National Debt affecting Mortgage Rates?

Welcome, Pat. Happy Thursday. Last week at this time, we were all gorging on food. Yeah, exactly. So like, there was like, we'll never see food again. Yeah. And, uh, it's kind of funny going back and looking at the numbers, you know, I knew it was going to be slow. Um, but I, you know, I was way off. We're running about 2,200 to about 2,400 contracts every seven days. So I said, we'll probably come in at, uh, um, you know, 1,800. And you look down there, I mean, 2,200, we came in with a low of 1,891. And, uh, so it, I mean, you know, look, nobody bought a house Thanksgiving week and certainly nobody listed one. So I expect listings to continue to climb until the first of the year. And then I think they're going to climb even more unless there's some kind of catalyst that makes sales take off. Yep. I don't see it. I don't, I don't really see it either. I mean, um, I was talking to another loan officer right next to me in the office next to me. And he's like, I, I expect more of the same going into this next year. I mean, I think people are kind of waiting for some catalyst, this golden key that, uh, affordability is going to come back in a couple of months. And, you know, unfortunately we've been delivering the same news kind of at, you know, Odnasium, Odnosium, yeah. I mean, it, it's been like, we kind of said beginning of this flat this year, we said it was probably gonna be a whole home market. We were kind of talking about, it's just going to be whole home. It has been, uh, I want to talk about why rates haven't gone down. Cause here's what's called Jerry and see what happened. Wait, let's see what he may answer your calls, but he does. So you can see we were flat, right? Done that, uh, gee, housing took off wonder why. And then they started tightening the long anticipated four to six rate cuts were supposed to happen in this period right here, we got 2.5 0.25. So they edged them back down and which we said last year, that was going to happen, but no more than two rate cuts. Yeah. And also, you know, the industry wide shouting from the rooftop saying we're going to be at 5.5% and all the buyers are going to come out. Well, here's what happened to mortgage rates. So they went down a little bit, back up, down, back up, get a little closer view here. You know, they certainly aren't reflecting the 0.5 0 and the 0.25 reduction. So question that I had and that, uh, finding is how's the national debt effect housing. I'm going to show that wonderful us debt chart a moment, but this says here when the U S government spends more than it takes in through tax revenues, the treasury borrows money from investors to make up the gap by issuing securities, notes, bonds, bills in closed and open markets, while many factors influence interest rates, rising debt could push up rates, investor demand on us investment products, effectively raising the yield. On treasury security. So they want a better return and here's the 10 year, which is blue. And here's the 30 year rate for mortgages. So there's always a gap between the two. So they're going to invest in 10 year treasuries. They'll get four and a half percent. And if they're going to invest in mortgage backed securities that carry some risks, they're going to want to hire, want to hire a return. And that's, that's, what's killing us. Right. Yep. So, you know, I mean, here it is. There's our interest on the debt 1 trillion. And it's now bigger than national defense, which is 950 billion. And you can see that our total debt is $36 trillion. That's with a, with a T. Now you can go through all these other numbers here and it'll drive you nuts, but you've got ADHD. It's a good chart to look at. Yeah. It's pretty bad, but it, what it does, it underscores the thing that says, well, if debt is really keeping rates from coming down, we're not going to see any significant movement unless one of two things happen. One, there's real, real progress towards paying down the national debt. It doesn't have to mean that, you know, by mid 2025, we're seeing improvements, but there has to be some movement to give the investors, well, they're going to trade off the expectation to, you know, if they see a sizable, you know, reduction or some progress coming, going to that, I think you're going to see because the market always prices out, you know, four or five, six, seven months out, you know, in the future. So you're going to see, I think rates, maybe that will help decouple rates and loosen them up a little bit. Like, Hey, there is progress in paying, you know, getting this debt under control. Well, we're looking here. Yeah, I agree with you. I'm looking here at Fannie Mae. This is their forecast. Now we take forecasts with a grain of salt. I don't have in front of me what they forecasted for this year, but I think it was about 6.3. Yeah. I like, I like, I personally like forecast. Cause you know, they're going to probably be wrong. Yeah. They're fun to look at. They're not showing and I'll use my handy dandy magnifying glass. They're not showing any reductions 2025. There it is. Yeah. And then you go, okay, well, it'll be next year. Well, they're saying, well, yeah, maybe six to 6.1. So that trend and be, be careful of the Mary, the