Mortgage Rates May Move the OPPOSITE Way After the Fed Hike

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1:03Stand still, not a chance. You're a lifelong learner who's come this far. Now, we are here to help you keep going further. Capella University, what can't you do? Visit Capella.edu to learn more. Mortgage rates top 7% is oil pushes over $100 a barrel, but the big nose this week is the Federal Reserve. They're going to meet. They're going to tell us what they're going to do with interest rates. And that's what we're going to talk about in today's show, folks, because basically there's 100% chance the Federal Reserve is going to be hiking rates at this next meeting. What does that mean for mortgage rates? And could mortgage rates actually go down? That's what we're going to talk about in today's show. Because if you're a realtor, maybe you're home buyer, maybe you bought that house and dated the rate, trying to figure out what mortgage rates are going to go because you're trying to figure out almost for the ability. So folks, my name is Dan Frey. I'm the host of the rate update. Today I want to talk to you guys about how oil is the predicator of all these things right now. That oil over $100 a barrel on the fed has to increase rates, but do they have to and could actually mortgage rates go down? That's what we're going to talk about in today's show.

2:03So here's one of those ones show you guys. So what does the Federal Reserve do? What do they look at? What do they control? And actually could mortgage rates fall even though the Federal Reserve increases rates? Sounds kind of strange, but let's go over to the scenario. Let me go down through this blog post and I'll have this posted on my website. I'll show you that at the end of this video. Here's what I want to show you guys. Could it possibly be that the Federal Reserve, they they they high grades at the next meeting, but could mortgage rates actually go down? Here's one of those show you guys. Here's what the Federal Reserve looks at. Here's the inflation numbers that came in. Look at these numbers. The headline CPI that's kind of all these numbers that the inflation numbers, you want it about 2%. Okay, that's 3.4. So that's way over the number. Then you go to core. What core does it strips out food and energy like the gas prices, diesel prices. Okay, that's a 2.4. That's pretty darn close to where they want it to be. And then you got the producer prices at 5.4. But the whole culprit here is what? Right there here. It's oil. We got oil up. What?

3:0427% this year. So what you're hearing now is, okay, now it's in their gas prices. Then I went to jet fuel. Now it's in diesel. And I've been saying, okay, watch oil because the longer oil is up at these levels, what's going to start really increasing the inflation levels. And here's how. Okay, so let's just say, well, here, let me give you an example down through here. Here's what, here's what happens. I'm going to explain this to you like this. Okay, so let's say you live in Florida and you, you have an orange crop. Okay, and all of a sudden it's devastated. Everything dies. But you have a little bit left of these things. What's, what's going to happen to those prices? Well, the prices are going to skyrocket because it's very limited resources. Okay, so that's what we've been seeing. We've been seeing oil prices ratcheting up and causing inflation. That's, we just showed you above. But even though the Federal Reserve cuts rates, does that mean more oranges are going to grow? Does that mean we're going to have more oil and gas? Oh, no, not necessarily because that's only going to add to the problem of things being more expensive.

4:05That's my analysis right now. I don't understand. I kind of get it. But why the Federal Reserve is hiking rates into an environment where we know it's basically a shock because of energy. So that's the one thing I want you guys to take away from here. So the next thing is what we want to say is what could happen after the Federal Reserve hikes rates? Okay, there could be a couple different scenarios that comes in. They can come in and say, okay, we're just going to sit back and we're just going to do a one off and then hold back and then we can see how the markets go. And I'm going to kind of go through some examples for you here. Investors may believe that the Federal Reserve has done enough. So they're going to say, okay, we'll just wait for things to happen. Or oil prices could reverse. So all of a sudden, I keep saying is the Iranian conflict once it's over, you'll most likely see oil retreat. Once it gets down to like $70 a barrel, you're going to see inflation just tumbling from there. So we're going to watch and see how the oil does from here. And could the Federal Reserve slow down the economy too much?

5:06So here's my thoughts with this. The Federal Reserve comes in and they hike rates. But then they realize once the Iranian conflicts over that oil starts to plunge and now they say, okay, well, did we do a little too much? But let me explain a tea in this scenario. Let's say for example, you're monitoring mortgage rates. The Federal Reserve hasn't done anything yet, right? Okay, so here's the bond market. Okay, this is what happens or this is what you monitor when you're trying to figure out with mortgage rates where they're going. When I come in each day at morning and I come in and I open up my charts, the first thing I go to is that thing right up through there. It's a mortgage bond. If that thing's red, that's bad. It means mortgage rates are going up. Look at this. What, a five day chart? This is down, down, down. Remember when down, mortgage rates are going to go up. Here's the bond market over through here. The Fed hasn't done anything yet. Remember? Okay, so the bond market went from here all the way up to here. We're hitting almost a 5% on the 10 year treasury. We haven't been there in a long, long time. But the Federal Reserve hasn't done anything yet. So what happens is the markets are already pre-anticipating what the Federal Reserve's

6:10done. Kind of like I'm explaining to you guys. So they've already moved the markets. So now when the Federal Reserve comes in and the hype rates, well, the markets are going to sit there and say, okay, what's the next thing you're going to do? Are you going to continue to hike? That's going to put more pressure on these things. Is Iranian war going to end and oil prices drop? Is inflation just going to come down on a trition? We don't know. And that's why you need to watch two things. If you're trying to figure out where mortgage rates are going to go, especially if you're a realtor, we're a loan officer. Watch oil. Because we just saw as oil goes up, inflation goes up and the Federal Reserve at some points going to have to increase rates. The other thing number two, watch my channel. Subscribe down through there. I'm going to go each day. I'm going to go over where mortgage rates are. The economic news of the day, the calendars, my forecast. I'm going to give you some tools you can use out there as well. They're all free. So let's look at this is what's happening in the charts today. It's down five. But this is dismal over the last just five days. Here's what we're watching. The Federal Reserve's going to come in in two days. We know what they're going to do. I'll show you this in a chart in a second. It's basically 90% chance of what they're going to do.

