Mortgage Rates Hit 7%: Will the Fed Make Them Even Worse Today?

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1:00So riddle me this one. In a few hours of Federal Zerr is gonna be meeting, we know they're gonna hike rates. But a few months ago, rates were 5.99%. Today, they're about 7.2%. Well, the Federal Zerr hasn't done anything in the last six months. So why did rates spike? That's what we're gonna talk about in today's show, folks. So my name is Dan from the Host of the Rate Update. My goal was to explain to you realtors out there. You loan officers, maybe you home buyers, or if you bought that house and dated the rate. Why mortgage rates change and how you can monitor these things? So without further ado, let me go over first and let's go over and see what does the Federal Zerr actually do? What do they look at? So the Federal Zerr was created for two mandates. One was to keep the unemployment rate under 5%. They're doing a pretty darn good job at that. But they also have the GDP. That's over 1.5%. That's good. And it's the pesky inflation right now. Their mandate is to keep this at 2%. It's at 3.7, maybe 4%. So this is what they look at. So when they don't like these numbers, they control that rate over through there.

2:01That's the Federal Fund rate. So what they're gonna do today is they're gonna raise that thing. They're gonna raise it probably a quarter percent. So what happens is when they raise that, well that's interbank lending. When one bank needs money, they can go to another bank, get it linked to them at that rate. So they come in and say, okay, you raise rates on us. We're gonna raise rates on the consumer. So they control like car loans, credit card loans, personal loans, but they don't control mortgage rates. Mortgage rates are controlled actually by a bond. And that's that bond report we look at each day. But let me go over here. And I want to show you guys my thesis on the oil dilemma that we have right now is I feel the biggest culprit that we have right now. So increasing rates is that gonna help? Well, I think they're back as against the wall at this point. But if you look at the data that I have here, you tell me down below what you would do. So that further do, let's get over to it. The Federal Reserve, they usually come in when they hike rates, they hike in multiples. So when they cut rates, they cut rates in multiples. With the thesis this time, is they're gonna come in with one hike and that's gonna be basically a one in mum.

3:01Would I be my mum is they're gonna come in and try to not say anything. So today live, we're gonna come in and we know they're gonna hike rates. But then we want to see what the Federal Chairman says to the public and the media. That's when it's gonna get really exciting. So join me today. But here's one and go down through. Here's what the Federal Reserve and the bond market looks at. Okay, they look at inflation and that CPI number. This is consumer inflation. Is it three, four? They want this at two. So that's elevated. But if you take out the energy, you know, like take out gas and jet fuel and diesel, which is up 16%, we have a core CPI, about 2.4. That's pretty darn close to what they want it to be. So oil right now is over $100 a barrel and that's really killing the environment. And that's causing the 10-year treasure. I know you hear everywhere. The 10-year treasure is now at 5% and blah, blah, blah. What I want you guys to understand is that's bad news. Because what really affects mortgage rates is this bond over here that we go over through each day. So, but first let's go over to here. I want to show you the correlation between this. So the bond market, we're going to focus in on the bond market is down through here.

4:03The 10-year treasury. Let's look at that as the blue line or the black line down on here at the bottom. This is the 10-year treasury. Remember right about in March of this year, we had rates about 5.99%. So the 10-year treasury was actually under 4%. Fantastic. But then what happened right through here? The Iranian conflict. Oil went from $60 to $100 a barrel. What happened? Causes inflation. So the longer it's here, the higher the inflation is going to be. So what happens is these 10-year treasury is the yield start to get a little bit higher because it's inflationary. Investors are requiring more yield to get rid of the bonds. Well, the bad thing there is there's usually a spread between that and that mortgage bond that we watch each day of about two and two or a quarter percent. So this is where you put mortgage rates. So you watch the 10-year treasury. You add two and two and a quarter to that. That's actually going to put you where the 30-year fixed rate should be about. So that's the spread correlation there. So is these go up because of fear of inflation, the jobs market and everything else? Well, that's actually going to push up rates. So I keep saying the longer oil is higher,

5:06the longer inflation is going to get higher and higher and higher because it's going to start seeping in to all the other areas of the economy. So if you go down through here, there's a 91% chance of federal reserve will be hiking today. How much does that affect you if you're looking to buy a home? Well, the rates at 5.99, your payment would have been about 24-hundred bucks. Now it's going to be about 26-hundred bucks. You lost about $40,000 in purchasing power. So it's a lot of money to leave on the table. So please check and make sure you're following these mortgage rates. So let's get over to the first thing I like to do each day. Here's where we're going to start this part of the equation. It says, the mortgage analyst, I like to start my day with this thing right through here. This is the MBS, that mortgage chart that we just went down through over through here. Right through here, this is the MBS that we're going to follow right through here. So it is up 22 ticks today. That is fantastic news. All you have to understand if you're new to the channel, that number right up through there. If it's green, that's good news. It means mortgage rates are going to get better. The bigger the number, the bigger the adjustment. 22 is pretty big, but here's what I don't like. See this spread right here, this opening, we call it a gap.

