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Interest rate predictions

5,697 Views | 45 Replies | Last: 1 yr ago by BeastmodeAg
BeastmodeAg
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5:59a, 5/2/22
AG
For conversation sake what do y'all predict interest rates on a 30 year fixed mortgage to be in 1 month, 3 months, 6 months and a year out?

Recently locked my rate which I am happy with but curious to see how high they could go. One of my "was to be" neighbors got priced out of his home due to the rates.
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barnag
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7:32a, 5/2/22
Not sure, but I did get quoted 6.125% on an investment property and they required a 740 credit score or better as of last week.
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mwp02ag
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8:44a, 5/2/22
AG
My WAG prediction is the recent fed rate hike caused mortgage rates to jump high enough to bake in some of the promised future short term rate hikes. The fed will try more rate hikes but that will soon become problematic, it already has, for the economy and the fed reverses course and takes nominal rates negative in 2023 or 2024.

Of course that has all kinds of problems too. Welcome to stagflation on steroids. They painted themselves into the corner and we all knew they were doing it. Rental property owners are going to make out like bandits over the next 10 years.


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SteveBott
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2:20p, 5/2/22
AG
I've been in mortgage for 20 years. 18 years ago I learned a hard lesson to not predict rates because I can't. And neither can anyone else. If they say they can they are lying.

You can get lucky and guess right sometimes but things even out over time.
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Scientific
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In reply to mwp02ag • 2:37p, 5/2/22
AG
Well the op did say only for conversation sake. Very few thought we'd be at 5% by the end of the year, and here we are. At this rate? We could hit six and above by the end of the summer.

mwp02ag said:
Of course that has all kinds of problems too. Welcome to stagflation on steroids. They painted themselves into the corner and we all knew they were doing it. Rental property owners are going to make out like bandits over the next 10 years.

The monster they created. Its what happens when its treated as risk free.
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mwp02ag
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In reply to SteveBott • 6:17p, 5/2/22
AG
I think all who would post here would agree. It honestly made me a little nervous posting that even knowing it was pure speculation. What's your WAG though?
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SteveBott
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7:42p, 5/2/22
AG
Rather then try to predict exact amounts of movement or target pricing I think it's better to focus on macro events that affect the market.

Right now we have extremely complex data. We currently have, regardless of the attention getting headlines, are pretty solid economic data. Record breaking job growth, outstanding wage increases, especially at the lower income jobs, almost max employment numbers. They savings rate is higher then normal and of course trillions of new wealth in the real estate market.

The downside to that data is inflation. We have a net -2.0 loss in spending power (7% inflation minus 5% wage growth). Inflation is Also targeting the most sensitive of goods…gas, groceries and rents.

So the negatives could be harsh response to inflation, a severe downturn to the economy in China, the ongoing drag on growth we are going to start to see from the war and high energy prices.

Which competing force wins out? Growth or recession? I don't know. Too many possible outcomes right now.

We are at the highest rates since I got in the business. Too much higher and it will increase the chance of recession which always lower rates. Painful though.

To sum up I don't know. To much complex decision making in the near future. I think you take the current rates and costs and use them as one of many data points on making financial decisions. Each person could come up with a different decision best for them right now. All you can do.
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BeastmodeAg
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8:49p, 5/2/22
AG
I think we'll see 7% by the end of summer honestly.
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mwp02ag
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9:06p, 5/3/22
AG


Will we see the .5% fed funds hike tomorrow or nah?

I kinda feel like they have to or destroy any confidence in all their future hike talk right?

If they do raise at all, will mortgage rates spike 2% again or is this like baked in from the Feb hike?

I cant believe I didn't like Econ in CS. This **** is fascinating.
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BeastmodeAg
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In reply to mwp02ag • 6:58a, 5/4/22
AG
mwp02ag said:


Will we see the .5% fed funds hike tomorrow or nah?

I kinda feel like they have to or destroy any confidence in all their future hike talk right?

If they do raise at all, will mortgage rates spike 2% again or is this like baked in from the Feb hike?

I cant believe I didn't like Econ in CS. This **** is fascinating.


Looks like it happened a quick google search is showing that the average rate on a 30 year fixed is 6% roughly. And that is from May 2.
I see rates continuing to go up, people aren't slowing down moving here.

I'm an Econ major and no kidding this is fascinating
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Diggity
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9:57a, 5/4/22
AG
6% sounds high. I thought they were closer to 5%
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Deats99
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In reply to Diggity • 2:31p, 5/4/22
AG
Diggity said:
6% sounds high. I thought they were closer to 5%
A good plan violently executed now is better than a perfect plan executed next week.
-George S Patton
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cevans_40
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In reply to BeastmodeAg • 2:35p, 5/4/22
AG
BeastmodeAg said:
I think we'll see 7% by the end of summer honestly.
FML
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Deats99
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In reply to cevans_40 • 2:42p, 5/4/22
AG
cevans_40 said:
BeastmodeAg said:
I think we'll see 7% by the end of summer honestly.
FML
I think that is optimistic as hell
A good plan violently executed now is better than a perfect plan executed next week.
-George S Patton
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ktownag08
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2:50p, 5/4/22
AG
Looks like I need to hurry up and get my one time close construction close loan done here asap!
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Deats99
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3:05p, 5/4/22
AG