7:10But let's get over to here. Here's what they monitor. Okay, they monitor two things, believe it or not. They monitor inflation, the PC, that's a 3.7. Who knows what that's at, but it's way above 2%. So they're finally saying, okay, we got it. We got to increase rates. But they also watch the unemployment numbers. These numbers have been up and down, but over the last two weeks they've been pretty darn solid. And we got a good GDP. So the fed's like, okay, we got to do something to keep our credibility. So they do something with that rate over there. That rate over there is called the Federal Funds Rate. All it is is interbank lending. Let's say one bank at the end of the day, they're short on money. They go out to another bank and get money lent to them. That's the rate they pay, not even close to what we pay. But here's what they do. When the Federal Reserve comes in and they bump up that rate over there, well, the banks come in and say, okay, we're going to increase, if you're going to increase rates on us, we'll increase rates on the consumer. So they increase rates on car loans and credit cards and personal loans, but they don't affect mortgage rates. Because mortgage rates are affected by that bond that we just saw. But let's go over here. What affects those bonds? Well, it's those things that we just looked at.

8:11But the big news to this week, it's the Federal Reserve. They're coming in this week and they're going to tell us what they're going to do. Now, the odds are pretty much in their favor. If you go to the odds, this is the CME Fed Watch Group. This is a Chicago Mercantel Exchange. They take all this data and they look at, what's the probability of what the Federal Reserve is going to do at the next meeting? So if you go down through here in two days, the Federal Reserve is going to do what? There's an 88% chance. They're going to, they're 88% chance right here that they're going to hike rates. How do I know? Right now, the Federal Funds Rate is right there. 3.5 to 3.75, you can check that out right through here. Okay, so you can see that. So down through here, this is what they're going to say. They're going to hike rates now. There's a 50% probability to stay there. And then in December or January, they're going to hike rates again. Now, look at this one. They're going to hike rates again in March of next year and then July of next. So there's like a ton of rate hikes coming. What are ifs the Iranian Conflict ends? What if oil drops back to even $60 a barrel and brings down inflation? Where are these numbers going to go? So take a look at this.

9:12We're going to come back in about a month. I go over this every day. You're going to look at this. There's an 88% chance they're going to hike, but there's also one to three more down the pike. I'm saying, once this Iranian Conflict ends, whenever that is, you're going to see all these numbers move from there. So let's get over to what should you do if you're out there and you're, you're looking to buy a house, you're looking to refinance what should you do? Well, if you're still trying to buy a house, I'm going to tell you, make sure you get pre-approved at a rate that's like a quarter, half percent higher than the current rate that you're getting that day. And the reason being is, cause we just saw over the last five days. Rates went from like 675 to over 7%. We don't want that to happen to you. So if you got the house under contract, lock it in. But what do you do if you're trying to build by, you may be looking to refinance? Do me a favor, go to my website. It's the rateupdate.com. We revamped this whole entire thing. You realize we can help you with that purchase anywhere in the whole country. If you're looking to refinance, buy a house. If you're looking to do your own mortgage, save a little bit of money, you can do that as well. But folks, my name is Dan Fierro, like I said.

10:13I'm the host of the rateupdate. I'm also a licensed mortgage loan officer in all 50 states as well as Puerto Rico. And the cool thing is, is here, you're watching this because you're trying to figure out where's mortgage rates going to go. And then where do I go from there to get the best rate, right? Or makes, first off, make sure you get pre-approved. But here's what we do for you. Instead of you going out there and going to, you know, lendingtree.com and Citibank and, you know, your credit union and another website. They all pull your credit, ruin your credit. Then they get back with you. You realize one denied you. And then the other three approved you and then they got these quotes back to you and you're so confused. What do you do? We'll go right up through here. You can go down through, right through here our tools. And you can even find out through here where you can upload your loan estimate. And now we can do a video and I'll get right back with you within probably an hour of what our rate's gonna be and what our fees are gonna be. If you wanna find out if you're a first time home buyer, we got some videos down here for you all the way down to reverse mortgages. Yes, I do reverse mortgages. And then you go up through here. Please don't forget all these tools we have for you up through here. Especially you investors out there looking for DSCR loans up to an eight unit building.

11:16How we do those. If you're also looking for some distressed properties, look, we can also help you with that. We can help you find the properties, but a contract in on the properties help you purchase the house and follow you from there to see if maybe if you're looking to invest further down the road. So that's it for today folks, but let's go back and see where the bond market's going and this isn't good news. We're down 11 ticks today. So that's what we watch. If that thing's down 10 or more, hem mortgage rates are gonna move. So if you go back to where mortgage rates are for today, we have rates at 7.12, probably hit 7.15. That's not helping affordability, but say tune. Because this week we're gonna hear from the Fed, monitor oil. Make sure you subscribe down there every day so I can come in and explain to you guys what's going on with these. And the most important thing is why and how it's affecting your clients. Thanks for watching God bless. Have a fantastic day. See you back here tomorrow morning with the opening bell to figure out where these are gonna go from there. See you then, bye bye. Before I switched to wealth front,

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