house date, the rate people out there saying, you know, as soon as we get to the mid fives, the market's going to explode. You know, Fannie Mae doesn't think so. And I don't know. And, you know, and this is where we're at today, 6.84 and you're seeing the same, same thing that, you know, we're stuck in this rut, right? Yeah. I mean, we've been, you know, this is, this is where we started the year. Basically the five and a half percent, five and a half percent coupon wasn't safe, you know, beginning of year was closed. Uh, let's see, a hundred, a hundred, a hundred point one, one, you take this, uh, cursor across the board. I mean, we're pretty much at the same level now. I mean, we've had some fits and starts, obviously rates went up in April, April. And then we saw somewhat of a softening from April through May, June, July, August, and then September, we got hit obviously with rates, uh, you know, after the feds cut the rate and we saw rates go back, these are counter counterintuitive, obviously with the, uh, these are prices versus rates, but you know, we saw rates go up again, so now we've been, but we've been, you know, for the most part, this whole year, you know, you, if you take this top, you take this bottom, we've been kind of stuck in this channel right here all year is kind of the channel. And, um, you know, we've seen that with the high end rates, you know, low, you know, seven and a quarter, seven and three eighths now today, uh, I mean, you got just to pull up my $475,000 purchase, 5% down, um, seven 80 credit score. You've got the best lender private provident or a paper lender. I mean, a couple of weeks ago, we were sitting at a, what about seven, seven and an eighth, right. And, uh, they've softened up to around the six and six and five, a six and a half range, give or take, this is 5% down seven 80, you know, everything is dependent on your, your individual situation, but they have loosened up a little bit more. And, um, I don't, you know, I really, like I said, I was talking to another loan officer and hearing on the street, talking to some other people and reading. And I just think that it's going to be just more, I don't more of the same. I don't see anything that's going to drastically, you know, if we do see rates, I think we are stuck in this channel. I think we do see them float down. We might see them float down to the low six range, maybe get into the high fives eventually, you know, middle of next year, but, um, I just don't see anything on the horizon that is going to be just, you know, just rip everybody's cover off the ball and say, Hey, I'm going to buy a house. Just give me more of the same. Next week, next Thursday, we're having the whole team on again, and I'm calling it my 2025 projections. Now I don't like to project out the year, so I will project the first quarter. I've got some very firm thoughts on how I think Q1, 2025 is going to lay out and I'll lay it out and say, here's why I think this, but, uh, I encourage people in the comment section, tell me a couple of things. One, we're, we're sitting here at 21,000 homes on the market. Tell me where you think we're going to be March 1st, as far as active inventory. And tell me where you think rates will be. And, and three, I know I said two. Will we have any more appreciation in house prices? Cause now annually we're at 4%. Um, so where do you think Q1 will come in and, uh, let me know in the comment section and we're going to drill down, um, next week, I'm going to ask everybody individually to weigh in and say, where do you think you are now? We're, we're not any smarter, but I don't think we're any dumber than these other people that are forecasting. Cause one of the other emails I got is showing what Zillow said. There's a realtor.com and there's one group out there that says that home prices are going to go up 11 and a half percent next year. I saw that. I think I saw that on the news. I think it was, uh, I don't know if it was realtor.com. I mean, there's some, it wasn't them. Okay. Well, some group that was saying they're going to, they see house prices go up 11, 12%. Um, that to me just seems like a self-fulfilling advertisement. Like, Hey, you got to get in now. Yeah, that, that one, that one didn't pass the smell test with me. I mean, here's, here's one that I got that said Fannie core logic said house prices are going to go up 2.3%. Um, they were way off two years ago. I mean, they, they forecasted we would be down 1.6 and I think we were up eight. I mean, they were way out there. Fannie Mae three, six Goldman Sachs, a housing wire, three, five. Uh, NAR 1.8 Zillow 2.8. Now they'll revise them a million times as we get towards the end of the year, like they did this year. But, but this is what, what they're saying. And so you ended up saying, well, what, why, if we're starting to see some pricing pressure right now, um, as far as supply and demand, why isn't it showing up and, uh, cause we've got, and this is one of the reasons right here is that. You know, we're, our inventory is going to go down now, as we get towards the end of the year. There's just nothing going on out there. It's, you know, Thanksgiving week, Christmas. I track this seven day moving average, as you know, with the