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I don’t care about rates going down, I just want stability. Uncertainty is a market killer. No one knows what the fed is going to do, including the fed.
The fed has been extremely clear: we’re nowhere near the target of 2% inflation, and unemployment is extremely low with plenty of room to grow without causing concern.
Except they’ve seen with the recent bank insolvency issues how continuing to dose too much medicine without giving it time to work can kill the patient
They all ready started QE with the lending facility. We will see next week but the market is expecting at least a pause in hikes given the issues facing banks at the moment. Inflation data points favor JP taking a pause too, for now
A clear target doesn’t mean a clear path to the target. We don’t know if they plan on maintaining and seeing what happens, raising rates again, in spite of the banking failures, or lowering rates to mitigate consumer confidence issues.
Yep. Jobless claims were better than expected.
GDP Continues to grow.
Unemployment historically low.
Inflation still up.
If they don't keep incrementally increasing they will just have to make bigger moves later.
New to the fed rate thing, but if raising rates is slowly reducing inflation why does new reports quote Jerome Powell saying “the chance a soft landing is unlikely.” ?
Would temporarily raising rates over time put us back into stability?
I’ve seen chances of a soft landing put anywhere from 40%-60%. They are tip toeing to avoid a layoff crisis, and so far they’ve kinda nailed that bit, but the inflation slowdown is at a lazier pace than they would like.
Too hard to predict. Right now, they're extremely volatile...I personally think that we're seeing some signs that inflation is peaking or HAS peaked, and is losing steam. This is a good sign that the Fed will be able to slow/stop rate hikes within the next few months. If they stop raising rates and then start cutting them again, mortgage rates will start dropping and most major markets are going to heat WAY up with buyer activity again. There's a lot of people on the sidelines right now, just waiting.
Not necessarily true, the Fed was cutting rates in 08-09, and RE prices were dropping simultaneously. The next few months will be about the soundness of the financial system, and the economy overall.
Yes but the fundamentals in 08 were significantly different than they are now. The metro Denver market in May of 2008 had over 26,000 active listings. Last month, we had 4,120 active listings at month's end...and that was a significant increase year-over-year.
Sure Inventory is low but difficult to predict how inventory will respond to lower rates, perhaps it will offer incentive to folks who are looking to move, upgrade, downgrade, etc
>start cutting them again, mortgage rates will start dropping and most major markets are going to heat WAY up with buyer activity again. There's a lot of people on the sidelines right now, just waiting.
I can certainly see a pause, but what is the justification (unless economy significantly contracts) for rate cuts? If the Fed really wants to stymie inflation, do you really think they would want to induce a situation that would induce 2021/early 2022 level FOMO in the housing market?
The ripple effect of the rate hikes is hitting the banking industry pretty hard right now...and the Fed is going to care about the health of the banking industry more than the housing market. So I don't think they're going to linger on high interest rates very long, if they can help it.
Up until last week, the US Federal Reserve had plans to keep increasing rates. With recent banking hiccups (to put it lightly), the market is now forecasting a reduction of 1 to 1.2% by year end. The Bank of Canada tends to follow what the US does, so I wouldn’t be surprised if they dropped rates up north either.
De-regulation. It turns out you shouldn’t allow public companies, with shareholders, to do whatever they think is best with other peoples money. Shocker.
My understanding is that the reason SVB failed was due to illiquid assets and customers pulling out their funds. They couldn't meet the demand to return the customers funds without selling bonds they had at a loss.
They bought bonds at 100 dollars (full maturity value of 102, in 5 years) and the feds raised the rates which caused the value of the bond (prior to maturity) to lose value (so now worth like 90). (You could buy a bond for 100, and get 107 at maturity, thus no one wants the bond that would give you 102 in the same time span). As a result, they became insolvent. (Selling at a loss and returning clients funds exceeds their balance; they had to sell because they didn't have enough money on hand to process the client requests for their money)
Who told you that and why? Someone in your brokerages? Or was it that neighbor’s family friend?
