Interest Rates and Where They Might Go!

I am not big on writing about interest rates. Still, I do like to give my opinion occasionally, especially when I think it helps bring some clarity to what buyers, sellers, and agents are feeling in the market.

The past few months have been rough on rates. We have seen interest rates spike, and for the most part, we have been floating about a half to one percent above where we were around February 28th, when the war escalated and pushed the markets in the wrong direction. One of the biggest issues from the war was oil prices. When oil prices rise, inflationary pressure rises, and when inflationary pressure rises, interest rates usually don’t like it.

Now, here we are, about three and a half months later, and we are being told that a peace treaty may be signed this week. That news helped the bond market recover a bit, which has helped interest rates, and the stock market seemed to like it as well. Of course, nothing is done until it is done, but the markets are already trying to figure out what happens next.

Most buyers right now seem to be waiting for one of two things. They either want a dip in interest rates or a dip in home prices. Either one would help affordability, and affordability is definitely not great right now. The big question is this: if bond traders believe the Iran deal is real and it actually gets signed this week, will we see rates drop a little more once there is confirmation? I think the answer is yes. Do we get back to where we were before February 28th? My answer is also yes, but probably not overnight.

The inflation damage from higher oil prices is already here. We have lived through three and a half months of higher fuel costs, and those costs eventually work their way through the economy. But if the Strait opens back up, the fear premium comes out of oil, and gas prices begin to ease, then hopefully inflationary pressure starts to ease, too. A lot of what happened with oil prices was not just about today’s supply problem, but also about the fear that the war would continue or get worse. If that fear goes away, we should see some relief.

Before all of this happened, the economy was not perfect, but it was moving in a direction that could have helped mortgage rates. Jobs were still holding up, unemployment was relatively stable, and inflation was no longer at the crisis levels we saw in 2022 and 2023. The official economic numbers were mixed. Growth was slowing, housing was still soft, inflation was in that stubborn but not insane range, and the labor market was steady but not exactly booming.

That is the official economy. But then there is the real economy that many of us feel every day. Many small business owners were already struggling. Some were starving. Some were closing doors. Big business keeps getting bigger, and small businesses are fighting for air. It felt like we were finally getting a little break, rates were starting to ease, and then the war pushed everything back in the wrong direction.

So now we wait to see what this week brings. If the treaty is signed, I would not be surprised to see a short-term improvement in rates. Maybe we get a nice day or two in the bond market, and then it is back to watching inflation, jobs, gas prices, the Fed, and everything else that makes this market so much fun to explain every morning.

I expect bond traders to view the inflation from the recent gas price spike as temporary. If gas prices come down and inflation does not get sticky again, then we may be able to look past this recent mess and focus on where the economy is heading next. AI is taking some jobs, creating some jobs, and changing the way businesses operate. If inflation stays under control and the economy slows just enough, we have a real shot at lower interest rates by the end of the summer.

I hope to see lower rates by the end of the week, but I know that hope isn’t a mortgage strategy.

Love you all, and thank you again for the business. I hope these updates help bring a little clarity to what we are all dealing with every day. I truly appreciate those of you who have it in your heart to send business my way or to anyone here at Augusta Financial. It means more than you know.

Interest Rates
See above, and things are looking better.  

Loan Programs Snapshot

• Government loans (FHA/VA/USDA): in the 5s –
• Conventional (≤ $832,750): low 6s
• High-balance: mid to high 6s
• Jumbo: Mid 6s
• Bridge Loans 7.75-7.99

Additional options:

• Bank statement loans (10% down+)
• P&L loans (20% down, no bank statements)
• 0% down options (620+ score)
• DSCR loans (15% down)
• Buydowns Available (3/2/1, 2/1, 1/0)
• Private Money loans – Hard Money  
• Construction Loans
• 203K loans
• Commercial Loans
• Fix and Flip Loans  

Rates subject to change without notice. 

Condo Update
Good news:
Cornerstone – FHA approved – YAY!

Bad news:

• Tres Robles III –   Critical repairs – deferred Maintenance
• Warner Center Condos – Litigation – Non Minor, Insurance Coverage
• Princessa Estates  – Outstanding Critical repairs 18121 Erik Court – Could affect the whole complex

We love your Non-Warrantable Condo loans!!
Need help checking a condo? Call me, and we can look it up in real time.

Also:
Full California "naughty list" available here:
https://mikemeena.com/non-warrantable-condos/

Let's Connect
If you or your clients, friends, or family need guidance, I'm here.

📞 661-291-2222 (Direct)

📞 661-714-6258 (Cell)

📞 661-260-2970 ext. 2222 (Office)

📧 Mike@AugustaFinancial.com

Sincerely,