Tag Archive for: federal reserve

Recession, Depression, Soft Landing, High Rates, Low Rates – Who Do We Believe?

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In late 2020, I was having lunch with several mortgage bankers who wanted to celebrate the success we were all having – as we were all enjoying unimaginable record profits. I, however, was not in a celebratory mood, telling them that rates would likely approach 8% in the coming years and that we needed to […]Read More

Deciphering The Terrifying Housing Decline Numbers from Case-Shiller

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RATES FALL IN THE FACE OF FED RATE INCREASE Rates fell today even though the Fed will increase “rates” today. I encourage everyone to re-read or re-share this blog: The Fed Does Not Control Interest Rates! BUT – our jumbo rates are largely the same today because the CFPB pushed Wells Fargo out of the […]Read More

The Fed Does NOT Control Interest Rates! Follow the Data Guys!

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  The Fed raised “rates” last year at the fastest pace in history! There were 7 “rate” increases in total: 0.25% in March 0.50% in May 0.75% in June 0.75% in July 0.75% in September 0.75% in November 0.50% in December BUT – DESPITE INCREASES TOTALING 1.25% OVER NOVEMBER AND DECEMBER, 30-YEAR MORTGAGE RATES HAVE […]Read More

Rates at 2008 Levels! When Will Rates Fall?

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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

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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

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

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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

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

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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!

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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

The “Fed” Does NOT Control Mortgage Rates

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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

Why The Fed Desperately Wants to TANK the Housing Market!

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One of my favorite macro pundits, Alfonso Peccatiello (former $20 billion fund manager who goes by “Alf”) recently tweeted this: “The biggest group of consumers in the US owns houses, not stocks. And this is why taming the animal spirits in the housing market is paramount important for the Fed. And they will succeed…” He […]Read More

Fed Raised Rates & Mortgage Rates Fell – Before Rising Today

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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

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

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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

How Much Have Rates Risen? Will They Fall?

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Last year at this time, the average conforming 30-year fixed-rate was about 2.7%, per Freddie Mac. Currently, the average conforming rate is over 3.7%. So, rates have risen a full 1% now over the last 12 months.Read More

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

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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

Mortgage Reminders: My Inconsistent Fed Comments; Rent Backs; Owner Occ Ratios; Attached PUDs/Townhomes; 12 Condo Considerations

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Here are a few random reminders. Powerless Fed Vs. Inflation-Causing Fed. In response to my recent blog about the Fed being “Powerless,” I got this comical point from an agent I really enjoy hearing from: “I know they say that great minds can hold contrary thoughts with ease, but how do you square a powerless Fed […]Read More

Fannie/Freddie Yank Their 1/2 Point Refi Fee

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On Saturday night my wife Heejin and I had a wonderful date at an outdoor Italian restaurant. The food and weather were perfect, and the ambiance was even better with overhead string lights, friendly passersby, and a saxophone player in the background. The only problem was that there were too few customers, and we would […]Read More

Jumbo Loans Stall; IRS & India Shutdowns Slam Industry; Still Funding Loans; Vanilla Loans Only

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STIMULUS AND FED ALMOST CRASHED MORTGAGE/HOUSING INDUSTRY Here is a great article that partially explains what happened. Long story short: many major lenders face bankruptcy b/c servicing values are now close to zero (b/c of the risk of missed payments) and b/c lenders face massive margin calls b/c of the Fed’s bond-buying. STILL FUNDING LOANS/VANILLA […]Read More

Rates Way Up! Liquidity Crisis; Refi Later for Free; Buy Takeout Food :)

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INTEREST RATES SHOT UP AGAIN YESTERDAY Rates shot up 1/4 percent yesterday over about a 30 minute period – something we have not seen for years. Rates came back a bit this morning, but then shot up again over the last hour in an extremely volatile market. Rates are now about 3/4 percent higher than […]Read More

The Fed Cut Rates by 1/4 Point And Mortgage Rates Fell Marginally

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The Fed cut the Fed Funds Rate by 1/4 percent yesterday, and rates…actually fell after the announcement. I was almost disappointed to see that b/c it will again confuse people about the influence the Fed has on mortgage rates. Briefly and once again – the Fed cut “The Fed Funds Rate” which is a short […]Read More

Are Low Rates The “New Normal?” The Fed Is Irrelevant

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For years I have been repeating the predictions of various market experts about how interest rates have to go up at some point. And for years, I have been dead wrong! My wrongness was only illuminated again with the recent dramatic drop in rates. All this only makes me think that low rates may now […]Read More

The Fed Halts Rate Increases; Good Or Bad?

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Yesterday, the Fed announced that there will be no more rate hikes in 2019. And many people in the mortgage and real estate industries cheered. But a lot of economists and Fed-watchers are more worried than ever. Here is just one of many articles (from the WSJ) I read today illuminating serious concerns. The Fed […]Read More

Why Interest Rates Should Finally Increase This Year; Or Not

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INTEREST RATES PLUMMET AFTER 2008 MELTDOWN After the 2008 meltdown, mortgage interest rates plummeted from the mid 6% range all the way down to the low 3% range at various times. More recently, mortgage rates have hovered in the 4% range. Over the last ten years, I have repeated pundit predictions of imminent rate increases […]Read More

Why Rates FELL After Fed RAISED Rates; Econ Data Trumps Fed Policy

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The Fed raised its short term “Fed Funds Rate” again yesterday, but long term mortgage rates fell. Once again, the Fed Funds Rate is only a short term interest rate (the rate that banks charge other banks for overnight loans necessary to pad their required reserves). This short term rate does not always directly influence […]Read More

What the Heck Is Going On With Rates? They’re Rising, Right? Wrong

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Interest rates fell again, surprising everyone (again) b/c rates are supposed to be going up, right? Wrong. Rates are supposed to being going up b/c the Federal Reserve has been increasing the short term Fed Funds Rate; b/c the economy is heating up; b/c Mr. Trump’s policies are potentially inflationary; and b/c the Fed is […]Read More

Rates Down After Fed Pushed Rates Up? Why?

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The Fed raised the short-term Fed Funds rate yesterday by 1/4% to a range of 0.75% to 1.00%. And long term interest rates fell. Here are a few reasons why this happened. First of all, the markets anticipated the increase and had already accounted for it. Rates actually improved after the increase was announced, in […]Read More

What Moves Interest Rates? Will Rates Fall?

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We get asked time and again if we think rates could fall again, and our answer is “maybe.” The Fed has indicated that they plan on raising short term rates a few more times in 2017. But, the Fed is not the only influence on rates. Other factors that influence rates include the following: 1. […]Read More

Interest Rate Increases – Effect, Likelihood and Perspective

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There is a lot of talk once again about rates increasing, especially b/c the Fed is indicating they will try to push rates up in December. But here is some perspective. The Fed may not be able to push long-term rates up. When the Fed increased the short term Fed Funds rate last December, it […]Read More

Janet Yellen Speaks; Fed Backing Off on Bond Purchases; Good Thing?

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Rates jumped yesterday after Janet Yellen (the new Fed Chairperson) spoke. She rattled the markets by implying that the Fed may push rates up sooner than expected. She also made it clear that the Fed will continue tapering (backing off on its bond purchases). Rates are heading up this year. We discussed this before but […]Read More