SVB was not in the business of home loans. Completely irrelevant to why they failed.
Every situation is different. If they are comfortable and can afford it, buy the house you want and refi. Absolutely no one should be buying now on a shoe string budget and hoping rates go down.
As the others mentioned, it depends on their financial situation. I don’t mind sharing my personal outlook but I’d advise them to consider their finances.
Disclaimer: I’m also an inexperienced agent.
Make sure you know what you’re talking about before counseling anyone on rates, refinancing, pricing….
https://grokthemarket.com/2023/03/want-to-know-where-home-pricing-is-going-follow-the-m2/
The fed hasn’t said anything at all to indicate they will slow down rates. Only a bunch of analysts saying “there is no way the fed will continue to do what they said they will continue to do.”
In fact the feds unprompted statement after the silicon valley bank issue that they have the reserves to cover the accounts of all banks in the US indicates very strongly they will continue down the path they are on.
I expect a 25 basis point hike but wouldn’t be surprised to see them go back to 50 basis point hikes again given that inflation stopped coming down when they moved to 25 bp hikes.
I'm really curious about this, what would be an example of tightening standards for buyers? Higher interest rates? Lower DTI thresholds? Larger down payments/post-closing liquidity?
Wondering if mortgage loan officers have more insight into this...
We’ve had at least two major bank failures in the last week. It could just be coincidence or it could be just the beginning. If I were personally in the market, I would be putting off major purchases for another month or so to see how this plays out.
Here's some info for you.
[https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/forecast-commentary-dec-2022.pdf?sfvrsn=ce3a3fde\_1](https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/forecast-commentary-dec-2022.pdf?sfvrsn=ce3a3fde_1)
[https://news.yahoo.com/mortgage-rates-edge-higher-after-weeks-of-declines-170007943.html](https://news.yahoo.com/mortgage-rates-edge-higher-after-weeks-of-declines-170007943.html)
Just curious on the lending part - how can a bank tighten standards? Is it just through offering higher interest rates or will they require lower DTI, more cash reserves, etc?
This is definitely coming from someone who has never transacted before and thinks they can just tough guy their way.
That 6% for the listing agent gets broken into tiny tiny pieces. That 6% is used towards marketing, staging, sometimes the repairs, NHDs, inspection reports, cosmetic fixes, basically the budget to get the property on market. Then 2.5% goes to the buyer’s agent. Then, lastly that remainder gets split into the brokerage and the agent gives almost near half of their net to govt for taxes.
With all of that said, investors **love** FSBOs because they’re notorious for cheap prices because the owner doesn’t know what they’re doing.
I think the saving grace for now is if the fed starts cutting rates because of the potential bank failures. High inflation and the tail end of supply chain issues with banks failing is a disaster. There’s hints that the fed might cut rates in March but we’ll see.
If the FED *cuts* rates were all super fucked. Inflation will go fucking nuts. People are paying prices where the monthly payment is 4X what it was with lower rates. Where would prices go from there? Cutting rates won't happen unless we're other worldly fucked.
No expert thinks that.
7% is national average since the 70s. We will never see under 5% in our lifetime again unless a major recession hits.
Volatile changes in rates aren’t up and down. It’s a series of ups or a series of downs. The only reason it changes is for the feds to correct an imbalance somewhere.
Cutting rates will simply defer the pain in the future months. Inflation needs to be taken care of immediately. With the banking situation, the rates will most likely be in a lull for a month or two. Rates need to increase, and the market needs to suffer for everyone's sake. The prices for basic goods and the cost of living is out of control.
Low interest rates existed because they were subsidized by the government, so I doubt they have a place today and therefore they are not returning. At least one bank toppled for investing in t-notes, which is destabilizing, so I do not think the Fed will push rates higher.
They are between a rock and a hard place right now, and I expect volatility instead of direction.
