Mortgage Mom Radio airs weekly focusing on topics that will educate our listeners around mortgage lending. This week we start off the new year by revisiting our Homebuyer Workshop and go over updates and changes for 2021. We start out with Catching Up With Mom, discussing all the fun and excitement over the holiday weeks. We then move on to cover the first installment of the revised Homebuyer Workshop and explain many of the real estate buzz words that are important to know when getting ready to buy a home. Afterwards we answer your questions that were left in the comments and stay tuned past the 1 hour mark for bonus content!Verify my mortgage eligibility (Aug 11th, 2022)
A Look Into the Markets
For the week of January 11, 2021
“Inflation is when you pay $15 for a $10 haircut you used to get for $5 when you had hair” – Sam Ewing
This past week we watched stocks and rates move higher with the former hitting all-time highs and the 10-year yield crossing above 1.00% for the first time since March. At the same time, mortgage-backed securities (MBS) traded lower, causing home loan rates to tick up just slightly from the lowest levels ever.Verify my mortgage eligibility (Aug 11th, 2022)
What was the main driver for these market moves? Inflation.
The Georgia Senate runoff ended with one party in power of all three branches of government. The market’s knee-jerk reaction is we will see endless stimulus measures, and this has sent inflation expectations to the highest levels in over 2 years!!!
The Problem:Verify my mortgage eligibility (Aug 11th, 2022)
MBS are the bonds which determine mortgage rates, and inflation is one of the main drivers. If inflation rises, rates rise â€“ period!
Fortunately, the daily Fed bond buying has offset some of the selling pressure caused by the rising inflation fears. Looking ahead, if inflation expectations continue to rise, the Fed will be forced to do more to pin down long-term rates, like more bond buying or some sort of yield curve control (YCC).
The Opportunity:Verify my mortgage eligibility (Aug 11th, 2022)
Millennials made up more than 1/3 of home purchases in 2020. One thing they have no experience with is inflation. The last time we had serious inflation, many of them were not even born. It is an opportunity for mortgage and housing professionals to educate them on the problem above and the screaming opportunity. In an era of higher inflation, you want to own real assets, like real estate which is a wonderful hedge against higher inflation. Moreover, when inflation rises, wages rise. So millennials today can lock in an “artificially” low mortgage rate thanks to the Fed bond buying, and more easily pay down that mortgage over time with ever increasing wages seen in an inflationary environment.
Bottom line: This past week we may be seeing a shift towards slightly higher rates in 2021. If you or someone you know would like to talk about the incredible opportunity, please contact me.
Looking AheadVerify my mortgage eligibility (Aug 11th, 2022)
Things have changed. Economic reports will take a bit of a back seat as the never-ending stimulus from the government and Fed will be the big drivers. If reports are good or bad, it may not matter as much because a tidal wave of new stimulus is coming. Consumer inflation has not been a problem up until now, and next week we will get some readings that could be market movers.
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Debbie Marcoux is licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, NMLS ID 237926, also licensed in AZ-0941504, FL-LO76508, GA-69178, IL-031.0058339, NV-57237, OR, TN-184373, TX, WA-MLO-237926 | Heidi Slagle-Points CA NMLS ID 1666881Show me today's rates (Aug 11th, 2022)