10/22/24 – American Debt

I was looking for some inspiration this morning and I looked over what I wrote two years ago! People believe that interest rates will fall in the next 6-24 months. Inflation is no longer the big story, and the economic news is coming in strong, but I really don’t understand why rates are again at these levels! Somethings gotta give and here is my guess of what it will be.

Total household debt in the U.S. climbed by $109 billion to reach $17.80 trillion in the second quarter of 2024. Notably, mortgage balances contributed significantly to this increase, rising by $77 billion to $12.52 trillion. Despite this growth, mortgage originations remain subdued, primarily due to low refinancing activity.

Breakdown of Debt Components:

• Mortgage Balances: Up $77 billion; total at $12.52 trillion.
• Home Equity Lines of Credit (HELOC): Increased by $4 billion, marking the ninth consecutive quarterly rise. Current HELOC balances stand at $380 billion, significantly above the low of $317 billion in Q3 2021.
• Credit Card Balances: Rose by $27 billion, now at $1.14 trillion - a 5.8% increase compared to last year.
• Auto Loans: Increased by $10 billion to reach $1.63 trillion.
• Student Loans: Declined by $10 billion, totaling $1.59 trillion.

Look above one more time! Credit card balances are $1.14 Trillion, and Mortgage balances are $17.8 Trillion. That is a lot of credit card debt, and it’s growing! I remember in 2006 when credit card companies started to get nervous and cut credit card limits. Is that the next step? Will that send some of the economy spinning? Consumer spending pushed rates higher last week, and the defaults will eventually lower rates! We have seen this play out before and will see it again, but we may be a couple of quarters away!

Delinquency Rates:

The Fed’s data shows that the “flow” of credit card debt that transitioned into “serious” delinquencies stood at 7.2% in the most recent quarter, up from about 5.1% in the second quarter of last year.

Economic Context:

Despite positive economic indicators suggesting that the economy is on the right track, recent market fluctuations and a sell-off seem to have occurred without clear justification. The rise in Treasury yields by 50 basis points since mid-September and a corresponding increase of approximately 0.75% in 30-year mortgage rates reflect these tensions, highlighting a complex relationship between economic data and market reactions.

I am available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property. My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is 661-291-2222. When you text me, please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

But wait, there’s more!

Yesterday was bad!  Today was flat and rates are back to where we were in July! Who knows when they will go lower, but it will happen!!!    

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• We do loans in all states, so call me with anything you need.  
• Government Loans (FHA / VA/ USDA) are in the high 4’s to low 5’s
• Conventional Loans up to $766,550.00 are in the high 5’s to low 6’s
• High Balance Loans $766,550.01 – $ 1,149,825.00 are in the low to mid 6’s
• Jumbo loans above $1,149,625 are in the mid to high 6’s
• Bank statement loans - They are available with 10% down again, and larger down payments are in the 5’s.
• Profit and Loss Statement loans – 20% down – You don’t need bank statements, just a profit and loss statement!
• No income qualifier – 40% down with r serves In the 8’s!
• 0 down loans are in the high 6’s – 620 credit score min right now, up to $1,191,000.00.
• Private Money lenders - Hard Money Loans – 35% down!
• No Ratio Loans 30% down
• DSCR – Debt Service Coverage loans with as little as 15% down
• Bridge Loans - typically 7.99% with limited fees – and they get you where you need to go!
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice. The above are LA County Loan Limits.

Good News / Bad News on Condos – This section has been moved to MikeMeena.com. I will post updates here, but all the information on the naughty list is now on my website. Just go there and click about it, and you will find our most updated list.

Please let me know if you hear anything new on condos or townhouses.

I am still available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property. My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. y direct line is 661-291-2222 When you text me, please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

Have a great day and an even better tomorrow. Please call me when you have a client who needs to borrow!