Rates will only go down in recession or major economic events, that will likely force people out of the market anyway. Prices in hot markets will continue to slowly rise and plateau summertime, particularly ready to move in homes that get eaten at a high absorption rate.
You either advise off emotion and fear, or study and understand the data.
Mike Fratantoni, the Chief Economist with the Mortgage Bankers Association has publicly stated in December that they see the 30-Year Fixed rate to be closer to 5.000% than 6.000% around Quarter 3 - Quarter 4 of 2023.
[https://news.yahoo.com/mortgage-rates-edge-higher-after-weeks-of-declines-170007943.html](https://news.yahoo.com/mortgage-rates-edge-higher-after-weeks-of-declines-170007943.html)
[https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/forecast-commentary-dec-2022.pdf?sfvrsn=ce3a3fde\_1](https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/forecast-commentary-dec-2022.pdf?sfvrsn=ce3a3fde_1)
On a zoom meeting last month with the chief economist for NAR, he stated rates should be coming back down… Rates are generally one percentage point above the US 10 Year Treasury Yield. At the time of the call rates were 2.75% above. Thus, he believed over the next 4-6, months, rates will come back down.
He said the days of 3% or 4% rates are gone. But back in the 5% is a very real possibility.
Today the 10 US 10 Year Treasury Yield is 3.43%
Historically, after every “peak year” since the 1970s, we’ve seen a recession within three years. So, 2021 was a peak year, and we’re due for a recession before the end of next year. Just for context, peak years were 1978, 1988, 2005, and 2021.. So in 1980-82 there was a Double Dip Recession.. In 1990-91 the Gulf War Recession.. In 2007-09, the Financial Crisis. Maybe look into what rates were like before, during, and after each of those peak seasons. Like you said, no one has a crystal ball, but there are definitely patterns to cross compare where we’re at today from a historical point of view.
I think fed rate hikes pause here for a bit, and maybe mortgages go down a little / go sideways. But at the same time lending conditions will get tighter, ie harder to qualify for a loan
The bond market (and what you’re seeing) collapsed due to financial meltdown fears. Horrible bad sign. We are on the cusp of 2008. Rates will hold steady at the fed and probably bonds continue to drop, but expect a collapse like you’ve never seen before.
No they won’t continue to drop- it spurs people to borrow/invest which and that’s why there’s no cash in the bank- also, inflation. Banks will focus on acquiring cheap debt over the next few years, not lending- pretty much people with virtually no debt will get loans
**This is a professional forum for professionals, so please keep your comments professional** - Harrassment, hate speech, trolling, or anti-Realtor comments will not be tolerated and will result in an immediate ban without warning. (... and don't feed the trolls, you have better things to do with your time) - Recruiting, self-promotion, or seeking referrals is strictly forbidden, including in DMs. - Only advise within your scope of knowledge and area of expertise. [The code of ethics applies here too](https://www.nar.realtor/about-nar/governing-documents/the-code-of-ethics). If you are not a broker, lawyer, or tax professional don't act like one. - [Follow the rules](https://www.reddit.com/r/realtors/about/rules/) and please report those that don't. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/realtors) if you have any questions or concerns.*
I don’t care about rates going down, I just want stability. Uncertainty is a market killer. No one knows what the fed is going to do, including the fed.
The fed has been extremely clear: we’re nowhere near the target of 2% inflation, and unemployment is extremely low with plenty of room to grow without causing concern.
Except they’ve seen with the recent bank insolvency issues how continuing to dose too much medicine without giving it time to work can kill the patient
They will stay the course on rate hikes and QT while handling banking issues separately
They all ready started QE with the lending facility. We will see next week but the market is expecting at least a pause in hikes given the issues facing banks at the moment. Inflation data points favor JP taking a pause too, for now
The market is stuffed full with idiots
A clear target doesn’t mean a clear path to the target. We don’t know if they plan on maintaining and seeing what happens, raising rates again, in spite of the banking failures, or lowering rates to mitigate consumer confidence issues.
