Volatility in the 5/1 ARM is greater than in the 30-year loan, which is unusual and worth noting, as is the rise in the 10-year bonds. The most recent information regarding the taper indicates that it’s going to end in March rather than the projected June date, raising rates sooner, but stemming demand with higher rates alone doesn’t bring down inflation. Supply-chain issues have also had a great impact on inflation with people staying home and buying things online, which increases demand and causes the supply bottleneck. How will this affect mortgages? When the yield goes up, so do rates, and when the yield goes down, rates follow. Uncertainty created by Omicron, the situation in China, and inflation will affect the US, but not necessarily as much as in other parts of the world. For example, the unrest in Ukraine will cause anxiety in Europe, making investors in that market leery about investing in European companies or European bonds. Those who are nervous about where to put their money will most likely buy US treasuries and mortgage-backed securities. In China, real estate has driven the economy over the past 11-12 years, and a dozen real estate developers in the last month have missed making millions of dollars in bond payments that are financing the building boom. Their government has reacted by loosening credit and making loans easier to get, thereby taking the spotlight off of the defaults. If these companies continue to default on bond payments to foreign countries, it will hit their economy hard and send investors to US treasuries. That, in turn, will make the rates come down, extending the long run of low-interest rates in the US mortgage market into another banner year. This week, Jeff’s guests include:

– Jill Denton of EXP Realty shares updates from the ultra-hot San Francisco and Lake Tahoe markets.

– Reverse mortgage professional Nina Penny discusses the latest on reverse mortgages.