6:08So in the yesterday we closed here, today we opened here a lot of times these fill. So I'm thinking, I don't know who in really the markets are going to do today. That's what we're going to have that live event today. So join me then, and we'll come back and see at the end of the day where this goes. So up 22 is pretty darn good. That's going to help out mortgage rates today. Let's get over and see what the markets are doing because the other piece of the puzzle I look at is that equation we looked at. Oil. Oil was down, whichever one you want to look at, but it's still both over $100 a barrel. So that's going to hurt the economy right now, especially with that inflation, because the inflation is just that red light is blaring on us right now. So if you get to the economic news for today, really not much out there. We got export retail sales and export prices, export prices. They're kind of in line to write where they were. Look at these retail sales numbers though. Last reading was negative 0.5. They thought it'd go to 0.8. It actually went 1.2. If you look at the control group, it actually was almost triple with the expected. So retail is good. The consumers looking pretty strong. I know the debts out there pretty bad. We have the jobs report numbers looking good.

7:09It's that in oil that's really causing this inflation to me. I mean, you guys think down below. So now what am I advising my clients? If you're out there looking and you're like, okay, Dan, is this a good time to buy? Well, hopefully your finances are in line that really make that worth, you know, that you're able to do so. So if you're needing help with the mortgage, you're trying to buy that first house. You're trying to refinance. I need you to do two things. Please watch oil as oil goes up. Inflation is going to go up and interest rates are going to go up. The other thing is watch my channel. My name's Dan Frey. I'm licensed mortgage loan officer in all 50 states as well as Puerto Rico. So I can help you anywhere in the country. Here's my logo and here's my slogan. One application, one credit pool. I'm going to compare your loan to almost 40 different lenders. You might ask, how and why? How I work at a bank that I'm licensed all over the country. The wise is if you're watching this, you're probably after this, you're thinking, okay, how do I compare rates and programs? So I'm going to go to that credit union, that bank, that lender, lending tree.com. Everybody's going to pull my credit, run my credit, get back with me. And once you've been going to turn me down, you're like, okay, now what?

8:12Well, let me help you. Okay, we work with almost 40 other lenders. I can offer you their rates, their programs by using just me and my services right through here. So go to my website, therateupdate.com, if you're a homeowner right now, want me to track your rates and your payments for you to find opportunities to refinance. We don't sell the date. I'll call you in text you if there's an opportunity there. You're putting your mortgage information right into this ratewatch. If you already got mortgage quotes from three, four different places, do me a favor. Just pick the best one you think. Make sure it's the best one because I want you to upload it into this loan estimate review. I'm going to review it. You got a video back to you within hours. Here's what I want you to do. If I can beat the competition on the rent rate and the fees, I'm hoping to win you as a client. And if you want to really watch rates to see where they're going, just click right through here and it'll take your rate to this right through here. It'll give you rates for the day. And actually, there's other tabs up there that'll take your right to this toolbox right through here. So if you need some help with the mortgage, I would love to help you out. Otherwise, let's go back and see where the MBSs are for today. So we are up 25.

9:14That's pretty good news. So that's good going into the Federal Reserve's meeting. Make sure you click down below and see that link that I'll be live later this afternoon with the Federal Reserve. What they're going to do, the After Effects and what my opinions are and where these are going to take us from here. So thanks for watching. Folks, God bless. Have a fantastic afternoon. And see you here at the Federal Reserve meeting. Otherwise, I'll see you tomorrow morning at the opening bell to let you know what is going on with these and the most important things is the wise behind it. See you then. Bye-bye. Thanks for visiting our yoga class. Tap when you're ready. What just happened? It's my new BMO Angel City FC debit mastercard. Every time I use it, it taps me into the game. Okay, maybe don't do it again. Ooh, these socks are nice. I'm going to go ahead and so sorry. The BMO Angel City FC debit mastercard. Tap into the game. A counter-suffer to approval and are provided in the United States by BMO Bank and A. Remember FDIC. BMO.