This is what I share with clients when they tell me it is going to come down
A good plan violently executed now is better than a perfect plan executed next week.
-George S Patton
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Deats99
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3:13p, 5/4/22
AG

Or this one when they say they will not go over 10

**Messy because I can usually screen shot for emails but y'all should get the gist
A good plan violently executed now is better than a perfect plan executed next week.
-George S Patton
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BeastmodeAg
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5:02p, 5/4/22
AG
Maybe I was being optimistic on 7%, seems like 8% maybe.
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The Fife
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10:04p, 5/4/22
I hurried up starting this addition/reno project early in the year and am still on the fence whether it was a good idea or not. Rates were still really low but the cost of supplies just sucks right now.
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Sea Speed
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10:44p, 5/4/22
AG
bought a second house to turn my other one in to a rental and bought down my rate to 3.99% and closed something like a week ago and I am EXTREMELY grateful at our timing. Current rates would have put this whole thing out of the realm of possibility.
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BeastmodeAg
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In reply to Sea Speed • 6:01a, 5/5/22
AG
What's crazy is it's only going to get worse!
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Red Pear Felipe
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6:39a, 5/5/22
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AG
The average mortgage rate since 1971 is 7.8%. Let's hope we don't cross that mark in the summer.

Many of our buyer clients are using our 2% buyer rebate to buy down their interest rate. They figured they'll pay for closing costs if they can save more money over the life of the loan.
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MAS444
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7:45a, 5/5/22
AG
Wow - I'm really surprised at the 7+ predictions here. That's about what the second note (80-10-10) was on the first home I bought 18 years ago. Like Sea Speed, we did an investment property recently and were extremely lucky to do it when we did.
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mwp02ag
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In reply to Deats99 • 10:42a, 5/5/22
AG
I'm a macro newb please explain. I think your argument is that the fed funds rate will not go back down in the 10 year term because investors will demand more return to hold government debt.

That does make sense of course. How does that account for government purchasing the bonds though? Isn't that what QE is essentially?

I have no idea what the second chart is. Please explain?
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Deats99
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11:29a, 5/5/22
AG
I don't argue economics, or underlying conditions. Just the skittish nature of what he market and these so called investors do. Whether the relationship between the 10 yr treasury yield and mortgage rates is correlation and causation is beyond me, but it is there.
When that yield is down rates dive, when the yield is up they spike.
A good plan violently executed now is better than a perfect plan executed next week.
-George S Patton
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mwp02ag
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11:39a, 5/5/22
AG
Ah I see. I thought your "when clients tell me it's going down" statement was referring to future rates. I really do find this all fascinating and enjoy discussing what's going on. I also think it's helpful to look at the probabilities of what will happen.

To me, the overwhelming probability is that the fed won't be able to take rates over 1.5% without destroying markets, something they have zero appetite for. My bet is the fed will try to prop markets up, just as they have since the GFC.

I really hope I'm wrong, I'd love to rip off the bandaid so to speak. Deals will be everywhere.
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jagvocate
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In reply to SteveBott • 11:46a, 5/5/22
AG
SteveBott said:
I've been in mortgage for 20 years. 18 years ago I learned a hard lesson to not predict rates because I can't. And neither can anyone else. If they say they can they are lying.

You can get lucky and guess right sometimes but things even out over time.
I can't predict rates but I can tell you we won't beat inflation until lending rates rise above the inflation rate
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Diggity
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In reply to Deats99 • 11:46a, 5/5/22
AG
Deats99 said:
Diggity said:
6% sounds high. I thought they were closer to 5%
latest numbers from FRED are 5.27%, so not sure what you took to be so amusing about my comment.
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Jay@AgsReward.com
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In reply to Diggity • 12:19p, 5/5/22
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AG
The issue with Freddie mac survey is that it is looking backwards. In most markets that is not a big deal but with rates moving as fast as they have been for the last few months the Freddie survey has been trailing pretty drastically. It does not help perception when it is the most quoted benchmark in the media of what rates are TODAY , when it really only tells you what rates had been last week.
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cevans_40
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In reply to ktownag08 • 12:21p, 5/5/22
AG
ktownag08 said:
Looks like I need to hurry up and get my one time close construction close loan done here asap!
Who are you getting your loan through?
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Diggity
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In reply to Jay@AgsReward.com • 12:21p, 5/5/22
AG
gotcha...so what are you seeing today?
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Sea Speed
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12:22p, 5/5/22
AG
So mortgage lenders, what are the rates right now for well qualified buyers? Say $400k house with 5% down. I know i know there are tons of variables, just trying to get a general idea.
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MTTANK
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In reply to ktownag08 • 12:31p, 5/5/22
AG
ktownag08 said:
Looks like I need to hurry up and get my one time close construction close loan done here asap!

Who are you using? I've been shopping them recently
GIG 'EM
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Jay@AgsReward.com
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In reply to Diggity • 1:00p, 5/5/22
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I am still in the low 5's with 20% down and good credit. But that rate is actually better the conventional rates as right now is one of those weird times that happens once in a while in market turmoil where portfolio rates are better then conventional.
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Diggity
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In reply to Jay@AgsReward.com • 1:35p, 5/5/22
AG
interesting. are you doing mainly portfolio loans these days?

how many basis points lower are you seeing the portfolio products come in at?
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