My Loan Officer
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Jason Obradovich - Chief Investment Officer

30 Year Fixed – 4.750% / 5.039% APR   15 Year Fixed – 3.875 /4.365% APR   FHA 30 Year Fixed – 4.250% / 5.249% APR   VA 30 Year Fixed – 4.250% / 4.848% APR

Rates are current as of 9:00AM PST on 5/20/2022 | View Disclosures

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

Are Rates Finally Leveling Off?

 

Hello everyone.  Welcome back to the Mortgage Rundown.  Today we are going to talk about what’s happening with interest rates. 

Can it be true?  Have interest rates finally leveled off as we’ve seen the 10yr yield rise about 2.6% after hitting the lows in August of 2020?

We’ve seen interest rates drop decade after decade, when have we really seen rates rise this much?  Well there have been a few times in history where this has happened.  You have to go all the way back after rates hit a low in October 1998 before rising around 2.6% in January 2020.  Before that was the rise in rates from 1993 to 1994 where the 10yr went up about 2.8% in yield. 

The phenomenon we are dealing with today with this level of inflation in the modern world is very unique.  Inflation has been stubbornly low for years and for very developed nations, it’s not a surprise.  There aren’t as many untapped opportunities in a modern society vs a developing nation.

Nonetheless inflation is a huge concern if the Fed doesn’t slow the economy down and at the same time not be too aggressive where they actually cause a recession. It’s a delicate balancing act as an threat of a recession will put a lot of pressure on them to back off.

It’s very important that to keep an eye on a few things.  First and foremost is inflation; if we don’t start to see inflation come down then the Fed may have to adjust their policy and raise rates more rapidly which is going to push up mortgage rates and likely will push down stock prices.  I do believe the Fed is taking the necessary steps to fight inflation and we should see it start to come down very soon.  This should play out over the coming months.

The other important thing to watch is the unemployment rate and the economy.  If we see inflation dropping rapidly, corporate earnings dropping rapidly or the unemployment rate move higher quickly, then we could actually see the Fed back off the projected increases to the benchmark rate, which in turn will bring mortgage rates down some.  The timing on this could very well be later this year or even next year, it really depends on the impact of the moves they have already made.

 

That’s it everyone from the capital markets desk this week. Thank you all for watching and have a great day.

Previous Market Update

Don't Fight The Fed Part 2

Jason: Hello, everyone. Welcome back to the Mortgage Rundown. Today we're going to talk about what's happening with interest rates. Since our last update, we've seen interest rates continue to rise and they've been rising very steadily since September of last year.

The question I get asked most often is when is this going to stop? The problem we are dealing with today is that the Federal Reserve didn't take the necessary steps last year to combat inflation, and now they are playing catch up as inflation hits 40-year highs. So, what the Fed needs to do after under correcting for at least a good solid year, they now need to overcorrect to slow price inflation down.

The other problem is if the supply chain is disrupted and the labor market is full, so a few rate moves by the Fed isn't likely going to do very much to slow inflation down. They will need to make some pretty drastic steps over a longer period of time to get prices under control. That means interest rates are likely to remain elevated for some time. That's the bad news.

The good news potentially is that the market has already priced this in and the rates you see today reflect a lot of future Fed moves. The market is expecting the Fed to raise 50 bips at the next meeting next week, another 50 bips in June, another 50 bips in July. And then it starts to level off somewhat, but still increase in September, November, and December.

So, what will happen to mortgage rates for the rest of 2022? Our best guess is that they will be somewhat around the levels we see today, but still very possibly that they go up a tad from here.

Rates in the 5% range are the new normal in today's market. And until we see the supply chain catch up with demand and excess in the labor market, we won't see rates move back down.

That's it everyone from the capital markets desk this week. Thank you all for watching and have a great day.

 

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