My Loan
My Loan Officer
  • Loading...
Jason Obradovich - Chief Investment Officer

Housing Market News & Updates

Translating the complexity of the markets into a concise and easy to digest format. Watch videos, read blogs, and view key data on short and medium term trends impacting interest rates, so you can make the right decision for your situation.

Latest Market Update

Added Relief From the Federal Reserve

Alexis: Hey, everybody. Welcome back to the Mortgage Rundown. My name is Alexis Quinney, and I'm here with Jason Obradovich, CIO of New American Funding. How you’ve been doing, Jason?

Jason: Good, Alexis. How are you?

Alexis: Pretty good. Can't complain.

Jason: Great.

Alexis: So, since we last spoke, it doesn't seem like interest rates have moved very much. Is that correct?

Jason: Yeah. In fact, they haven't moved very much at all. You know, we had so much volatility going into Covid, and as all the uncertainty around Covid, you know, rates continue to drop and drop and drop. And they kind of hit a floor about 30 days ago. We'll try to put a chart up on the screen where you can see it. But things have really, really leveled off. And when you look at the Federal Reserve, they've kind of found that balancing point where they say, ‘look, this is how much we're going to want to improve mortgage rates. This is how much we're going to improve Treasury rates. And anything else that happens after that is going to be based on the impact of those rate changes or potentially anything that happens from the legislative body.’ So, whether there's stimulus, you know, we've had unemployment benefits, and other things that have come out, really, they've decided we're going to leave mortgage rates here and we're not going to move them.

Alexis: OK, got it. So, the FOMC meeting happened last week. So, is there anything that we should be concerned about? Anything that we need to pay attention to? Can you just give us a little update on what was announced then?

Jason: Yeah. You know, a lot didn't happen. You know, these meetings have become a little bit boring considering we're in the middle of a pandemic. But like I said just prior, they've kind of done everything that they're going to do. And so what they came out with last week, they said, ‘look, you know, prior we had, you know, they had told us that they're going to keep or they're going to keep rates low until the end of 2022.’ Well, they came out last week and said we're probably going to keep rates low until the end of 2023. So, they've added another year. So, we should expect to be in this rate environment for quite a long time. They really feel that the ill effects of this pandemic and what it's done to certain sectors of the economy is going to last for a really long time. And they actually are calling on Congress to do more as well, saying, ‘look, they can lower interest rates and help your mortgage rate. But that doesn't really help a lot of people who either don't own a home or they lost their business. Right? Rates do some, but they don't do everything.’ And so, they're asking Congress, you know, ‘you need to do more.’

Alexis: OK. Got it. So, without getting into politics, we do have an election coming up. So, I'm curious how that might affect rates. What are your thoughts there?

Jason: I think what the Fed did is they said, ‘look, we're going to keep rates low until the end of 2023,’ and that's really regardless of what happens in the election—

you know, depending on who controls Congress or who's in the White House. They're saying, ‘look, this is a pandemic. That's politics. We need to help the economy.’ You know, who's voted in office does have some impact. But really, the economy is what it is. They need to support it. They need to support it through their interest rate policy, keeping rates near zero for a long period of time. So, if I'm a borrower, I'm not as much concerned about where rates are from the election. You may concern yourself more with, you know, what legislation or the Supreme Court or taxes. But from an interest rate standpoint, it really doesn't matter.

Alexis: OK, well, that's good to know. Well, those are my only questions for today. Again, another great update. Thank you for taking the time, and yeah, I'll talk to you again soon.

Jason: Yeah, thanks. Appreciate it. Take care everyone. 

Previous Market Update

US Economic Reality Check

Alexis: Hey, everybody! Welcome back to the Mortgage Rundown. My name is Alexis Quinney, and I'm here with Jason Obradovich, CIO of New American Funding. So, to get started, I wanted to talk today about the stock market. So, Jason, it looks like the stock market is creeping up a bit. So, what can we expect from that? Are there going to be more increases or what's going on there?

