When Great Economic News Is Actually Bad News

I Was Slapped in the Face With Very Good Economic News! For months now, I have been explaining how weak our overall economy is and why that portends much lower interest rates in the near future – no matter what the Fed does. I of course was just repeating what Jim Rickards, Jim Rogers, Stephanie […]Read More

Why Timing Interest Rate Locks Never Works

BORROWER REFUSES TO LOCK! We have a borrower who did not want to lock this week because “rates are on a downward trend.” He is totally correct about the trend, but utterly wrong about not locking. This is because it is impossible to time the market and because rates never move in a straight line […]Read More

Inflation Slows & Rates Drop AGAIN; WHY SO IMPORTANT?

Rates plummeted yesterday after Fed Chair Jerome Powell made some comments indicating that the Fed will start to slow its rate increases. Rumor has it that he got early notice of today’s delightfully tame inflation reports, and thus decided to back off on his “hawkish” efforts to keep pushing up rates. 10-YEAR TREASURY YIELDS FELL […]Read More

Which Mortgage Loans Are Assumable?

We are getting questions about Assumable Loans again, as there are a lot of sellers with very low-rate mortgages selling homes in our current high-rate environment. If those sellers could offer their low-rate mortgage along with the house, their house would no doubt be worth a lot more. Up until the 1980s, many loans were […]Read More

Why I Hate “Points” Now More Than Ever (Permanent vs. Temporary Buydowns)

I just read a blog by a mortgage underwriter in which she was explaining how loan officers are stupid because they are not explaining the benefits of “Permanent Rate Buydowns” (vs. “Temporary Buydowns”) to listing agents. Ironically though, she may be the one who is lacking on the intelligence front. A “Permanent Buydown” is where […]Read More

Much Lower Interest Rates By March; Why & What It Means

On Thursday, CPI (inflation data) came in lower than expected – and we saw one of the largest one-day rate drops ever. I of course blogged about it here: THIS IS HUGE! Inflation & Rates PLUMMET. My biggest takeaway though wasn’t just that inflation and rates dropped; it was to point out how correct the […]Read More

THIS IS HUGE! Inflation & Rates PLUMMET!

Inflation Came In Cool – Exactly As Barry Habib And Jeff Snider Predicted! In 2021, I told a group of mortgage bankers at a lunch how and why rates were going to shoot past 7% in 2022 – and NONE of them believed me. Despite their pushback, I remained very confident in my position because […]Read More

The Effect of the Election on Interest Rates

Rates fell yesterday as soon as investors digested the likely results of the midterm elections. As I often repeat, rates fall when investors expect the economy to weaken or when they expect less inflation or even deflation. Conversely, inflation expectations and/or strong economic signals push rates up. So, yesterday, as it became clear that the […]Read More

How Interest Rates Impact Home Values (Not What You Think)

“Jay, How Naïve Are You?” That was the response I got from a past client last spring when I was noting how higher interest rates had not yet impacted home values. I made the further mistake of saying I was not sure how much higher rates would impact values too, in light of all the […]Read More

The Fed Did NOT “Raise Rates 3/4% Yesterday” – Deflation/Lower Rates Coming Soon Part II

The Fed raised rates 75 basis points or 3/4% yesterday – so my rate quote at the bottom of this blog went from 6.0% yesterday to 6.75% today. FALSE!! THAT DID NOT HAPPEN! My rate quote today is the same rate as yesterday’s even though the Fed “raised rates 3/4%” yesterday. I typed the top […]Read More

Why I Am Convinced Rates Will FALL By March

I have myriad acquaintances in the mortgage industry (mortgage bank CEOs even) who insist rates will continue to rise throughout 2023. They tell me I am crazy to think they will fall as early as March – with inflation surging and the Fed on the warpath. They further tell me that the Fed cannot get […]Read More

The Beauty of BUYDOWNS – To Lower Payments & Save Deals

In Friday’s blog, I explained why ARMs are NOT the solution for payment relief (because ARM rates are so close to 30-year rates) in today’s high-rate world. BUT – there is another solution for payment relief that is nothing short of awesome: TEMPORARY RATE BUYDOWNS, aka 3-2-1; 2-1; or 1-0.5 buydowns (NOTE: these are NOT […]Read More

Why ARM Rates Are So Close to 30-Year Rates

Apparently, in 2002, it was “Hot In Herre” – or at least it was according to Nelly. I, however, had no idea because I had never heard the song, and I probably wouldn’t have trusted Nelly’s assessment in any case, given his inability to spell. I bring that up though because yesterday’s rates hit 2002 […]Read More

Inflation RED HOT! Rates WAY UP! Relief On The Way?