ticker down below and, and it measures the gap too, just like, um, the Crawford market index does, you know, the gap between sales and contracts and it, it inverted. Thanksgiving week, I thought they'd both go down equally, but new contracts went above new listings by a wide margin. You can see down below there, like 800 and some odd homes. Um, and when that happens, um, there's not a whole lot of pricing pressure. So I don't know. Um, it's really hard to watch what's going on between now and the end of the year and pick out a trend. Yeah. Cause it's, there's really, it's just kind of there. It's just floating in Christmas. You've got, it's just very hard, very hard, very hard. Well, and keep in mind the number of people that are not going to list a home or buy a home next week, because next week is my birthday. People will just stop. And, uh, um, and if any of you out there know any, um, fountain of youth beverages, um, bring them here. Yeah. It's called Jack and Coke. Okay. I've tried that. It that's, uh, got the worst effect. Here's what experts say again, as long as we're on the topic, will home prices crash 2020? Oh my God. I'm so tired of these. Who is this market watch? Um, uh, Trump campaigned on promises to lower housing costs. I'm tired of that too. Yeah. Here's what real estate economists say. Home prices will go. Okay. Um, you know, um, frustrated home shoppers might be wishing for the housing market to crash so they can foot in the door. Yeah. Um, but a housing crash is highly unlikely and home prices are only expected to go up further from the record highs they hit this year. Experts told market watch. Now you got to take the word experts with a grain of salt. Yeah. They just kept calling to somebody answered the phone mind. If we quote you, um, you know, they, they brought in some people, bright home L S MLS it's, this is basically a recap of the same chart that I showed you, uh, NAR. Um, but, and I, there aren't going to be any policies coming forth that are going to affect home prices. I don't believe in the next, in the next year, most inventory and demand are solved on the local level through zoning and building requirements. It's not Washington DC. Now, if they decide to really get out of the way, um, maybe we'll get some relief that trickles down to the local level, but I don't see, you know, a new president saying build here. Yeah. No, I mean, um, well, I think, you know, there was an article that came up, Paul, Paul had quoted in, you know, the other day, I can't remember what I was on, pulled it up, but it basically, I think I talked to you about earlier today, but saying policy, there's not much they can really do on the housing side for the most part. He said, it's all supply. And, um, you know, the demand will increase. We've seen it the last couple of years where demand does increase when we get lower rates, you know, if we got rates in the mid fives, you know, I think you will see demand pop out of the woodwork. You know, the predictions of housing. It's amazing to a psychology, the predictions and housing. Now, if you said, what would, what would it be like if, you know, the psychology would be if like, oh, prices are going to go up 15, 20% next year. Or, or on the other side, if you saw an article, prices go down 10 or 15%. I mean, it's, I mean, to me, housing going up one or two or 3% doesn't get anybody excited, but yet that's still from a buyer perspective, that's, that's okay. I'm okay with that. You want to be buying in that market or do you want to be buying in 2021 when prices were going up 15, 20%. That's it's still that herd mentality that people have, uh, in terms of stocks and housing. Well, you're chasing that 2% inflation rate. And, and it has always bothered me that, that the only tool that they claim they have is to slow down the economy. And I just wish they would embrace. Let me jump in quick. Yeah, go ahead. Um, I have heard federal reserve. Uh, I think that Mary Daly or, uh, daily from San Francisco, I've heard a couple of X, you know, the fed reserve, a couple of them and a couple of pundits on Fox business news, they said the real, the target rate, they quietly have raised it. She said, I think she was saying right around, they'll be happy around 3%. I've been waiting for that. I mean, did you notice, I've noticed some of these guys on Fox in business market. And like I said, she was interviewed. She goes, well, you know, we'll be happy if the real rate it's around 3%. It's gone from two quietly up to around two and a half to three. I noticed them kind of a couple of people being interviewed saying they're going to be okay with that. And that's what we've been saying. I've been saying that for the last two years is that, you know, we were talking about how this 2% target really is fictional. And, uh, I just, I've noticed that in some of the conversations though, they're saying, well, we'll be happy two and a half to three. They're not, they're kind of cutting out the 2% level. It seems like real quality. How much do you want to break to get that extra 1% down? Yeah. And we're, and nobody, nobody's going to, as I, or you often heard me say, nobody's gonna ring a bell at the bottom. Say, okay, we're at 2%. We got such, there is such a big