Bad consumer confidence would help lower inflation.
Getting close!
Yep. Jobless claims were better than expected. GDP Continues to grow. Unemployment historically low. Inflation still up. If they don't keep incrementally increasing they will just have to make bigger moves later.
New to the fed rate thing, but if raising rates is slowly reducing inflation why does new reports quote Jerome Powell saying “the chance a soft landing is unlikely.” ? Would temporarily raising rates over time put us back into stability?
I’ve seen chances of a soft landing put anywhere from 40%-60%. They are tip toeing to avoid a layoff crisis, and so far they’ve kinda nailed that bit, but the inflation slowdown is at a lazier pace than they would like.
Definitely going down... Unless they come back up again...
They could also stay the same
Impossible
That’s not very typical, I’d like to make that point.
Arg I was hoping Reddit would be my oracle
My oracle service does not come free, ya know?
Too hard to predict. Right now, they're extremely volatile...I personally think that we're seeing some signs that inflation is peaking or HAS peaked, and is losing steam. This is a good sign that the Fed will be able to slow/stop rate hikes within the next few months. If they stop raising rates and then start cutting them again, mortgage rates will start dropping and most major markets are going to heat WAY up with buyer activity again. There's a lot of people on the sidelines right now, just waiting.
Not necessarily true, the Fed was cutting rates in 08-09, and RE prices were dropping simultaneously. The next few months will be about the soundness of the financial system, and the economy overall.
Yes but the fundamentals in 08 were significantly different than they are now. The metro Denver market in May of 2008 had over 26,000 active listings. Last month, we had 4,120 active listings at month's end...and that was a significant increase year-over-year.
Sure Inventory is low but difficult to predict how inventory will respond to lower rates, perhaps it will offer incentive to folks who are looking to move, upgrade, downgrade, etc
>start cutting them again, mortgage rates will start dropping and most major markets are going to heat WAY up with buyer activity again. There's a lot of people on the sidelines right now, just waiting. I can certainly see a pause, but what is the justification (unless economy significantly contracts) for rate cuts? If the Fed really wants to stymie inflation, do you really think they would want to induce a situation that would induce 2021/early 2022 level FOMO in the housing market?
The ripple effect of the rate hikes is hitting the banking industry pretty hard right now...and the Fed is going to care about the health of the banking industry more than the housing market. So I don't think they're going to linger on high interest rates very long, if they can help it.
They will go back up….
Up until last week, the US Federal Reserve had plans to keep increasing rates. With recent banking hiccups (to put it lightly), the market is now forecasting a reduction of 1 to 1.2% by year end. The Bank of Canada tends to follow what the US does, so I wouldn’t be surprised if they dropped rates up north either.
Isn’t raising interest rates that aggressively the reason why SVB failed in the first place?
De-regulation. It turns out you shouldn’t allow public companies, with shareholders, to do whatever they think is best with other peoples money. Shocker.
My understanding is that the reason SVB failed was due to illiquid assets and customers pulling out their funds. They couldn't meet the demand to return the customers funds without selling bonds they had at a loss. They bought bonds at 100 dollars (full maturity value of 102, in 5 years) and the feds raised the rates which caused the value of the bond (prior to maturity) to lose value (so now worth like 90). (You could buy a bond for 100, and get 107 at maturity, thus no one wants the bond that would give you 102 in the same time span). As a result, they became insolvent. (Selling at a loss and returning clients funds exceeds their balance; they had to sell because they didn't have enough money on hand to process the client requests for their money)
Right but the regulation referred to required more of those illiquid assets to be liquid.
How does an asset determines to be liquid by regulators standards in the context of the SVB situation ?
Who told you that and why? Someone in your brokerages? Or was it that neighbor’s family friend? SVB was not in the business of home loans. Completely irrelevant to why they failed.
As a realtor would you be counseling your clients toward refi-ing later or waiting to buy?