Today’s inflation report (Consumer Price Index/CPI) came in much hotter than expected and rates shot through the roof in response. BUT – as Barry Habib (of MBS Highway fame) has been explaining again and again – this was expected – and should not be alarming. In addition, Mr. Habib carefully explains WHY future inflation reports […]Read More

Are Home Equity Lines (HELOCs) Still A Thing?

The Prime Rate today is 6.25% – a full 3% higher than where it was last year at this time. Prime Rate is the rate that commercial banks charge their most creditworthy customers, usually large corporations. It matters to us though because it is also the rate that most Home Equity Lines of Credit (HELOCs) […]Read More

Why Are Banks Not Paying Higher Rates for Deposits? Why Did Rates Plummet Today Too?

Why Interest Rates Are Rising Everywhere – Except Your Savings Account That was the headline from this recent WSJ article. Back in the 1980s, a general lack of savings in America was one of the many reasons why America was going to collapse, and we were all going to die… This was ostensibly because Japan […]Read More

Everything Lags…Making The Media & The Fed Wrong (AGAIN)

In 1992, the rock band R.E.M. released the annoying song, Everybody Hurts. And, sensitive Gen Xers everywhere played it loudly and proudly on their Sony Walkmans and boomboxes to prove just how sensitive they really were (and they were sensitive!). But, fortunately for us, Michael Stipe retired from R.E.M. so he could watch macro videos […]Read More

Are Rates Really Over 7%? Not Really; Rates Up 2% Since August; Surveys Lag Market

Today’s average interest rate is 6.82% per Mortgage News Daily (about 1/2% higher than where they were last week). The average is up almost 2% from early August when it bottomed near 5% – amazingly. The average rate was in fact over 7% yesterday, but they plummeted today (and I will explain why below). The […]Read More

U.S. Dollar at Record Highs & Twitter Is Panicking! Why?

The U.S. dollar is again hitting record highs, and it is much stronger than it was even a few months ago when I last blogged about it: Why a Strong U.S. Dollar Is Terrifying! My favorite way to gauge the dollar’s strength is by watching the DXY Index. The chart at the bottom of this […]Read More

DEFLATION Coming Soon To A Theater Near You!

Stephanie Pomboy is the founder of a macro research firm called MacroMavens, and she was on this Wealthion Podcast recently, and it was so interesting I had to blog about it! I was fascinated by her insistence that we face DEFLATION as early as next year because everyone is talking about how entrenched INFLATION is […]Read More

The Fed Raised Rates And Something VERY UNUSUAL HAPPENED!

The Fed raised the Fed Funds Rate yesterday by 0.75% and long-term rates actually increased (a lot) after the announcement. This is very unusual for several reasons: The markets had long anticipated the 0.75% hike and had “priced it in” already. The Fed only controls short-term rates and not long-term (30-year fixed) rates, so long-term […]Read More

Investors Dumping Inventory vs. Mortgage Rate Lockdowns!

BIG PROBLEMS AHEAD FOR REAL ESTATE INVESTORS! That was the title of this tweet from Nick Gerli, a real estate guru on YouTube. He said: “The 6-month US Treasury now yields…the same as Buying & Renting Out a House in America…Translation: Big Real Estate Investor selloff coming. Especially among Wall Street owners.” And, in response […]Read More

Rates at 2008 Levels! When Will Rates Fall?

Mortgage Rates Top 6% for the First Time Since the 2008 Financial Crisis The above is a WSJ headline for this article. Rates are also back to where they were … way back in June and somehow we survived July and August 😊 Rates shot up this week in response to higher than expected inflation […]Read More

Inflation Drives Interest Rates – Except When The Fed Gets Involved

As most people know, inflation drives interest rates because investors do not want to accept yields that are lower than the inflation rate because they will effectively be losing money if they do. If you loan somebody $1,000 for one year at 5%, and inflation is at 8%, at the end of the year, you […]Read More

The Fed’s Raising Rates 3/4%! OMG! CoreLogic Predicting 4% Home Appreciation Still!

