Tag Archive for: rates

Stock Market Crash Is Coming FOR SURE; Preventing It Will Push Rates Higher

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We are going to see a 1987-style stock market crash (only worse) for sure, and it is only a matter of when. I have blogged about this many times, but investing guru Mike Green was just on this Julia La Roche podcast - Why A 1987-Style Crash Is Now Almost Inevitable – explaining why. So, I am hitting it again for two reasons: (1) the podcast is very short – so every investor should listen to it; and (2) I am adding another twist to explain why this threat will lead to higher rates.Read More

Oil & Rates Plummet; Why “Portable” Mortgages Are A Really Dumb Idea

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Oil prices plunged last night on credible rumors that the U.S. and Iran are close to an agreement to end the war. And, as I’ve been noting since the war started, as goes oil, so go rates. Rates fell sharply Portable mortgages are loans that homeowners can transfer from one home to another. Naïve housing analysts often float portable mortgages as a great way to free up “locked down” inventory (homes with very low rates that owners do not want to lose – so they refuse to sell). Homeowners with very low rates also often get excited by the prospect of portable mortgages.Read More

Iran Tensions Push Rates Up Again; Dead Boomers – Good or Bad? Appraisal Waivers Saving Deals!

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Mortgage rates bottomed out at 5.99% on February 27th – the day before the Iran war started. Rates peaked one month later on March 27th – hitting 6.625%. Rates then fell steadily into April but have since been rising in response to escalating tensions and rising oil prices. I share all this because rates shot up again today in response to Trump’s latest action, called “Project Higher Interest Rates.” OK – actually it is called “Project Freedom.” It is an effort by the U.S. to restore freedom of navigation through the Strait of Hormuz and free stranded commercial vessels. This action escalated tensions and pushed oil prices (the main cause of higher rates) higher again. Today’s average mortgage rate is 6.52%. We’re still below the peak we saw in March, but we’re getting close.Read More

Uh Oh!! Fed Says No More Rate Cuts This Year!! Panic Time?

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Interest rates shot higher yesterday after the Fed signaled there would be no further interest rate cuts this year. And because 99% of Americans mistakenly believe the Fed is all-powerful when it comes to all interest rates, I am going to dispel the Fed myth one more time. We share these blogs with clients who insist on “waiting for the Fed to cut” before buying homes or locking in rates. SIDEBAR: This post explains that for every $1 rise in gas prices, the sitting president loses 6% of his support – meaning Trump has now lost 15% of his support. A) It is super interesting. B) You can be damned sure Mr. Trump is aware of this, so it will be interesting to see him pull out all the stops to push oil and gas prices lower. And that bodes well for rates.Read More

Expect Higher Rates In The Near Term; Two Huge Takeaways

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I predicted mid to low 5% mortgage rates later this year several times in blogs and talks – but I did not expect three things: Ukraine to get so good at attacking Russian oil facilities. The Iran war, and its continuance. And Too fast of an increase in the money supply. As recently as two weeks ago, I discussed energy analyst Doomberg’s reminder that oil producers always overproduce in response to high oil prices, which always results in gluts later on. Doomberg predicts that oil will drop to as low as $30 per barrel (from $105 today). But that could take several years to play out. High oil prices push up all other prices, sparking the inflation concerns that have been pushing rates way up since the Iran war started. Iran’s resistance and Trump’s escalatory language pushed oil prices up to a new high today, and rates are up again as a result.Read More

Rates Fall Back to the Sweet Spot After Oil Crash

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Oil Prices (WTI) Plummeted To $92 Per Barrel From $104 Per Barrel On Monday. Interest rates followed and are now almost 3/8% LOWER than they were a few weeks ago. This unprecedented plunge in oil prices indicates again that very astute oil traders believe the Iran war will not escalate (again, huge investors with money on the line are often more accurate predictors of world events than “expert” pundits).Read More

Ceasefire Pushes Rates Way Down; Will It Hold? Ask The Markets, NOT The Pundits

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It was an amazing thing to behold! I watched the 10-year Treasury yield fall almost 15 basis points or 0.15% (a huge drop) very quickly when the ceasefire was announced yesterday. I also watched oil prices drop from $117 per barrel to only $92 per barrel – and I was gleeful. But then I saw “Iran’s 10 Point Plan” (copied below) – and my heart sank. I thought and still think … “NO WAY WILL THIS CEASEFIRE HOLD…given Iran’s demands.”Read More

Why We Could See 9% Rates By June

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Uh oh… There is a real risk we could see 8%+ mortgage rates over the next few months. Economist Steve Hanke is on the warpath, sharing post after post about the enormity of the threats to the world’s oil supplies. Here is a post in which commodity markets guru, Jeff Currie, explains that we’re facing one of our biggest oil supply shocks EVER, but we have not yet felt it because countries are still able to draw down reserves.Read More

Loan Officer vs. Mortgage Broker vs. Mortgage Banker vs. Direct Lender; What’s The Difference?

