Bridge & Branch Wealth Partners’ Post

Interesting to read a story criticizing the 30-year fixed rate American mortgage without any commentary on the role played by Fed policy that had interested rates too low for too long, tax policy that further subsidizes interest on mortgages, and then reckless and inflationary fiscal policy that caused the Fed to have to raise rates at the fastest pace in history. There are many reasons our system has created inequities but the 30 year-fixed rate mortgage was originally intended to reduce them — viz., by making home ownership more affordable. If it no longer works, then it is more likely a story of broken money.

Lot of information in this recent article in Housing Wire. To summarize, if we enter another recession, real estate will not play as major a part as in 2008 because mortgages aren’t being handed out to anyone who can fog a mirror. A #recession in the near future would be based on larger economic factors (particularly economic and job losses), rather than driven by housing market crash because most mortgaged homeowners are in a much better credit position this time around. A number of good points are made, but my take is that it is both more complicated and simpler than that; the simpler part being that no matter how good your credit is, if you lose your job, you are going to have trouble paying your mortgage. And as we are seeing elsewhere, and is quite clear on the graphs in this article, delinquencies and negative credit events are on the rise. #REO #FORECLOSURE #bankingindustry #realestateadvice #realestatemarketing #realestateexpert #reolistings #reoagent #NRBA https://lnkd.in/eZnpiV8u

Imagine this: nearly $1 trillion flowing into the U.S. economy and not a penny added to the national deficit. Sounds too good to be true? Well, Freddie Mac is making moves that might just bring this scenario to life. They're diving into the secondary mortgage market, aiming to unlock a staggering $2 trillion for consumers by tapping into home equity loans. 🏠💰 Here's what's happening: Despite homeowners holding over $32 trillion in equity, only a sliver has been accessed through home equity loans. Post-financial crisis, banks tightened their belts on these loans, but Freddie's plan could bring back much-needed liquidity to this area. The strategy? Freddie will offer second mortgages only to folks who already have their first mortgage with them, keeping things safe with a loan-to-value ratio under 80%. This conservative approach could free up about $980 billion in homeowner equity. 📈 If Freddie’s siblings, Fannie Mae and Ginnie Mae, get on board... we’re looking at a secondary home equity loan market that could balloon over $3 trillion. This isn’t just good news for homeowners; it’s a potential boon for the economy and - guess what - our industry too. More cash in people's pockets means more spending on big items like furniture & appliances. More goods need moving, and that means busier times ahead for us. This could lead to a surge in demand for deliveries, especially to residential areas, and we might need to tweak our strategies to keep up with the flow. Read more here: https://lnkd.in/eAQtt5ve #freddiemac #economicboost #logistics #supplychainmanagement #homeequity #transportationsector

Lot of information in this recent article in Housing Wire. To summarize, if we enter another recession, real estate will not play as major a part as in 2008 because mortgages aren’t being handed out to anyone who can fog a mirror. A #recession in the near future would be based on larger economic factors (particularly economic and job losses), rather than driven by housing market crash because most mortgaged homeowners are in a much better credit position this time around. A number of good points are made, but my take is that it is both more complicated and simpler than that; the simpler part being that no matter how good your credit is, if you lose your job, you are going to have trouble paying your mortgage. And as we are seeing elsewhere, and is quite clear on the graphs in this article, delinquencies and negative credit events are on the rise. #REO #FORECLOSURE #bankingindustry #realestateadvice #realestatemarketing #realestateexpert #reolistings #reoagent #NRBA https://lnkd.in/eA93cE3d