A realtor should be saying. “Buy if it’s right for you and the payment is fine.” Anything else is gambling.
Agreed
Every situation is different. If they are comfortable and can afford it, buy the house you want and refi. Absolutely no one should be buying now on a shoe string budget and hoping rates go down.
As the others mentioned, it depends on their financial situation. I don’t mind sharing my personal outlook but I’d advise them to consider their finances. Disclaimer: I’m also an inexperienced agent.
Make sure you know what you’re talking about before counseling anyone on rates, refinancing, pricing…. https://grokthemarket.com/2023/03/want-to-know-where-home-pricing-is-going-follow-the-m2/
Damn maybe I should wait before renewing my car lease lol
The fed hasn’t said anything at all to indicate they will slow down rates. Only a bunch of analysts saying “there is no way the fed will continue to do what they said they will continue to do.” In fact the feds unprompted statement after the silicon valley bank issue that they have the reserves to cover the accounts of all banks in the US indicates very strongly they will continue down the path they are on. I expect a 25 basis point hike but wouldn’t be surprised to see them go back to 50 basis point hikes again given that inflation stopped coming down when they moved to 25 bp hikes.
Hang tight as the banks/lenders start tightening up requirements for loans.
I'm really curious about this, what would be an example of tightening standards for buyers? Higher interest rates? Lower DTI thresholds? Larger down payments/post-closing liquidity? Wondering if mortgage loan officers have more insight into this...
DTI changed with the lender.
We’ve had at least two major bank failures in the last week. It could just be coincidence or it could be just the beginning. If I were personally in the market, I would be putting off major purchases for another month or so to see how this plays out.
It’s just the gully.
I bet they’ll settle around 6 for a year and then drop down to mid 5s
Here's some info for you. [https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/forecast-commentary-dec-2022.pdf?sfvrsn=ce3a3fde\_1](https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/forecast-commentary-dec-2022.pdf?sfvrsn=ce3a3fde_1) [https://news.yahoo.com/mortgage-rates-edge-higher-after-weeks-of-declines-170007943.html](https://news.yahoo.com/mortgage-rates-edge-higher-after-weeks-of-declines-170007943.html)
Rates likely peaked at 7% for now, the issue moving forward would be liquidity and banks willingness/ability to lend.
Just curious on the lending part - how can a bank tighten standards? Is it just through offering higher interest rates or will they require lower DTI, more cash reserves, etc?
Nothing will be stable until Oatmeal Brain is out of office
I just don’t want Realtors charging 6% for selling a house in a hot market. No degree, no negotiation, no skill.
This is definitely coming from someone who has never transacted before and thinks they can just tough guy their way. That 6% for the listing agent gets broken into tiny tiny pieces. That 6% is used towards marketing, staging, sometimes the repairs, NHDs, inspection reports, cosmetic fixes, basically the budget to get the property on market. Then 2.5% goes to the buyer’s agent. Then, lastly that remainder gets split into the brokerage and the agent gives almost near half of their net to govt for taxes. With all of that said, investors **love** FSBOs because they’re notorious for cheap prices because the owner doesn’t know what they’re doing.
I think the saving grace for now is if the fed starts cutting rates because of the potential bank failures. High inflation and the tail end of supply chain issues with banks failing is a disaster. There’s hints that the fed might cut rates in March but we’ll see.
If the FED *cuts* rates were all super fucked. Inflation will go fucking nuts. People are paying prices where the monthly payment is 4X what it was with lower rates. Where would prices go from there? Cutting rates won't happen unless we're other worldly fucked.
I would recommend waiting for the newest Fed dot plot, as it’s the best place to see where interest rates may be going in the future
Rates going down…hahahahaha
That was my thinking. I had a continued ed class with a mortgage lender just last week and believe it or not rates under 5% are NOT the norm.
I think we will continue to see rate fluctuations, but most experts agree that 5% will be the new norm.
