Why Mortgage Rates Have Risen, and What It Means for Buyers

Over the past few weeks, mortgage rates have climbed to their highest levels since September, leaving many buyers wondering what is driving the increase.

When geopolitical conflicts or military actions begin, financial markets tend to react quickly. Mortgage rates often move as investors reassess the potential impact on the global economy.

Right now, the concern isn’t necessarily the conflict itself, it's inflation, particularly tied to energy prices.

The Role of Oil and Inflation

Military tensions in regions tied to global energy supply often push oil prices higher due to fears of supply disruptions.

When energy prices rise, it can ripple through the entire economy:

• Transportation costs increase
• Manufacturing costs rise
• Consumer prices move higher

This creates inflation concerns, and when inflation expectations rise, bond investors demand higher yields to protect their purchasing power.

Since mortgage rates are closely tied to bond markets and mortgage-backed securities, they tend to move higher as well.

Simply put:

Higher inflation expectations → Higher bond yields → Higher mortgage rates

How Real Estate Typically Responds

Historically, real estate markets tend to follow a predictable pattern during geopolitical shocks.

Short-Term: A Brief Pause

For a few weeks, buyers and sellers often step back while they assess the situation. Showings may slow, and some buyers take a wait-and-see approach.

Medium-Term: The Market Adjusts

Once the economic impact becomes clearer, confidence typically returns and activity begins to normalize.

Long-Term: Fundamentals Take Over

Housing markets are ultimately driven by:

• employment
• population growth
• housing supply
• affordability
• mortgage rates

Because people still need places to live, real estate has historically proven to be very resilient during periods of global uncertainty.

The Bottom Line

The recent rise in mortgage rates is largely tied to inflation concerns driven by energy prices, not just the geopolitical event itself.

If inflation fears ease and energy markets stabilize, mortgage rates could begin to move lower again.

And while uncertainty can briefly slow housing activity, history shows that real estate markets tend to pause during global events, but rarely stay on the sidelines for long. Remember Covid? The world stopped for two weeks, and then everyone and their brother purchased! That’s not gonna happen here, but it will get better!    

Please let me know if you have any questions or if you or any of your clients, friends, or family members need my guidance. I’m just a call, text, or email away.

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

But wait, there’s more…

Interest Rates

Rates are up by about .50% from where we were two weeks ago! This is my favorite part of the job. Get clients in, get them ready, and then tell them that rates have increased! UGH! Well, it’s better than being their Doctor, and letting them know that they are dying. Since the conflict began, the underlying U.S. economic data has actually been somewhat soft, which normally would have pushed mortgage rates lower. Recent reports showed weaker job growth and a slight rise in unemployment, signals that typically lead bond markets to expect future Federal Reserve rate cuts. However, the war has pushed oil prices close to $100 per barrel and increased concerns about inflation, which has driven Treasury yields higher and pulled mortgage rates up with them. In other words, if the conflict had not disrupted energy markets and reignited inflation fears, the recent economic data likely would have put downward pressure on mortgage rates rather than pushing them higher.

Loan Programs

• We do loans on Non-warrantable condos!  
• We offer 12-day escrows for pre-approved buyers, including conventional, FHA/Jumbo/Bridge loans.
• We provide loans in all 50 states, so call me with anything you need.
• Government loans (FHA/VA/USDA) are in the 5s.
• Conventional loans up to $832,750 are in the mid to high 5’s.
• High-balance loans from $832,751 to $1,249,125 are also in the high 5 and 6s.
• Jumbo loans above $1,249,125 are in the high 5’s and 6’s.
• ARMS in the 5’s and some in the 6’s
• Bank statement loans are available again with 10% down, with larger down payments in the 6’s++.
• Profit and Loss Statement loans require 20% down - no bank statements needed, only a profit and loss statement!
• 0 down loans are available in the high 6s, with a minimum credit score of 620, up to $1,325,000.
• Private Money lenders offer Hard Money Loans with 35% down.
• No-Ratio Loans require a 30% down payment.
• DSCR (Debt Service Coverage Ratio) loans are available with as little as 15% down.
• Bridge Loans typically have an interest rate of 7.99% with limited fees, helping you get where you need to go!
• 3/2/1 Buydowns, 2/1 Buydowns, and 1/0 Buydowns are available at great starting rates!

Please note that interest rates are subject to change without notice, and the information above reflects LA County Loan Limits.

**Good News for Condos:**   

Nada today!  

**Bad News for Condos***     

Nothing today! YAY!  

CONDO HELP!!!

If you have a listing or a buyer interested in a specific condo and are unsure whether it is warrantable or Non-warrantable, please call me, and we can look up Fannie’s list in real-time. We don’t know when something has changed, and it would be impossible to track everything day by day, but we don’t mind looking up a few items each day.  

The full state of California’s naughty list has been added to:

MikeMeena.com! See the link below:

https://mikemeena.com/non-warrantable-condos/

Let me know if you hear anything new about condos or townhouses.

I am available every day if you need anything.    

📞 Direct Line: 661-291-2222 – Text OK

📞 Cell: 661-714-6258 – Text OK

📞 Office: 661-260-2970 ext. 2222 – Text OK

📧 Email: Mike@AugustaFinancial.com

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

Sincerely,