𝗡𝗮𝘃𝗶𝗴𝗮𝘁𝗶𝗻𝗴 𝘁𝗵𝗲 𝗡𝗲𝘄 𝗡𝗼𝗿𝗺: 𝗙𝗮𝗻𝗻𝗶𝗲 𝗠𝗮𝗲'𝘀 𝗗𝗼𝘂𝗴 𝗗𝘂𝗻𝗰𝗮𝗻 𝗼𝗻 𝗥𝗶𝘀𝗶𝗻𝗴 𝗥𝗮𝘁𝗲𝘀 𝗮𝗻𝗱 𝗠𝗮𝗿𝗸𝗲𝘁 𝗩𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆 In his recent interview with Flavia Furlan Nunes from HousingWire, Doug Duncan, chief economist at Fannie Mae, provided some critical insights into the current state and future outlook of the mortgage market. 𝗞𝗲𝘆 𝗣𝗼𝗶𝗻𝘁𝘀: 𝟭. 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗥𝗮𝘁𝗲 𝗘𝘅𝗽𝗲𝗰𝘁𝗮𝘁𝗶𝗼𝗻𝘀: • Duncan anticipates the Federal Reserve will implement two rate cuts this year, in September and December. He estimates mortgage rates to end 2024 at around 7% and drop to about 6.5% by the end of 2025. 𝟮. 𝗠𝗮𝗿𝗸𝗲𝘁 𝗩𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆: • According to Duncan, we should brace for more volatility, partly due to the Fed’s overcommunication and the sensitivity of Treasury investors to fiscal policies. This volatility could impact the secondary mortgage market significantly. 𝟯. 𝗛𝗼𝘂𝘀𝗶𝗻𝗴 𝗦𝗮𝗹𝗲𝘀 𝗮𝗻𝗱 𝗔𝗳𝗳𝗼𝗿𝗱𝗮𝗯𝗶𝗹𝗶𝘁𝘆: • Despite the high interest rates, Duncan expects home sales to increase by about 3% this year, reflecting some income recovery and the stabilizing effect of slow-growing house prices. • He emphasized that affordability is influenced by three main variables: interest rates, household incomes, and house prices. A balanced interplay of these factors will dictate market dynamics. 𝟰. 𝗜𝗻𝗻𝗼𝘃𝗮𝘁𝗶𝘃𝗲 𝗦𝗼𝗹𝘂𝘁𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝘆 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀: • Some mortgage companies are going "dormant," maintaining their infrastructure but furloughing employees to weather the market downturn. Others are exploring new products like zero down payment programs to tackle affordability issues. • Fannie Mae is also exploring the potential for single-family, closed-end second mortgages, pending approval from the Federal Housing Finance Agency (FHFA). 𝟱. 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗥𝗲𝗮𝗹𝗶𝘁𝘆: • Duncan highlighted the improbability of seeing 3% mortgage rates again unless there is a catastrophic economic event. He underscored the new norm of a higher interest rate regime, driven by the need to fund substantial national debt. Despite these challenges, Duncan’s insights suggest a strategic approach to navigating the current market. By staying informed and adapting to the evolving landscape, mortgage professionals can better advise their clients. The anticipated rate cuts later this year could provide some relief, and understanding the broader economic context will be crucial in managing expectations and strategies. For a detailed analysis, read the full interview on HousingWire here: https://lnkd.in/gXjSaPRz

To Push or Not to Push (continued) Higher Rates continue to overwhelm the Housing Market The housing market may be characterized as No supply/No demand (hat, no cattle). Existing home sales continue to decline as homeowners with mortgages hold on to decades low mortgage rates. A damp rag has been thrown on demand, as current rates continue at decades highs and price appreciation make buying a house unobtainable for many. On a positive note, construction spending and new home sales remain elevated, rays of sunshine, in an otherwise dreary housing narrative. The Fed’s higher rates agenda has put banks in an uncomfortable position. Portfolio lending has left the building, taking a large piece of mortgage originations with it. Yields on jumbo Loans have returned to historic spreads (jumbo rates higher than agency rates). The shoreline is desolate as lenders trying to hook well-heeled individuals for loans have run out of bait. Controlling expenses, compensation recalibration, margin management, percentage of direct/indirect originations, accelerated computing and leakage prevention (leakage = losing a few basis points across all mortgage disciplines due to loss of focus resulting in hundreds of thousands of dollars in extra expense spending) are key pieces to a successful playbook. Everyone has the playbook. Knowing when to push, breathe and not push will determine who delivers a healthy mortgage originations baby, on time without complications.

How Inflation Affects Mortgage Rates When you read about the housing market in the news, you might see something about a recent decision made by the Federal Reserve (the Fed). But how does this decision affect you and your plans to buy a home? Here's what you need to know. The Fed is trying hard to reduce inflation. And even though there’s been 12 straight months where inflation has cooled, the most recent data shows it’s still higher than the Fed’s target of 2%. While you may have been hoping the Fed would stop their hikes since they’re making progress on their goal of bringing down inflation, they don’t want to stop too soon, and risk inflation climbing back up as a result. Because of this, the Fed decided to increase the Federal Funds Rate again last week. As Jerome Powell, Chairman of the Fed, says: “We remain committed to bringing inflation back to our 2 percent goal and to keeping longer-term inflation expectations well anchored.” Even though a Federal Fund Rate hike by the Fed doesn’t directly dictate what happens with mortgage rates, it does have an impact. As a recent article from Fortune says: “The federal funds rate is an interest rate that banks charge other banks when they lend one another money . . . When inflation is running high, the Fed will increase rates to increase the cost of borrowing and slow down the economy. When it’s too low, they’ll lower rates to stimulate the economy and get things moving again.” How All of This Affects You In the simplest sense, when inflation is high, mortgage rates are also high. But, if the Fed succeeds in bringing down inflation, it could ultimately lead to lower mortgage rates, making it more affordable for you to buy a home. McBride says this about the future of mortgage rates: “With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, particularly if the economy and labor market slow noticeably.” Bottom Line What happens to mortgage rates depends on inflation. If inflation cools down, mortgage rates should go down too. Let's talk so you can get expert advice on housing market changes and what they mean for you.