The Fed let it be known yesterday that it will definitely raise the Fed Funds Rate by 0.75% on September 21st… and the market yawned. As Barry Habib reminded us this morning, everyone used to engage in a huge guessing game – in regard to what the Fed might do. And – if the Fed […]Read More

Rising Housing Payments – In Perspective!

The below chart was circulating on Twitter recently – and it of course made potential homebuyers unnecessarily apprehensive.   Yes, payments have surged, but I want to put this in perspective. Interest Rates: While rates have risen sharply from the lows we saw during the COVID crisis, they are only about 2% higher than where […]Read More

The True Cost of “Low Rate” Commercial Bank Mortgages

Some regional commercial banks are buying the jumbo loan market right now with very aggressive rates. BUT – they come with an enormous cost that most borrowers do not take into account. At one of the more prominent banks – that cost is a mandatory deposit equal to 15% of the mortgage! In other words, […]Read More

Fed: “We’re Going to Beat The Shit Out Of You Until Inflation Goes Away”

Fed Chair Powell spoke today in Jackson Hole, Wyoming, in a much-anticipated speech – and it roiled the markets. Here is a brief summary in case readers are interested. CONTINUED RATE INCREASES/0.75% HIKE LIKELY. Powell implied that the Fed is going to continue raising rates aggressively, despite “some pain to households and businesses” (hence my […]Read More

Free Refis Aren’t Free

An agent recently told us he only refers his clients to “one loan officer” because that loan officer “offers a ‘free’ refi to all of his clients in 6 months, if rates fall.” We tried to explain to the agent that there is no such thing as a free refi, and that every lender in […]Read More

History Of Interest Rates Part II (50 Years; 1 Year); Perspective Again!

Several agents have recently requested updates to the History of Interest Rates/Perspective blog I wrote in early May. They of course want to show clients that today’s 4%-ish (jumbo) and 5%-ish rates are really low by historical standards – which is a point I make often. There are two charts below: one shows mortgage rates […]Read More

Rates Went Way Down Because Rates Went Way Up (AGAIN)

The Fed raised the Fed Funds rate by 0.75% yesterday as expected, and long-term rates have been falling ever since. I would not beat this dead horse again but for the fact that rates are continuing their slide downward as I type, and because of how important this all is for housing and mortgages. As […]Read More

If High Rates Bring Down Housing Prices, Will Low Rates Push Prices Through the Roof Again? Inflation Too!

If higher rates are the sole reason the housing market is softer, will the soon-to-be-here lower rates push prices through the roof again? If that is the case, it is one more reason to buy now to take advantage of today’s slower market, knowing that a refi into a much lower rate is very likely.Read More

Why A Strong U.S. Dollar Is TERRIFYING! (and what it means for real estate)

The mighty U.S. dollar has been hitting 20-year-highs over and over recently – and I was so proud that I booked a flight to Europe and ran around yelling: “USA! USA! USA!” and “We’re Number 1!” We’re Number 1!” until… … someone slapped me and explained that the strong dollar has little to do with […]Read More

Is Inflation “Over?” (and boy does it matter!)

Inflation Is Here To Stay! (or not) After telling us that inflation was transitory or temporary for months in 2021, many if not most economists changed their tune and declared that inflation was here to stay. This is why the Fed changed course so quickly and aggressively this year, and it is largely why interest […]Read More

The “Fed” Does NOT Control Mortgage Rates

The Fed controls the short-term “Fed Funds Rate,” or the overnight rate that banks charge each other. The Fed does NOT control long-term rates like the 10 Year Treasury or 30-year mortgage rates. The Fed can influence long-term rates with its comments and by raising the Fed Funds rate, but it does not have the final say.Read More

Rates Keep Falling & Will Fall More; Timing The Market

Rates fell again primarily in response to negative economic data, including revised data that showed the economy shrunk more than we thought in Q1 along with more recession indicators and predictions. The 10 Year Treasury, which correlates closely to mortgage rates, hovered near 3.5% only a few weeks ago – but it is now under […]Read More

Fed Raised Rates & Mortgage Rates Fell – Before Rising Today

The Fed raised the Fed Funds Rate 75 basis points (0.75%) yesterday, and mortgage rates largely fell in response to the news.Read More

Huge Opportunity From High Rates!

