Hello everyone and Welcome to another

episode of Selling Greenville your

favorite real estate podcast here in

Greenville, South Carolina, I'm your host

as always Stan McCune realtor here in

Greenville, South Carolina, although I'm

recording once again from a cabin in

Georgia same day recording this the

same exact same day as the last one

that I recorded sometimes I do this I'll

record multiple pods in the same day so

anyway in case you hear the noise

difference the audio difference or see

if you're on YouTube that I'm in a cabin

or or on a back porch That's why but you

can find all of my contact information

in the show notes if you need a realtor

in the Greenville area and just a

reminder as always please subscribe to

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Stan S-T-A-N McCune

and yeah like like review rate

subscribe do all of those great things

for this show and I would really

appreciate that from you guys today we

are going to be talking about mortgage

rates of course we can't get past

mortgage rates

one thing that I've learned in the

three years that I've been doing this

show is that there is always just

something that is kind of captivating in

real estate something that's just kind

of controls the real estate narrative

and right now it's mortgage rates

like that is the talking point that is

the thing that people are most concerned

about and so I'm gonna give the people

what they want to hear and that is a

discussion on on mortgage rates now

ask for a little bit of patience

because I've got a lot going on here on

one single screen I don't have multiple

screens here but I have multiple

different things that I'm doing on my

one single screen and so if you're

watching on YouTube You're Going to see

that I'm going to be screen sharing the

30-year fixed rate mortgage chart

from the St Louis fed

and so I want I want you guys to look

at that it's helpful to look at it but

I'm going to explain all of this data as

well for those that are are just

listening in but yeah I've got notes

I've got this chart I'm going to try to

keep you guys on the video following

along with the chart

but I understand too that there are

some things because I don't have this

chart fully expanded not all of the I I

won't be able to get down to the exact

numbers on everything so just understand

that if you're if you're watching but

here it is we have again if you're

looking on YouTube I've got the entire

30-year fixed rate mortgage chart

courtesy of the St Louis fed

and one thing I just want to point

out I feel like this chart and the

numbers that they have on here are

slightly low in comparison to what

reality is I don't know why that is but

all of these averages on here appear to

be a little bit lower than what they are

or have been in realities that's just

something to keep in mind

but what I wanted to look at here in

an exercise that I did in order to help

you guys in order to kind of give me an

idea of what's going on and what might

happen in the future

was to see well I've got

something that just went into my mouth

again here I am outside on a on a

porch so there are bugs and whatnot

flying around

I wanted to look at historically what

have happened with 30-year mortgage

rates because they do fluctuate right

there are times when they're high

sometimes when they're low of course

that's all relative but they go up and

down

and so I wanted to see historically when

rates have started to go up how long do

they typically stay up right because

that's the story of real estate right

now how long are the rates going to stay

where they are as I'm recording this we

actually just had them shoot up recently

you know I'm recording this the end

of June this probably won't release

until mid-july but we've had rates

shoot up just recently here at the end

of June

and here they are at or above

seven percent for for most people and

and again this is the 30-year fixed rate

mortgage you know there are other

products out there there are variable

rate mortgages and things of that nature

more people are are looking into those

but most people just like the security

of that 30-year fixed rate mortgage and

so historically speaking looking at the

data how frequently do rates stay at an

elevated level in comparison to what

they were when they have a dramatic

shoot up so what I did did was

well actually before I get into my

methodology I do want to say this one

thing okay I have to say this and if

you're looking at the chart this is very

apparent but if you're looking back 50

60 years mortgage rates still are not

that high in comparison to that data

sample

you know if you go back into the 80s

rates were really really high in the you

know on the St Louis fed

information that they have here into the

high 18s I've seen other data that

indicated it was into the high 19s or

the 20 that's much much higher than the

seven percent rates that we're looking

at as I'm recording this and and there

was a very lengthy stretch during the

80s when it was at least above 15

percent

and then even when it came down from

there it was typically above above

eight percent so being in the seven

percent range historically speaking

going back way way way back is not that

high but going back 20 years which

really is a more fair way of doing this

exercise right because the majority of

homeowners

are people that have purchased their

home the past 20 years right

rates are actually pretty high right

now in comparison if you go back 20

years ago if we

basically we'd have to go back to like

the the 2002 year before we really

start to see rates in that seven percent

range again and they had come close

if we look around the Great Recession

right before in 2006 2007 they kind of

came close to the seven percent range

but they didn't hit it and so here we

are with rates that are the highest that

they've been and really 20 years

and that in the real estate world

is a very very long time

now looking at this chart was an

interesting exercise

what I did was

I looked at the years where there

were big jumps in mortgage rates at

least a one percent jump in less than 12

months and then I looked at how long it

was until rates returned back to what

they were before the jump so that was

really essentially the two things that I

did

but I only went back to 1987. I'm

kind of jumping ahead of myself

so let me just go back for one second

if you look at the an entire chart

that the Federal Reserve has has

provided you can see that essentially

since 1984 rates have been steadily

going down until just recently when they

started this dramatic uptick that

started in the the middle of 2021 and a

lot of us myself a lot of other experts

if you want to consider me an expert if

you want to lump me in with them we've

been saying when rates were insanely

low in 2020 and 2021 that they were

going to go up that there was no way

that they could stay there forever

m and that they probably would

never go back to those levels what we

did not foresee in 2021 was rates

doubling going from three percent to six

percent and now seven percent in a very

very short period of time

and there was an assumption for a while

this year that that rates would

actually go down before the end of this

year at the beginning of the year many

were predicting rate Cuts before the end

