November 4, 2022

The Federal Reserve increased the Federal Funds rate on Wednesday by .750, which pushed the Prime rate to 7.00% and pushed 30-year mortgage rates up slightly.

Mortgage rates don’t follow the Federal Funds or the Prime rate, as the bond market and mortgage-backed securities primarily influence mortgage rates! We are finally getting closer to the target rate that the Federal Reserve wants to be at to get inflation down from 8.2% to their goal of 2.0%. There is still a plan to increase rates in December by .50- .750%, and there could be a couple of smaller moves as we get into next year. The Federal Reserve understands that this hurts the housing and stock markets and will eventually increase unemployment. Still, the fear of hyperinflation continuing is bigger in the big picture. The day’s big news was Powell’s comments at the end of the session. See some of his critical comments below:

• At some point, it will become more appropriate to slow paces of rate hikes.
• We still have a ways to go.
• There is significant uncertainty around that level of interest rates.
• Data suggests that the ultimate level of interest rates will be higher than previously expected.
• We will take into account cumulative tightening, policy lags, and economic and financial developments in determining the pace of rate hikes.
• We anticipate ongoing interest rate increases to be appropriate to attain a sufficiently restrictive policy stance to return inflation to 2% over time.

We need to see inflation go away before rates go lower. The Fed is under the impression that we will see that later rather than sooner, but I am hopeful we will see inflation start to go away by the second quarter of 2023. Hopeful but not confident! LOL!

Mortgage rates pushed higher most of the week, but we are seeing a little reprieve this AM! A mixed bag of economic data this week moved the markets along with what the Federal Reserve said. Ms. Collins of the Federal Reserve Board said in a statement TODAY that she is in favor of slowing the pace of rate increases. That would be good for mortgage rates as the fear of more large increases to slow the economy could hurt some industries.

• 30-year Government Loans (FHA / VA) is in the 6’s.
• Conventional Loans up to $715,000.00 - 6’s and 7’s
• High Balance Loans $715,001.00-$ 1,072,500.00 are in the 6’s and 7’s
• Jumbo loans above $1,072,500 are in the 6’s and 7’s
• 5/1, 7/1, 10/1 Arms are in the 5’s and 6’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 high 7’s - low 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 $735,000.00.
• 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 weekend 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!