally falling consistently, existing homes were up in November (despite record-high rates when those buyers were shopping in October), and inventory is climbing as well.

    All this is happening during “slow season” too, so things should be far better by the busy spring selling season.

    As interesting asides, I found two past blogs of mine this morning when I was researching blog topics – and both reminded me of how difficult it is to predict anything in today’s world.

    Who’s Better For Rates – Trump Or Biden?

    I wrote this blog in October of 2020: Trump or Biden – Who’s Better for Rates & Mortgages? I thought Biden would be better for rates at the time, largely because of how the market reacted to Trump’s election in 2016 when rates shot UP, shocking everyone.

    Rates shot up because investors thought Trump’s policies would foster more economic growth – which pushes rates higher. What I got wrong was the massive spending that Biden was able to push through once he got into office. I didn’t anticipate a congress that would be that willing to spend, e.g., Inflation Reduction Act, in a post-COVID environment. And all that spending temporarily stimulated the economy and pushed inflation and/or inflation expectations higher.

    In addition, Biden’s regulatory fervor likely helped push one of the most prominent buyers of jumbo mortgages out of the industry, and that too probably resulted in higher rates.

    Much of that spending though is now petering out, as I have pointed out a few times, and we are likely seeing the results now – which is one of the reasons rates are finally falling.

    Why I Was Convinced Rates Would Fall By March … Of 2022 😊

    I wrote this blog in 2022: Why I Am Convinced Rates Will FALL By March, and “I missed it by that much…” (to quote Maxwell Smart from the 1960s sitcom Get Smart).

    ANNNNDDD… I likely would have been right, but for that darn Bank Term Funding Program (BTFP)… that pretty much saved the banking system – so credit to the Fed.

    The BTFP offers short-term loans from the Fed to troubled banks based on the “face value” of their assets vs. the actual “market value.” The program was put into place in response to the collapse of banks like First Republic and Silicon Valley. Without the program, we would have seen many more bank failures – and that would have brought rates way down.

    As an aside, I was in talks with numerous banks in the fall of last year (trying to set up relationships through which they’d buy our jumbo loans) and many of them warned me about the pending banking crisis – which was another reason why I was convinced rates would fall.

    There were actually numerous reasons why I was so wrong about when rates would fall, and I discussed them all in this blog: Why I Was So Wrong About Rates (Reasons: people spent savings; more government spending; BTFP; wage growth; student loan forbearances; delayed lag effect from rate increases).

    In any case, I think all the reasons I was wrong are coming to an end. So, I really do believe things are turning around … finally. (But, I’ve been wrong before – see above).

    If you don’t believe me or Barry, you might check out this YouTube video with mortgage industry veteran, Dan Rawitch: 5.875% Interest Rates By March 2024! He makes a very strong case for falling rates based on declining inflation and money supply, among other things.

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