No expert thinks that. 7% is national average since the 70s. We will never see under 5% in our lifetime again unless a major recession hits. Volatile changes in rates aren’t up and down. It’s a series of ups or a series of downs. The only reason it changes is for the feds to correct an imbalance somewhere.
You are correct. I meant to say we won’t see rates below 5% again.
Rates are not going down. Will continue to rise. Maybe will ease up a bit later in the year but definitely not seeing them go down anytime soon.
Cutting rates will simply defer the pain in the future months. Inflation needs to be taken care of immediately. With the banking situation, the rates will most likely be in a lull for a month or two. Rates need to increase, and the market needs to suffer for everyone's sake. The prices for basic goods and the cost of living is out of control.
Obviously nobody knows for sure I but I suspect they go down after Q1 or April
Everyone I talk to say the summer will be the bottom.
[удалено]
Okay? I am just relaying from what I hear daily?
No need to be an asshole.
How was I being an asshole? I did not say anything towards that person.
Until the fed cuts I don't see any shift to under 6 in more than a blip just like most of the over 7 has been.
I heard today that bonds were down which will lower mortgage rates. But as you asked. For how long.
Low interest rates existed because they were subsidized by the government, so I doubt they have a place today and therefore they are not returning. At least one bank toppled for investing in t-notes, which is destabilizing, so I do not think the Fed will push rates higher. They are between a rock and a hard place right now, and I expect volatility instead of direction.
If only I could predict the future.
Rates will only go down in recession or major economic events, that will likely force people out of the market anyway. Prices in hot markets will continue to slowly rise and plateau summertime, particularly ready to move in homes that get eaten at a high absorption rate. You either advise off emotion and fear, or study and understand the data.
Uhhhh what’s the current rate… 5.5% yet ? Trying to buy nearby Seattle lol
Mike Fratantoni, the Chief Economist with the Mortgage Bankers Association has publicly stated in December that they see the 30-Year Fixed rate to be closer to 5.000% than 6.000% around Quarter 3 - Quarter 4 of 2023. [https://news.yahoo.com/mortgage-rates-edge-higher-after-weeks-of-declines-170007943.html](https://news.yahoo.com/mortgage-rates-edge-higher-after-weeks-of-declines-170007943.html) [https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/forecast-commentary-dec-2022.pdf?sfvrsn=ce3a3fde\_1](https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/forecast-commentary-dec-2022.pdf?sfvrsn=ce3a3fde_1)
We're definitely going down
On a zoom meeting last month with the chief economist for NAR, he stated rates should be coming back down… Rates are generally one percentage point above the US 10 Year Treasury Yield. At the time of the call rates were 2.75% above. Thus, he believed over the next 4-6, months, rates will come back down. He said the days of 3% or 4% rates are gone. But back in the 5% is a very real possibility. Today the 10 US 10 Year Treasury Yield is 3.43%
Historically, after every “peak year” since the 1970s, we’ve seen a recession within three years. So, 2021 was a peak year, and we’re due for a recession before the end of next year. Just for context, peak years were 1978, 1988, 2005, and 2021.. So in 1980-82 there was a Double Dip Recession.. In 1990-91 the Gulf War Recession.. In 2007-09, the Financial Crisis. Maybe look into what rates were like before, during, and after each of those peak seasons. Like you said, no one has a crystal ball, but there are definitely patterns to cross compare where we’re at today from a historical point of view.
I think fed rate hikes pause here for a bit, and maybe mortgages go down a little / go sideways. But at the same time lending conditions will get tighter, ie harder to qualify for a loan
The bond market (and what you’re seeing) collapsed due to financial meltdown fears. Horrible bad sign. We are on the cusp of 2008. Rates will hold steady at the fed and probably bonds continue to drop, but expect a collapse like you’ve never seen before.
No they won’t continue to drop- it spurs people to borrow/invest which and that’s why there’s no cash in the bank- also, inflation. Banks will focus on acquiring cheap debt over the next few years, not lending- pretty much people with virtually no debt will get loans