Dave:
Hi there everyone. Dave Barlow here with the Gang from Sell for 1% Realtors. It’s our weekly interest rate discussion, and we have a special guest here this morning is the great Carnac,
Jaime:
Uh…
Dave:
He’s these, Jamie and Mike have no idea who the great Carnac is. Uh, Johnny Carson, late night King, um, would always, uh, about once every month or twice a month would, would make his predictions. And if you want to watch something fun on YouTube, go check out Johnny Carson, the great Carnac. And so, uh, without further ado, we’re going to talk to the great Carnac, Rich Cereone. Um, and, and Rich, yesterday was the fed rate, uh, meeting. They raised rates 0.25%. Um, how have you seen that impact mortgage rates, uh, yesterday, uh, overnight into this morning?
Rich:
Hey, Dave. So yeah, first of all, when the great Carnac was predicting things, I think interest rates were about 18% back then, so that’s true. Uh, we’re definitely better than that. , um, that’s a good point. And, uh, uh, yes, the Fed, uh, did raise rates yesterday and as we’ve said in prior discussions, it’s not so much whether they raised their lower rates, but if they stay in line with expectations or if they do something unexpected. Uh, so the market’s expected a rate increase. Uh, the fact that it was a quarter rate increase as opposed to the previous rate increases have been half percent in three quarters of a percent, so much more aggressive. So this was a, uh, even though it was a raise, it was a smaller raise than what we had been seeing. That was a good sign for the future of interest rates.
Rich:
And then, uh, as I, as I’ve also said in prior discussions, uh, the comments or the, uh, the, the, the signals that Chairman Powell gives at his news conference are probably more important than what they actually do. And so in this news conference, he mentioned, uh, the fact that the Fed fund rates probably would not exceed 5%. The Fed fund rates are the back bank to bank rates, and currently they’re four and a half to four and three quarters. So, uh, the fact that they’re, he feels they won’t go over 5%, seems to indicate that he doesn’t have a lot of additional rate increases in the future. So all of those things were positive signals to the market that that, uh, uh, the rate tightening cycle is coming to an end. And as we’ve said, the, the mortgage market is always forward thinking. And so the, the forward thinking at this point is that rates have had this, the tightening cycle has come to, to an end and we will see rates start to come down at some point in the future, or at least not go up any further. So the market like that, and we have seen, uh, mortgage rates overnight drop into the fives. We’re at 5.875% on a 30 year fixed conventional. And, uh, the, uh, ,
Dave:
The, uh, so
Rich:
For real FHA, the FHA and VA, uh, fixed, conventional or fixed, uh, 30 year is, uh, 5.625%. Whoa. Wow. So we’ve got a solid five in front of our numbers and, uh, again, as we’ve said, these are very volatile times, so we never know what tomorrow brings. Sure. At least for now, we seem to be headed into the, into the fives and hopefully staying there through the summer buying season.
Dave:
So here we are on February 2nd, uh, 2023. Uh, you’re seeing rates below 6% and um, uh, even as close to five and a half percent on a VA loan. Um, so we’re gonna ask you to put on your great Carnac hat and um, tell us where do you think interest rates will be a month from now? Uh, the first week of March?
Rich:
Well, I hate to keep telling jokes Dave, but since you mentioned the great Carnac again and February 2nd, we, the great Carnac and Punxsutawney, PA oh boy, did predict six more weeks of winter, by the way. So we have that to look forward to. But in terms of where I see the, the interest rates going in, in, uh, uh, the, the future and into the summer buying season, you know, again, putting on my hat, which I, you know, I definitely need with this, uh, shiny head I’ve had , uh, I, I feel that we’re gonna see rates, uh, stay down in the fives and, and I think that the, uh, market will cooperate with people. It’s a great time to buy a house. Uh, you know, the market is still a little bit weaker than it was. Uh, so you have a minute to think about buying a house to negotiate a little bit. And, uh, interest rates are much lower than they were two months ago when they were over 7%. So I feel the rates will be in the fives and uh, you know, with a little bit of luck, maybe even lower than that before the end of the year. But that’s where we are right now.
Dave:
And so I just put one in the contract, um, $400,000 property and that that buyer is doing the two one buy down. So basically if they, uh, are at five and seven, eight s, five and three quarters with two, one buy down, their first year payment’s going to be three and three quarters, uh, second year, four and three quarters, and then they’ll settle into five and three quarters, unless of course right interest rates continue to drop and they refinance and get into, you know, something locked in. But, um, we still have those options out there of doing, um, the two one buy down. Uh, I even had a seller yesterday and I think they’re going to be calling you here, rich, um, talking about a five one arm and being able to get, um, down below even the fives on a five one arm. So a lot of options out there.
Dave:
Um, and so if you have any questions with regards to financing, Rich’s information is here on the screen. Give him a call. He’d love to be able to talk to you. Uh, you can call absolutely text, email, and um, and, uh, pick Rich’s brain. You’ve been doing this about as long as I have, about 25 years now. Correct. So you’ve, we’ve seen the ebbs and flows over a couple, three different, uh, real estate cycles and, and, um, we can definitely help you get to the other side of the river, uh, where you want to be in purchasing a home. So keep us in mind and if you have questions, give any of us a call. We’d love to talk to you. Thanks guys. Have a great morning. Thank
Rich:
You, Dave. Thank you.
