How Will The Stock Market Crash Impact Real Estate?

I ❤ Real Estate I frequently tout real estate as an excellent investment for the following reasons: (1) it is a great inflation hedge; (2) there is an inventory shortage due to a lack of building, and not due to excess demand; (3) homebuying demographics are surging in sharp contrast to 2008; (4) buying is […]Read More

Will We See Negative Interest Rates In America? (Hint: We Already Are)

Today’s Rates Are More Of A Gift Than Ever! I often write that today’s very low interest rates are a gift because they are so low by historical standards! (and it’s true) And today, they are more of a gift than ever before, despite the fact they have risen by 1/2% since last summer, and […]Read More

Why You Can’t Get Yesterday’s Rate, Stock Price, or Bitcoin Price

My Angry Phone Call With Jeff Bezos! I recently called up Jeff Bezos last week and that he sell me Amazon stock for $6 per share because that was the price in October of 2001, when I wanted to buy 10,000 shares … but didn’t. I then explained to him that my $60,000 investment at […]Read More

How Much Do Higher Rates Affect Payments?

Recently, I facetiously wrote a blog about why rising rates would crash the housing market, pointing out that they actually won’t 😊. So – because of yesterday’s blog and because rates shot up again this morning – I wanted to remind everyone of just how little rate increases of less than 1% affect someone’s payment. […]Read More

Why Rising Rates Will Not Crash The Housing Market!

Rates rose another 1/8 to 1/4 percent over the last few weeks and are now almost 1% higher than 2020’s lows. (as a sidebar, they are about where they were last March…so they are not THAT high) But, whenever rates do start to rise in a hurry, I invariably see pundits explaining how rising rates […]Read More

2022 Predictions: Fed, Inflation, Stocks, Interest Rates, Housing, & Rents

Happy New Year! Here are some predictions for 2022 – even though I implored everyone to ignore all predictions in this recent blog. 😊 I am sharing these predictions, however, for two reasons: (1) they are from Barry Habib and he has been more accurate than anyone over the last several years; and (2) they […]Read More

Credit Scores Affect Mortgage Rates A LOT!

Agent Was Furious Because Her Client’s Interest Rate Was Too High! We recently had an agent scream at us (yes, scream) because of the rate we quoted to her client. Our rates of course are notoriously low and we also are not allowed to quote different rates to different clients. So, sadly, the only thing […]Read More

Fed Announces 3 Rate Hikes… And Rates Dropped! WHY?

The Fed sent the markets into a tizzy recently, finally admitting that inflation is now a serious problem and that there would likely be as many as THREE RATE HIKES in 2022. The bond and mortgage-backed securities (MBS) markets reacted negatively, and every lender announced a series of mortgage interest rate increases as a result. […]Read More

Jumbo Loan Rates 3/4% LOWER In California and Texas

The Jumbo vs. Conforming Difference Widens! Recently, the rate for a $1 million jumbo loan at a 1/2 point cost is 2.5%. And recently, the rate for an $800,000 “high balance conforming loan” at 1/2 point cost is about 3.25% today. These quotes are for pristine borrowers (800 FICO, etc.) but the fact remains that […]Read More

Mortgage Rates Do Not Equal 10-Year Treasury Rates

The 10-Year Treasury Yield dropped almost 4/10% recently – so why didn’t mortgage rates drop that much? The 10-Year Treasury yield (interest rate) is a reflection of what it costs the government to borrow money and is perhaps the most influential interest rate/yield in the world. Hence, when the 10-Year yield drops, the media will […]Read More

When Interest-Only Loans Are A Good Idea

INTEREST-ONLY “STIGMA” An “interest-only mortgage,” as the name implies, is a loan where the payments include only accrued interest – and no principal paydowns or amortization. Such loans had an enormous stigma for years because interest-only (I/O) loans were far more common prior to the 2008 meltdown and because so many of the loans ended […]Read More

Why Are Rates Not HIGHER – With Inflation, Fed Tightening, & Economy Improving?

HORRIFIC SPACE SHUTTLE CRASH On January 28th, 1986, the entire world watched the Space Shuttle Challenger explode and crash to the earth – on live TV. Seven people lost their lives, including school teacher Christa McAuliffe, right in front of our eyes and – everyone wondered what the hell happened? The talking heads in the […]Read More

Jack Dorsey’s Case for Hyperinflation (There Isn’t One)

JACK DORSEY = PARIS HILTON 😊 A few weeks ago, Twitter CEO, Jack Dorsey, tweeted this: “Hyperinflation is going to change everything. It’s happening.” And sadly, some of the talking heads on the various cable news networks seemed to agree. But, fortunately, cooler and better-educated heads are prevailing here and one of them is Erik […]Read More

Inflation; Mercedes S-Class Cars; Here To Stay? Does It Matter?