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Interest rates shot way higher today, and I will explain why below. I. “2005 Mortgage Man” will be studied by anthropologists for centuries. This is because there has never been a more confused, obnoxious, ostentatious, and non-self-aware Human Being. After the 2008 meltdown, there were myriad news articles and podcasts devoted to the downfall of “2005 Mortgage Man,” as most of the demographic crashed from high six-figure incomes, mansions, and Lambos into near-poverty in their moms’ basements. These are the conditions that fostered “2005 Mortgage Man:” (1) insanely loose lending standards made almost everyone eligible for mortgage financing, irrespective of income, assets, or credit; (2) loan volumes hit record levels that we’ve never come close to hitting again, with almost 24 million mortgages originated in 2003 alone; (3) barriers to entry for becoming a “mortgage man” were extremely low; and (4) interest rates were falling every year while home values were fast increasing every year.Read More

Oil & Rates Spike WAY UP Again…Then Plummet; We Now Know When The War Will End; Whew!

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All hell broke loose in the financial markets yesterday – in what had to be one of the most interesting weekends ever. First of all, WTI (oil prices) spiked to almost $120 per barrel – nearly double the $65 price we saw before the war (and $30 higher than the $90 price we saw Friday). Needless to say, interest rates spiked too in response – and the world (especially mortgage guys, the Trump administration, and Asian countries dependent on oil imports) panicked. Oil spiked because of direct attacks on Iran’s oil facilities, because the Strait of Hormuz remained closed (choking off oil shipments), and because countries near Iran shut down their oil and liquid natural gas production.Read More

Should Buyers Wait For Lower Rates To Buy?

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Oil prices (WTI) spiked up to $90 per barrel (from only $66 prior to the war), and rates rose again in response. Interesting thing number #1: Inflation fears trump weak labor markets. A very weak jobs report surfaced today, which would normally have caused rates to plummet. But higher oil prices outweighed the very weak job numbers, and rates rose. Interesting thing number #2: Oil spiked far higher when Putin invaded Ukraine. WTI oil prices were in the $80 range when Putin started to build up his forces in anticipation of his Ukraine invasion in early 2022. After the invasion, prices spiked up to almost $116 in a few weeks – a $36 increase. What is interesting, though, is that Russia was only responsible for about 10% to 12% of the world’s oil production in early 2022, vs. 20% for the Persian Gulf region. This implies that the markets thought the Ukraine war would last longer and be more severe.Read More

Rates Up Again; When Will They Come Back Down?

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We saw record loan volume last week, hitting a number of locked loans we have not seen since 2022. Then…it all stopped. The reason, of course, was the Iran war – which threatens the distribution of as much as 20% of the world’s energy supplies (sparking inflation fears). In other words, right when things were getting good, geopolitics threw a wrench into the machine (again).Read More

Why Rates Will Now Stay Elevated Even When The War Ends; But Don’t Worry…

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West Texas Intermediate (WTI) oil was down to $64 per barrel last week before the Iran war. Today, WTI is close to $74 per barrel – a whopping 16% increase that will work its way into every other thing we purchase. This is because the war threatens the supply and transportation of a huge portion of the world's oil and liquid natural gas (over 20%). Gasoline prices are already up 20 cents per gallon – the largest jump we’ve seen over a short period in over 20 years.Read More

I Still HATE Permanent Buydowns; 5 Reasons Why Rates Will Keep Falling; 5.5% By The End Of May

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A “permanent interest rate buydown” is simply the act of paying “points” or “origination fees” to buy down one’s interest rate. Buyers or sellers can pay for them – and I hate them. 1 point (1% of the loan amount) will permanently buy down an interest rate by about 1/4%. The problem is that borrowers often refinance before the buydown cost is recouped through lower payments or the lower rate.Read More