Grizzled Escrow Officer Sets Me Straight! While aimlessly wandering the hallways lamenting the industry slowdown, I ran into a very grizzled escrow officer who runs the title company next door. She is one of those utterly fearless women who has been around forever and has literally seen it all. She handled George Washington’s escrow when […]Read More

Goldman Sachs Still Buying Homes; Rates Dropped The Most In 2 Years Last Week – Why?

Goldman Sachs-Backed Funds Bought Entire Housing Development I saw this recent New York Post article on Twitter yesterday and thought it would be another nice share for any potential buyers who might have cold feet. TLDR: Two Goldman-backed ventures just spent $45 million to buy up an entire housing development in Florida. The big funds […]Read More

What If Rates Don’t Fall? WRAP-AROUND MORTGAGES

“… I remember my first mortgage back in 1982, when my rate was 15%!” said every boomer ever… “… I remember my first mortgage back in 1982, when my rate was 10%!” said my law school professor… The above two comments are huge reminders that homes still sell in even the highest of interest rate […]Read More

Barry Speaks! Fed Disdain; Recession & Low Rates Coming; Housing Will Be Fine

Barry Habib reminds us that it is inflation that is driving higher rates, but that it will peak in October and start to fall for two reasons: (1) today’s higher rates are destroying demand across the board (I again suggest watching the video for his full explanation); and (2) supply chains will be untangled and working by then, eliminating shortages.Read More

Why Housing Prices Will Double In 6 Years; No Bubble Here…Part 37

Interestingly, Barry Habib (MBS Highway Founder), Ken McElroy (famous real estate investor), and some dude on Reddit all recently made the case for much higher housing prices – DESPITE HIGHER RATES. And all of them were responding to all of the housing bubble fears we see everywhere now on social media and in the press. […]Read More

History of Interest Rates; Some Perspective

Are Rates High? Yes, rates are 2% higher than they were when they bottomed out after COVID hit and they are back to the 2009 levels, but are they “high?” No. Not even close when we look at the history of rates over the last 50 years. Here is a link to an excellent interactive […]Read More

Rates Back to 2009 Levels; Time for ARMs!

Mortgage rates have climbed to their highest level since 2009! One way to combat the rise in rates is to take an ARM instead of a 30-year fixed-rate loan.Read More

Points, Discount Points, & Origination Fees – Avoid Them In 2022!

Even though distinctions can be made, Points, Discount Points, and Origination Fees are effectively the same thing, and they are used interchangeably. A “point” typically represents 1% of the loan amount. So, a 1/2 point is 1/2% of the loan amount, and so on. Paying a full point will typically “buy down” an interest rate […]Read More

Pyramid Lending = Death of Mortgage Banks

During boom times, when there is excess business and margins are fat, “pyramid lending” can work. But – when business slows and margins compress like what has been happening this year – pyramid lending not only does not work, it will kill off many mortgage banks. This is because borrowers can shop for rates and apply for loans more easily than ever nowRead More

17 Day JUMBO Financing – With No Contingencies & Super Low Rates!

I often blog about how jumbo rates are as much as 1% LOWER than conforming rates and explain why too. This recent blog is just one example. Our Jumbo Niche I obsess with jumbo financing not only because it offers astoundingly low rates, but also because it comprises as much as 75% of all financing […]Read More

Jumbo Rates Remain FAR LOWER Than Conforming & FHA Rates

Mortgage rates have climbed by about 2% over the last six months! Jumbo rates, however, have climbed much more slowly – and they are now almost 1% LOWER than conforming (Fannie Mae and Freddie Mac) rates! What Is A Jumbo Loan? Once again, a jumbo loan is any mortgage loan that exceeds the conforming (Fannie/Freddie) […]Read More

8 Ways to Lower Debt Ratios When Rates Are High

With rates rising so quickly, “debt ratios” are becoming a major issue for many borrowers. Hence, I am repeating this past blog where I set out various ways to lower debt ratios in order to still qualify in a market with rising rates. Also, in case anyone is interested, I explain what debt ratios are […]Read More