MERCEDES S-CLASS SEDANS COST 1/2 OF WHAT THEY COST IN 1979 Leonard Steinberg wrote this in his excellent blog last week: “In 1979 a Mercedes S-Class cost about $34,000. Today about four decades later, an S-Class Mercedes sells for around $111,000, more than triple.” He was illuminating just how much inflation there already has been […]Read More

Rates Have Not Been This High Since… 2021

RATES HAVE NOT BEEN THIS HIGH SINCE 2021! I thought I would put interest rates in perspective again, given that they have risen so much (1/4% to 3/8%) since last summer and that there is so much concern! But – they are still slightly lower than where they were on April 1st of THIS YEAR! […]Read More

Why Lenders HATE Jumbo & Why JVM’s Jumbo Rates Are SO LOW

JVM FHA OFFER ACCEPTED OVER CASH OFFER As a brief aside – one of our clients recently had his 14-day-close FHA offer accepted over an all-cash offer – at the same price. Why? The listing agent knew our reputation and knew the appraisal would not be an issue (b/c of comps and b/c our buyer […]Read More

Record Equity + Certain Inflation + Uncertain Economy = Cash-Out Now (4 Reasons Why)

TOTAL HOME EQUITY SURGES TO INSANE RECORD Prior to the 2008 meltdown, total home equity (the value of all homes minus all mortgage debt) in the U.S. peaked in 2005 at $14.4 TRILLION. Last year, total home equity hit $21.1 trillion – crushing the 2005 record (here is a table showing total home equity from […]Read More

Rates Shot Way Up Yesterday; Why? Will They Come Down Again?

Interest rates shot way up yesterday – catching most of the industry by surprise (again). This is because rates have held amazingly steady for the last several months – but now rates are back up to levels we have not seen since early July. WHY DID RATES GO UP? The primary reason is a “Taper […]Read More

Jumbo Rates – Almost 1% LOWER Than Conforming; Going For Jumbo!

ACTUAL CONVERSATION AT FANNIE MAE Fannie Mae Bob: “Hi Mike, I just remembered we have no competition, so let’s charge a lot more…” Fannie Mae Mike: “Hmmm, great idea, but what about Freddie Mac?” Fannie Mae Bob: “Freddie always follows us, and we are so much bigger that we can do whatever we want anyway.” […]Read More

Are China’s Woes Good for Mortgages and Real Estate? Yes, and No

CHINA LOWERED OUR INTEREST RATES Rates opened up lower today, partially because of the issues China is having with some of its more debt-laden companies such as Evergrande (the huge Chinese Developer teetering on bankruptcy, that was all over the news last week) – according to Barry Habib of MBS Highway. Mr. Habib reminds us […]Read More

Is The Fed The Wizard Of Oz (Powerless)? Why It Matters

In the iconic movie The Wizard of Oz, all of the characters thought the Wizard was an all-powerful being who controlled everything and everyone. But, in the end, we found out that the infamous Wizard was really just an old man behind a curtain playing tricks with loudspeakers, smoke and mirrors. RENOWNED RESEARCH ANALYST SAYS […]Read More

Inflation Up; Rates Up; Explained In Terms of Porsches; All About “Buying Power”

THE REFI BOOM THAT WASN’T When rates plunged a few weeks ago in response to renewed COVID concerns and weak economic news, the entire mortgage world was gleeful b/c we thought we had another refi boom on our hands. But alas, it was not meant to be, as strong employment numbers AND INFLATION crashed the […]Read More

BEST NEWS EVER! Fannie And Freddie Eliminate “Adverse Market Fee;” Reduce Rates By 1/4%!

