November 29, 2022

I hope you had a great Thanksgiving weekend. We are back to work for a few weeks before we get into the next holiday, so let’s do it!

I like to read a bit in the AM and here are a few headlines I saw this AM:
The Fed Has Good Reason to Slow Rate Increases  - The inflation fight isn’t over, but there is evidence that the central bank is making progress. WSJ
Yield Curve Inversion Reaches New Extremes  - Unusual relationship between Treasury yields reflects investors’ bet on easing inflation and future rate cuts. WSJ
Fed’s Williams Says Inflation Fight Could Last into 2024  - The New York Fed president points to signs that price pressures are easing but sees inflation remaining above 3% in a year. WSJ

The above were all interesting articles, and I read a few more. Still, you can see that there are differing opinions on what will happen with rates and the economy, but everything I am reading is saying rate cuts at the end of 2023 or early in 2024. The yield curve inversion article talked about a recession because rates on the 10-year Treasuries are lower than the 2-year by about .78%. This hasn’t happened since the 1980’s.

The articles state that the Fed has possibly overcooked with the rate hikes because they were behind the curve. Many people in the Fed feel that we should not raise rates in December, but the current plan is likely another 50 basis point hike. The annualized CPI over the past 4 months is 2.8%, which is .8% above the Federal reserves target inflation rate of 2%.

So what does this mean?
To me, buyers should be looking at the 2/1 buydown loans as they will likely be able to refinance in 12 months or less and get a credit back for the buydown money they didn’t use. The odds are that rates will move lower, and we will return to rates in the 4’s and 5s in 12-18 months. It also means that getting credit for the buydown from the sellers while it is slow is huge.
Also, sharing the above info with buyers will ease their minds and help them decide to buy now instead of waiting until rates drop and becoming a bidder! Yes, there is risk in this market, but there is risk in every market, and the risk here is pretty limited with all of the data coming out.

Interest rates are down slightly today, staying in this range for now. Most people in the industry think that the next move will be down, but we look at things with rose-colored glasses!

• 30-year Government Loans (FHA / VA) is in the high 5’s and low 6’s.
• Conventional Loans up to $700,000.00 - in the high 5’s and low 6’s.
• High Balance Loans $700,001.00-$ 1,050,000.00 are in the low to mid 6’s
• Jumbo loans above $1,050,000 are in the mid 6’s
• 5/1, 7/1, 10/1 Arms are in the 5’s
• Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score.
• Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the 8’s.
• 0 down loans are in the high 7’s to low 8’s- 620 credit score min right now! Mid 6’s, for the most part, up to $725,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 7.49% with limited fees – But they get you where you need to go!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I will be around all week if you have any questions or if someone interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!