How Inflation Affects Mortgage Rates When you read about the housing market in the news, you might see something about a recent decision made by the Federal Reserve (the Fed). But how does this decision affect you and your plans to buy a home? Here's what you need to know. The Fed is trying hard to reduce inflation. And even though there’s been 12 straight months where inflation has cooled, the most recent data shows it’s still higher than the Fed’s target of 2%. While you may have been hoping the Fed would stop their hikes since they’re making progress on their goal of bringing down inflation, they don’t want to stop too soon, and risk inflation climbing back up as a result. Because of this, the Fed decided to increase the Federal Funds Rate again last week. As Jerome Powell, Chairman of the Fed, says: “We remain committed to bringing inflation back to our 2 percent goal and to keeping longer-term inflation expectations well anchored.” Even though a Federal Fund Rate hike by the Fed doesn’t directly dictate what happens with mortgage rates, it does have an impact. As a recent article from Fortune says: “The federal funds rate is an interest rate that banks charge other banks when they lend one another money . . . When inflation is running high, the Fed will increase rates to increase the cost of borrowing and slow down the economy. When it’s too low, they’ll lower rates to stimulate the economy and get things moving again.” How All of This Affects You In the simplest sense, when inflation is high, mortgage rates are also high. But, if the Fed succeeds in bringing down inflation, it could ultimately lead to lower mortgage rates, making it more affordable for you to buy a home. McBride says this about the future of mortgage rates: “With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, particularly if the economy and labor market slow noticeably.” Bottom Line What happens to mortgage rates depends on inflation. If inflation cools down, mortgage rates should go down too. Let's talk so you can get expert advice on housing market changes and what they mean for you.

Why Mortgage Rates Could Continue To Decline 📈🔽 When you read about the housing market, you’ll probably come across some information about inflation or recent decisions made by the Federal Reserve (the Fed). But how do those two things impact you and your homebuying plans? Here's what you need to know. The Federal Funds Rate Hikes Have Stalled One of the Fed’s primary goals is to lower inflation. In order to do that, they started raising the Federal Funds Rate to slow down the economy. Even though this doesn’t directly dictate what happens with mortgage rates, it does have an impact. Recently inflation has started to cool, a signal those increases worked and are bringing inflation back down. As a result, the Fed’s hikes have gotten smaller and less frequent. In fact, there haven’t been any increases since July. This indicates the Fed thinks the economy and inflation are improving. Why does that matter to you and your plans to buy a home? It could end up leading to lower mortgage rates and improved affordability. Mortgage Rates Are Coming Down Mortgage rates are influenced by a wide variety of factors, and inflation and the Fed’s actions (or as has been the case recently, inaction) play a big role. Now that the Fed has paused the increases, it looks more likely mortgage rates will continue their downward trend. That would improve affordability for buyers and make it easier for sellers to move since they won’t feel as locked-in to their current, low mortgage rate. The Fed’s decisions have an indirect impact on mortgage rates. By not raising the Federal Funds Rate, mortgage rates are likely to continue declining. Feel free to call us so you have expert advice about changes in the housing market and how they affect you 🤝🤗. #KathieLeaTeam #TampaBayRealEstate #PinellasCountyRealEstate #realestate #homeownership #homebuying #realestategoals #realestatetips #realestatelife #realestatenews #realestateagent #realestateexpert #realestateagency #realestateadvice #realestateblog #realestatemarket #realestateexperts #realestateagents #instarealestate #instarealtor #realestatetipsoftheday #realestatetipsandadvice #keepingcurrentmatters

🏡 Wondering what major factors affect mortgage rates? Here are a couple key points to consider: 1️⃣ Economic Conditions: Mortgage rates are influenced by the overall state of the economy, including inflation, unemployment, and GDP. 2️⃣ Federal Reserve Policy: The Federal Reserve's decisions on interest rates can have a direct impact on mortgage rates. Understanding these factors can help you navigate mortgage rate changes as you prepare to buy or sell a home. If you have any questions or need guidance, feel free to reach out! 📈🏠 #MortgageRates #RealEstate #HomeLoans #KeyTeamSold #CompassNewEngland www.keyteamsold.com