I can think of many examples of things that would constitute “the best news ever.” Hearing “snow day/school canceled” announced on the radio when I was a kid on Western Minnesota’s prairie is definitely up there. And, so is the time my friend’s older brother scored us not one but TWO kegs of beer for […]Read More

Beware of VACATIONS :) Rates Way Down Again; Why? Stimulus Will End

HOLY LOW RATES, BATMAN! (Wallowing in Wrongness) For months now, I have been repeating the warnings of various pundits about runaway inflation and rising rates. But rates seem to continually fall despite inflation concerns, and this week was another example as rates fell precipitously again. I and many others (like Barry Habib) thought we’d see […]Read More

Why The Fed Probably Can Never Raise Interest Rates

Paul Volcker was the 6 foot, 7 inch tall Fed Chairman who raised the Fed Funds Rate to 20% in 1980 and shoved the United States into a massive recession. As a reminder, the Fed Funds Rate is the rate that banks charge each other to borrow “reserves” overnight, and it is currently 0% – […]Read More

Fed Speaks – Rates Up; Paying Off Student Loans With Mortgage; Interest-Only Loans

Fed Chair Powell spoke yesterday and sent the bond market into a tizzy, as investors sold off their bonds and pushed rates sharply higher. What crazy thing did Powell have the audacity to say? He acknowledged that the economy is strengthening and that there is an uptick in inflation. In addition, a statement by the […]Read More

Inflation Way Up & Rates Down? What Does The Bond Market Know?

I blog about inflation over and over b/c its potential to send interest rates into the stratosphere and to disrupt our entire economy is so strong. The last time we saw significant inflation in the 1970s, the stock market tanked and didn’t recover for a decade and interest rates remained in double digits for years. […]Read More

Inflation Is Here! Why Didn’t Rates Climb More?

Inflation numbers came in sharply higher today and rates increased – but only a little. Here is a brief summary of the numbers from the Bureau of Labor Statistics. Long story short: Inflation numbers are higher than expected and at their highest level since 2008. So, the question is why didn’t rates spike up further […]Read More

13 Factors That Impact Your Mortgage Rate

We often have buyers or agents ask: “What is your 15-year rate today?” Or “What is today’s interest rate?” We always respond by explaining there is no single rate, because the market moves so often and because there are so many things that affect an individual borrower’s rate. Here are 13 factors that affect almost […]Read More

Higher Capital Gains Taxes? 2 HUGE Effects On Real Estate & Mortgages

INVESTOR WITH 70 HOMES REFUSES TO SELL I know an investor who owns over 70 single-family homes in California that he accumulated in the 1980s. Almost all are rented at below-market rates** with minimal or no mortgages, and he refuses to sell any of them. **Pro Tip: In my 27-year mortgage career, I have observed […]Read More

Why Are Jumbo Interest Rates So Much Lower Than Conforming?

Our jumbo rates are now sometimes as much as 1/2% lower than conforming (Fannie/Freddie) rates (and today is no exception). Today’s blog explains some of the reasons why. Stricter Qualifications. Jumbo loans are often much “safer” than conforming loans from a risk perspective because jumbo guidelines are often much stricter with respect to credit, reserve […]Read More

Buying A Home For Your Child – Options?

WHAT IS THE BEST WAY TO BUY A HOME FOR YOUR CHILD? This is a question we see quite often so I thought I’d list the options. No Mas “FHA Kiddie Condo” Loans. This used to be a very flexible option where FHA allowed parents to put down only 3.5% in order to help kids […]Read More

10 Myths About Mortgage Rates

In July of last year, I wrote a blog called “7 Myths About Mortgage Rates,” largely in response to so much confusion amongst our many clients. Since I wrote that blog, rates have risen almost 3/4% and misconceptions remain as prevalent as ever. So, I thought it was time to repeat the blog with the […]Read More

Rates Climb Again; Panic Time? Paying Points? Affect On Buying Power

PANIC TIME? Interest rates climbed again yesterday, primarily in response to inflation fears – so we are now officially back to pre-pandemic interest rate levels. It is not time to panic, however, as rates seem to be following the trajectory I outlined in this recent blog: 4% by June. In that blog, I referenced Barry […]Read More

How Do Higher Rates Affect Buying Power?

RATES BACK TO PRE-PANDEMIC LEVELS We are officially back to pre-pandemic rate-levels, and it looks like rates will continue to climb in the short run at least. Whether or not they ever come back remains to be seen. HOW DO 1/2% HIGHER RATES AFFECT BUYING POWER? The answer is “not that much,” but because so […]Read More

Rates Up Again! Why Nervous Appraisers Sometimes Appraise Lower Than We Expect

RATES 3/8% HIGHER NOW Interest rates continue to climb in response to positive economic reports (strong retail and home sales numbers), inflation concerns relating to both price signals and massive increases in the money supply, and President Biden’s $1.9 trillion COVID Relief package. Rates are now a solid 3/8% higher than where they were in […]Read More

5 Key Credit Reminders & Misconceptions; Albert Einstein On Interest Rates!

Albert Einstein On Predicting Interest Rates (true story) When Einstein died and went to heaven, the doorman told him his room was not ready, and that he had to wait in a dormitory with others. So, he was led to a dorm and introduced to his roommates. The doorman said, “Here is your first roommate. […]Read More

Will Mortgage Rates Fall Again? What Are The Variables?

