Rates are the most discussed metric in the mortgage market that the average person can connect to. The 30-year fixed rate is hovering above 6% at the start of 2023, still much higher than its year-ago lows of under 3%. The epidemic, federal government cash infusions, and a restriction on many late payments for mortgages and rents resulted in those decreased rates. While multiple rate cuts spurred the market and kept the economy afloat throughout the pandemic, everyone paid for it later in the form of inflation.

The 30-year fixed rate is currently linked to 10-year government bonds. This is a new technique to compute and examine where the economy needs to be regarding the FED funds rate, and all signals point to the FED raising it. The FED funds rate applies to credit cards, car loans, and short-term interest payments made to lenders and banks by consumers but not to mortgage lenders. It has a tangential effect because some of the money in the system is removed, which raises the mortgage interest rate on a 30-year fixed-rate mortgage.

Industry professionals are approaching the first two quarters of 2023 differently, with less doom and gloom in the marketplace and volatility in the stock market. Not only was there a Santa Claus rally in the last week to ten days of 2022 in December, but the beginning of 2023 reported more positive than negative days. The Consumer Price Index is also trending in the right direction, leading those in the real estate and mortgage sectors to be cautiously optimistic that Q1 and Q2 will be better than previously thought. Does that rule out the possibility of a recession in Q3? Only time will tell. This week, Jeff’s guests include:

– Charles Giscombe (Malibu Funding Las Vegas) examines mortgage rates and several loan products.

– George Gonzales (Malibu Funding) talks about what it takes to get into a house.

– Joan Rebaza (Malibu Funding) discusses the modernization of communications in lending.