number. There's so many components that go into that number. It's mind boggling, you know? I think they're just, they're guessing just like you and I, you know, for the most part, I mean, I mean, that's why I just, I've been around in the finance markets for 36 years, I was a stockbroker and I, I've seen so many experts that are just fricking long, you know, it's just like you said, I don't have, I have just as much confidence saying what you and I are saying versus some of these guys, yeah, you're there, they probably are a little bit more eloquent in how they're present, presenting the information versus you and I just sitting here on a, you know, three o'clock afternoon, a TV show or computer show. But it's amazing how wrong they are, but I've noticed how they have really shifted their dialogue from two to two and a half to three, very quietly. I've heard a couple of people say that, so it's going to be interesting to see. But I, I think once the feds get, you know, if they can get things calmed, I think there's just to me, just to kind of keep rattling on here for just a bit. Chatty Kathy is that I think people are just sitting in with the holidays. I think there's people that are sitting there in the wood, you know, in the background, you know, for lack of better term is just, they're kind of waiting to see how this Trump stuff kind of gets shakes out, you know, I, yeah, yeah. Well, look at this listing success rate over the holidays. I mean, if you want a chart that shows you that people sat on the hands, there they go, like I'm, I'm out and you get the election, you get the holidays, you get mixed those together, and then you're going to have Trump, who's obviously going to be mixing things up. I think there's probably a handful of people are just waiting, you know, to see kind of what happens, you know? I, and it's, you know, I'm re and you can read everything. Inflation is going to come running back because of the new president or inflation is asking to come down because of more productivity. You know, it's like the article I read last week said that mortgage applications are up 12.3%. And then you real read farther down the line. Then they go, of course, these numbers are comparing to last year. And we had Thanksgiving week. I'm like, really? Yeah. Red fin, red fin. You're supposed to be smarter than that. Yeah. You should have started with that. This looks like an artificial bump because it's compared to a holiday week, but they didn't. They came out with a headline that said mortgage applications are up 12.5 because rates went down and people came off the sidelines, not a chance did not happen. And, you know, and you, you look at, um, you know, I'm surprised if they were comparing it that way to Thanksgiving week, that we weren't up 35%, but it's, that's why whenever I see headlines, I just, I scroll all, I read the whole thing and I get down to the last paragraph where they finally go, yeah, well, it could mean this, like, really? Yeah. So, so I think, I think, um, I'm not hearing, uh, there's, there's talk of some banking deregulation that could help the industry. I know there's some agencies you and I would like to see go away. Like the CFPB. Yeah. Um, they're self funding, aren't they? I believe they are. Yeah. They're the, I believe they are. They make their money on people that they find. Yeah, correct. Yeah. And for, for me, so let's say that I wanted to have some flyers to promote a house, a listing, and I have you make my flyers. Okay. And I put you on the flyer about this much. And then the rest of it's all me in the house. Well, proportionally, we have the cost of that flyer, right? Yep. Well, if it's determined that you made the flyers for me and you took on all the costs and I didn't pay you anything, they can find me 10 grand and the thing that made most realtors mad and title agencies and lenders is you, you have no recourse. You don't even get to go into arbitration. You have no opportunity to dispute and go, actually, here's my receipt. They just find you 10 grand. And they only had two offices, one in Washington, DC and one in Phoenix. I haven't heard of anybody that got dinged by it, but the threat was there. And so it was like, I'm not having anybody make flyers for me. I'm paying the whole kit and caboodle. Yeah. So it's, there's a lot of probably overlap, a lot of rule overlap. You know, it seems like every time the government got their hands involved in the mortgage business, you know, there's some regulations being good, Dodd-Frank, I mean, you know, regulating more of the mortgage brokers and bankers. But yeah, there was some nonsense. I mean, in terms of the appraisers, you know, the third party, I think there's some nonsense. They could tighten up the mortgage business to make it a little bit more efficient, you know, the three day waiting period for this closing disclosure. When you, you know, you get the loan estimate out initially, then you have, you know, people do see numbers, but they have a three day waiting period. After you've seen numbers, you know, the loan estimate, get this closing disclosure and to have a three day waiting period is still, I know I have seen it so many times in the last several years where, and you've, you've felt