Jason: Yes. So, the stock market is kind of an anomaly, right? We're in the middle of this global pandemic and these stock indexes, like the S&P, the Dow are hitting all-time new highs in the middle of a pandemic. And so, it's confusing, right? You're trying to understand what's happening with the economy. But I wouldn't really follow the stock market. The stock market is in the middle of this kind of redistribution. Investors are pulling money from certain stocks and putting it in other stocks. So, the tech sector is just getting a ton of money poured into it. Right? Investors don't want to put money into bonds that earn next to zero percent interest. So, they want to put their money somewhere. And you know what the soup de jour, the thing that's most popular today, is really the tech sector. So, money is just piling in there and just driving those prices, which is pushing the indices up a lot more.

Alexis: OK. It also seems like the stock market continues to reach new highs. So, does this mean that the economy is starting to get back on track? Or what does that really mean?

Jason: You know, it's a little bit of a false positive. You know, I'll try to put up on the screen what's happened with GDP, right? GDP is a function of the amount of product our country produces in any given month, quarter. And most of the indices that we follow really quarterly. So, we won't get third quarter until the end of October. But what you'll see on the screen is just, you know, we kind of hum along at a 2% growth rate. And then second quarter when COVID came and everything just came grinding to a halt. So, we don't really know what the third quarter is going to look like. Yeah, there's a lot of positivity in the stock market. That's great for investors. But what's happening for the people that aren't in stocks or the people who've had small businesses that went under, or people who've lost their jobs or people that are in forbearances. Right? There's so much dislocation going on. So, once we look at the GDP number, which unfortunately like I said is not until the end of October, we'll get a better sense of what economic activity has been like.

The other thing to look at, really, is unemployment. The unemployment rate hit record lows. It sat at record lows for a long period of time and then you had that huge spike. And so, as you can see on your screen, there is a ton of unemployment that's come. And so, what's going to happen? Does it spike up you where the unemployment rate reaches these highs and now we've come way off it? You know, what's that curve going to look like? Things have not returned to normal at all. Can you go to a restaurant and dine indoors? No, you can't. How many people are traveling on an airplane? Not very many. Can you go outside? Yes, you can, but there's a lot of limitations. So, it's not like things are back to normal. So, like I said, the stock market is not the indicator that all is well.

Alexis: OK, that makes sense. So aside from the stock market and maybe aside from unemployment, are there any other pieces of data we can look at to get a better idea of where our economic health is going to go in the future?

Jason: Really, you do want to look at GDP. Unfortunately, it is a lagging index. I know people will look at like inflation.

Inflation is a little bit dangerous, too, because the, you know, the Fed is pumping all this money into the economy. Right? You have the government pouring money in the economy with all these unemployment checks and a lot of stimulus packages and stuff. And sometimes that might actually push prices up or keep prices from going down, which is what their intention is. It doesn't necessarily mean the economy is doing well. It's just a lot of money is just getting shoved into this system in the short term. So really, what is the long-term impact? So, I think that's we have to look at the trends of GDP and unemployment. I think those will give you a better barometer of what's happening with the economy.

Alexis: OK. That all makes sense. It sounds like there's just a lot going on and time will tell what the future holds for the market.

Jason: Now, I want to make one important comment. You know, we haven't talked much about interest rates and so people had seen recently interest rates are starting to move higher and higher. And by higher, I mean, it's moved up, you know, an eighth and a percentage point in rate—not very much. Rates had come down and down and down since December and then have moved up just a hair. But a lot of that is just, you know, you can't just keep dropping down and down, down forever. Right?

We have to have a point where things start to level off and we're just at that leveling off point. And I think we'll sit at this leveling off point until we really know what's happening with the economy. If the economy starts roaring back, which, you know, I hate to say I'm a pessimist, I don't think it roars back. But as the economy starts coming back, then you might see rates gradually go up over the course of years, not days or months. But you know what? If we get third quarter GDP and it looks really bad at the end of October, then you might see rates come down more, more and we might need the Fed to step in and provide additional stimulus. So, I don't think people need to react too heavily over interest rates, making some short term moves as they have in the last month.

Alexis: All right, great. So those are the only questions I have for you today. This was a lot of great information for our viewers. So, I just want to thank you for taking the time to educate us all today. I appreciate it.

Jason: Absolutely. I enjoyed it. Thanks so much, Alexis. Hope you’re doing well.

Alexis: Yeah, you, too. I'll talk to you later.

Jason: Bye, everyone.

Alexis: Bye.

More Market Updates  

How low will your payment be?