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 5/18/2022 | 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

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.

 

Previous Market Update

Don't Fight The Fed

Hello everyone.  Welcome back to the Mortgage Rundown.  Today we are going to talk about what’s happening in the capital markets.

It should be no surprise that interest rates continue to climb.  The FOMC came out last week and raised their benchmark rate up one-quarter of one percent.  This was widely expected but the big item on the agenda was their forecasts for interest rates for the end of 2022 and 2023.  They raised their forecast for 2022 with an expected seven increases to rates by the end of year.  And oh, by the way, including the March meeting, there are seven meetings left in 2022, which means they are expecting to raise rates at every meeting effectively.

Now if that wasn’t hawkish enough, Jerome Powell came out this week and said the committee would consider raising rates up to 50bps in the next meeting on May 4th to combat inflation.  This has sent interest rates up even higher and if you look at the graph on your screen, you can see that rates have been climbing very quickly in March after rising pretty rapidly in December, January, and February.

The Federal Reserve has shifted very quickly from a long stance of transitory inflation to ringing the inflation alarm bell. 

With rates rising so quickly and inflation so prevalent, one of the things we will want to keep an eye on is the yield curve.  The spread between the 2yr and 10yr Treasury is generally a good inflation indicator if that spread goes negative for a period of time.  The 2’s 10’s spread has tightened a ton over that last year and is moving pretty close to zero.

The Fed raising interest rates so much so quickly will cause a lot of chatter about the possibility of a recession.  But as of right now, the Fed has to worry about inflation and hopefully if inflation starts to return to normal, they will be quick to adjust and take their foot off the brakes on the economy.

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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