it. Every realtor, every agent that's maybe watching this has felt the CD waiting period, the three day waiting period where the CD goes out on Thursday. You know, you, you've got a closing, but you got to wait, you know, they're supposed to be moving in Friday, but the lender is something long, short term, obviously comes up last minute. They get the CD out, but you're going to wait another three days. You got a moving truck sitting there. It'd be nice if you do have some chances to waive that three day waiting period, but it's like an act of God to get that done. So they should be it's an expensive delay too, because like you said, you know, I'm trying to never have closings on a Friday. I like on Thursday, cause if there's a little hiccup, you know, at least you don't have to wait until Monday. So I encourage people don't, don't sign up for Friday closings or month end, you know, month end closing. It'd be nice to, you know, maybe the third week of a month or the second week of the month, but there's so many times that I have heard and seen just, you know, through Facebook posts from mortgage people, the CD has got to go the three day waiting period. Be nice. If they could cut that down, maybe to a day, say, okay, you've got one day, you know, once you've seen the numbers or, or you can automatically have a third party, like the title say, you know, have them verify the fact that the client wants to basically eliminate that three day waiting period say, yes, I verify that he has does well, you know, rather than having them, the client say, Hey, I want to, you know, cause you could probably, anybody could probably make that up, but just have, you should be able to have a signature out there that says I saw that I approved it. Let's go. Yeah. But it, it, it, it's just my little skeptical part says I'm tired of the government pretending we're all stupid. Exactly. And that's where that, that alone, I guarantee you in the mortgage business business, you ask any mortgage person and real estate agent for that fact that three day waiting period has kicked them in the butt sometime or another in the last couple of years. And, um, it's just one of those little things you can tighten up, um, as far as being efficient. We saw the numbers, Jim and Mary Smith are ready to go and sign our docs. So we don't have to wait three days. That's just, it just gets under my skin when I, you know, I know it's part of the rules it's embedded in the CFPB and the, you know, the mortgage industry, but if they could change that, that I think that would certainly help a number of people. There's a lot that they could streamline in the processes without going in and loosening up lending requirements, which would be a recipe for disaster. But, but there's a lot that they could do to really smooth things up. And a lot of people are trying that. And, and Jason here, he's saying, I agree, make three day optional. The client wishes to have three days run by family. Sure. They can give them, give us options. You're right on the money. You know, say, look, I can, I, I learned how to read a long time ago and I can probably read that closing document in five minutes or I may want to take it to an attorney, but you've already seen the document twice before that anyway, right? Yeah. You see the loan estimate, the loan estimate, just an estimate. You know, when I do a loan estimate, I typically, you know, the mortgage person will overestimate fees. Cause you don't want to underestimate fees. Last thing you want to do is, you know, underestimate say, and that's sometimes the games that people do play. Not, not everybody, but you know, they'll say, oh, your, your, um, your title, your closing costs are only $2,500. But when, in essence, they're about 4,500 or $5,000, you know, I'd rather overestimate if the closing costs give me 5,000, I'll tell them 6,000 just to be safe, but, um, you know, it's things like that that could tighten up drastically. And you got to understand the state laws when you're moving to, I know when I moved to New York state, fortunately, my vice president gave me a head up and said, Hey, before you go to the closing table, you have to understand that your taxes have to be paid up front. And I'm like, and at the time my taxes were, and this was 1990 or I think they were 4,500 on the house. The house was 162, no, $129,000. And my taxes were 4,500. Well, I had to have that up front. Yeah. And, you know, you don't, when you're moving and you're on a tight, you know, fine, you're trying to squeeze every dime together because, you know, there's just a lot of expenses that come up. You, you don't want to get surprised at the closing table. And yet at that time, thank you, Renee, there, there wasn't anything out there giving us that heads up officially outside of my VP going, Hey, Rick heads up. Well, the government, the government did a good thing by basically tightening up the, you know, the regulations. Cause there's a lot of back in the day and, you know, 2003 to 2004. Um, what they were trying to do is get rid of somebody tacking on an extra point or two points on feet and origination fee at the end, which I get it. I totally get that. That, but that's gone. Those days are gone. So let's lose, you tighten up