I received numerous questions in regard to mortgage rates yesterday, e.g. Will they come down again? Should I lock now or wait? What do I think will happen? As always, my answer was don’t wait to lock in your rate b/c nobody has a clue what will happen. VARIABLES AT PLAY I responded that way […]Read More

Mortgage Rates Way UP; Refi Now… Or Forever Hold Your Peace

Remember last year when I said rates could either go up, go down or stay the same? Well, I was right. 😊 OK – I was actually right about the rates going up part. And I was just repeating what Barry Habib was saying. Habib thought rates would go up early this year and then […]Read More

Mortgage Rates Climbing As Predicted; “Average Rates” Are Often Very Misleading

RATES UP 1/4% Yesterday, we were quoting rates a full 1/4% higher than what we quoted as recently as last week. Rates have been climbing despite negative economic news – which normally pushes rates down. This is partially b/c investors expect the negative news to spark more stimulus from Congress which could trigger more growth […]Read More

Why 13% Interest Rates In 1980 Were Effectively LOWER Than Today’s; Real Rates vs. Nominal Rates

Mortgage interest rates were just under 19% in the early 1980s, as shown in this table by Freddie Mac, going back to 1971. BUT, “real rates” were sometimes LOWER than where they are today. This was a point that an inflation hawk made on a podcast I listened to recently. He borrowed money to finance […]Read More

Why Rates Went Up After Democrats Took Senate; Affect On Mortgages & Housing

10 YEAR TREASURY EXCEEDS 1% FOR FIRST TIME SINCE MARCH As soon as it became apparent that the two Democratic Senatorial candidates would win in Georgia, rates started to edge higher. As most readers know, mortgage rates tend to correlate to the 10 Year Treasury Bond – although this year that correlation has not been […]Read More

Points & Origination Fees – And Why We Discourage Them

I recently blogged about 5 Misleading Rate Quote Tricks that everyone should be leery of and received some questions from our readers. WHAT ARE POINTS? Some readers asked about the $9,000 of “points” that another lender had tried to hide in the borrower’s new and larger loan. I touched on this last year and am […]Read More

5 Misleading Rate Quote Tricks!

We recently had a borrower come to us with a ridiculously low rate quote for a “no cost” loan from one of America’s largest mortgage banks. The borrower insisted it was legitimate and asked us to match it, so we asked to see the other lender’s Loan Estimate or “LE.” And sure enough – there […]Read More

What Will Happen To Mortgage Rates in 2021

Here is my bold prediction for mortgage rates in 2021: They will go up and down. You can take that to the bank! OK – here’s a more specific prediction – they will edge up about 1/2 percent before coming down again to where they are now or even lower. This is from rate-guru, Barry […]Read More

Stocks Way Up & Rates Way Down – Very Unusual! Why?

The stock market has been on a tear lately, with the Dow Jones index flirting with 30,000. This is amazing b/c the Dow dropped down to close to 19,000 as recently as March when COVID-concerns peaked. What makes the sharp rise in stock prices particularly interesting to those of us in the mortgage industry is […]Read More

Negative Rates Are Coming; What It Means For Real Estate And Mortgages

Negative interest rates are heading our way – with certainty – according to Luke Gromen, a macroeconomist who was featured on The Investor’s Podcast recently. Mr. Gromen believes that the Fed and the U.S. government have no choice but to continue to push rates down in whatever way possible in order to finance our massive […]Read More

Biden Wins & Vaccine News; Effect On Mortgages & Interest Rates

Joe Biden was declared the winner of the election over the weekend, and the markets … did very little. When I refer to “the markets,” I am referring to both stocks and bonds – which often move in opposite directions. Hence, when stock prices move upward, bond prices often move downward (with the effect of […]Read More

Fannie Mae Re-Slams Mortgage Industry With 1/2 Point Refi Fee

In August, I blogged about Fannie Mae Slamming Refi Borrowers With A New 1/2 Point Fee. And then later in August, I blogged about Fannie Mae Yanking Its 1/2 Point Fee In Response to Industry Pressure. But, Fannie only postponed its refi fee until December 1st. So all refinance loans sold to Fannie Mae and/or […]Read More