the regulations. Let's pull them back a little bit to make it a little bit more. You know, you know, flexible. I know we're getting out. Also the three day was on there because they were pushing this narrative. People goes, I didn't know I had an adjustable rate loan. Well, yeah, you did. You signed several documents that said you did now. So now they're saying, well, you need three days to go over that. I don't need three days to read a document that says on June 1st, 2027, your payment's going to go from 2000 a month to 3000 a month at the current rate. I don't need three days. So it really just has to be a sign off process to Jason's point. They should be able to choose. I don't understand this. I don't get it. Can I have three days? So have a third party, you know, if you want to document where, you know, it's not the client, but have the third party escrow, you know, have them, maybe have us get escrow involved and say, okay, I verify this party has said they want to do this, you know, so it's not me making it up on the, in the background. Yeah. And I think, and anyway, that that's, those are the kind of loosening up that I, I'd like to see, there was a lot of extra multi-thousand dollar prizes by shady lenders. Totally agree. You know, real life. I mean, it's, that's, that's what they eliminate. We've eliminated that. Yeah. Fees will maybe, you know, they'll fluctuate maybe by a couple hundred dollars, but there's a tolerance. Um, but like you said, I mean, they're, they, people were getting surprised by like, oh, geez, you know, back in 2003, four, you know, lenders were like, oh, let's add another one or two points onto this loan. And you know, that they'll have to sign these documents. They're at closing anyway. So that's, they've eliminated that. So let's get back to real time, you know, real, you know, basic stuff. So, yeah. So I'm hopeful. I'm hopeful for that. I think, um, there's, there's not a whole lot that the federal government's going to do to help the situation we're in. I think in our industry, we're looking at chairman pounds, central bank, and we're thinking, okay, he's got a lower rate so he can get housing back on. I don't, he, if he lowers rates, um, it's because the economy is really choking and this national debt is so out of control that he's going to have to do something by either lowering rates or taking the, those treasury notes and holding them on their books. Kind of like another round of quantitative easing. It won't be because of housing. And I think, and this is just my opinion. If he does get in and he loosens up rates and does it because he feels he has to, it'll be like, yeah, I know this is really going to hurt housing by inflating it again, but we have to do it. And so when people are looking way in the hands of saying, are we going to have a crash or are we going to have inflation on housing again? It could go either way. That's why it's so hard to predict. So, you know, they could come in and go, boy, things are rough. We, we got to, we got to cut right now. And then you're going to go, Whoa, I can get a four and a half percent mortgage again. Are you kidding me? Yeah, yeah, exactly. Right. You came in with that now. And you know, I just got a email from Lenar this morning, 3.99 financing. You know, it's like, so it's out there. It's out there. Well, Pat, I hope you have a fantastic weekend and I'm going to a white elephant function on Saturday night. I'm looking forward to that as I am a root canal, but we'll see what happens. Obviously the feds, I mean, we'll get, they're going to get the, get meeting together and you know, next week we'll see, it just seems like it's just plugging along as far as rates. Like you said, I think the biggest thing is I mentioned this more than once is a, obviously if people are looking at, you know, it's, things are not taking off. They're not falling off the cliff. People are still out there buying, but it's been a sluggish, sluggish time. But once again, a two, one buy down gets you into the, you know, gets you into the fours, you know, high fours, you know, for a year, two years. So, you know, some of the, that's about the only secret that I can see that's out there that can crack, you know, somebody to crack into the market with a decent rate for the time being. Well, next week, we're going to do our prediction video next Thursday. And I'm going to, I'm going to put money on it, Pat. I'm going to bet you another dollar, but we're going to have to remember that for 13 weeks. Okay. Yep. So, so you, you have time to save up. All right. As notice, I'm feeling so confident that I'm not going to be owing you a dollar, but, uh, we're going to, we're going to put some pressure on the ladies next week, say, all right, spit it out. What do you think it's going to be? And, uh, and we'll see what they come up with. So, so other than that, have a good time. Hey, would, would spare glasses be a good white elephant gift? I just curious. Okay. Yeah. I'm, I'm digging around here trying to find, I never give good stuff. It's just, it's not in my DNA. It's like, you know what I go through drawers and look for things. So anyway, Pat, have a fantastic one. We'll see you in a few days. Yep. Sounds good, buddy. Have a good week.