of the year but listen that sentiment

has all but dissolved and there's a lot

of reasons for that

but now some people are starting to

say perhaps we should be bracing for

rates to stay in the six to seven

percent range mortgage rates 30-year

fixed rates in the six to seven

percent range for the next maybe the

next several years

and I've long said if you've listened

to this show for a while you know I've

said that I think the FED really likes

to Tinker with rates and the moment that

the economy starts showing signs of

weakness they are likely to start

cutting rates but that is more of a

hunch than anything there's really no

data behind that and when Banks started

going into crisis a few months ago we

had Banks I mean Swiss bank ran into

problems had to basically be bought

out

when all of these things started

happening the FED didn't blink the FED

didn't be like oh we gotta we gotta calm

down on the rates no they didn't blink

they kept hiking rates even as Banks

were failing

so I do think it's worth looking at

the historical data to see what has

happened traditionally and but we

also need to consider that the current

fed operates obviously much differently

than it did 20 or even 10 years ago

there's a lot of turnover in the Federal

Reserve we talked about this a few weeks

ago and so we need to look

at the historical data but also realize

that it history doesn't necessarily

repeat itself and really in reality

history never repeats itself but it does

often rhyme history does frequently

rhyme and so I would not be surprised if

we see some similarities

coming up here to what we have seen

in the past the question is as we'll

get into this is it going to be the past

from you know 30 years ago or the

more recent past

now because the early 80s were like

extremely volatile mortgage rates in the

early 80s

were just insane and if you look

at a chart you'll see that

I didn't feel like it was fair to

include that data in here that that just

would have really confounded everything

so I really want to start in in 1987.

I feel like that that is the the best

period of time to start in get past the

major recessions of the early 80s and

start in 87. if you're looking at the

chart I've got you'll see and you're not

familiar with this chart the grayed out

areas those are recessions that happened

at least according to how the FED tracks

them

all right so let's look back at 1987

specifically March of 1987. in March of

1987 we saw rates that had been

hovering for around the 10 10 mark for a

while until the recession sorry they had

been they had been hovering

well over 10 for a while they finally

reached a low of nine percent in March

of 1987. this is the lowest in a long

time but after that happened they shot

right back up okay pretty much right

away and basically by May of

of that same year they were in the tens

they went from

9.03 to 10.7 in just a few months from

March to May so a massive massive

increase in just a few months

so this is the first since all of

that volatility this is the first major

increase that we saw and then

it they continue to go up all the

way through October of 1987 when they

hit 11 and a half percent so a

massive increase in 1987 that occurred I

was one year old when when all of

that went down so I don't remember any

of this

but it seems like interesting

times for sure so how long did these

rates stay elevated how long was it

until they went back down to those March

1987 levels

well it took four and a half years we

don't see it go back down until

1991 once we hit let's see here it

wasn't until September of 1991 that we

finally see rates go back down to that

level that they were in March of 1987.

that is four and a half years that is an

eternity in real estate an absolute

eternity in real estate

I can barely remember closings that I

had four and a half years ago that was

pre-pandemic that was like almost a year

and a half before the pandemic

I've moved twice since then I mean four

and a half years is a real estate

eternity

so rates stayed above and stayed

elevated for for for basically four

years and they didn't hit back down to

they didn't drop back down to that level

where they were at for an entire four

and a half years that's crazy

but rates continued to fall once

they started falling they continued to

fall and and that Trend continued

until let's see here October of 1993

they bottomed out at 6.7 and if you're

looking on here this is part of what I

was saying that I can't get it to show

below 6.8 percent but just trust me

they went down to six point seven

four percent

and then they after they bottomed out

then they shot right back up and

by October of 1994 they had gone all

the way back up to 9.3 so let's find

that October of

1994. they're right back up 19 sorry

9.03 percent

now that's not as this increase that

we're seeing here that's not as extreme

of an increase as we've seen recently

but that's still a massive massive jump

and that continued on throughout 1994

going into into the low nines and so

and staying in that low nines

level up to nine point two five percent

it may have gone slightly higher than

that but I'm saying at least it

went up to 9.25 so in a very short

period of time in in just over a year it

went from 6.74 to 9.25%

so what happened after that so after

rates topped out at that 9.25 number in

December of 1994.

they didn't actually stay there

within so they they immediately

dropped and then they kind of bounced

around so they dropped into the low

sevens in early 1996.

before climbing back again then they

had another jump in the summer

in June of that year up into the low

eights eventually I have in my notes

that they that they got up to 8.39 in

June of that year and then rates finally

fell back to below seven percent in June

of 1998. so we we finally go back down

to the level where it was in June of

of 1998. and now for those trying to

keep track at home all right that's

close to five years since they had hit

6.744 in October of 1993. again an

eternity in real estate time so from the

time they bottomed in June

of let's see or what your what

year did I say that was

sorry of October of 1993 they didn't

go back down to that 6.74 for nearly

five years and and that's that's

insane to think about and there was tons

of the other thing that's insane is how

much volatility there was I mean rates

going up rates going down

again a really a period really marked

by volatility and I would not be

surprised if we start to see kind of

similar volatility like that happening

again coming back after we've we've

had

relative stability for

more or less for for the past 10 to 15

years

but then again rates got into kind of

the mid sixes

and then they started going back up

again and so we have rates going if

we go to

June of 1998 let's see here

at one point they were in

it even goes at some point

in June of 1998 they kind of got down to

6.6%

and then in October of 1998 basically

six and a half percent and then they

shot right back up in June 1999

gonna find this on here June 1999

they're already back up to

7.65 percent and that just continued

until it topped out in year 2008.54

so another very big and very long

period of time

so

but I will mention that's not as

long as what we've been talking about so

they were elevated for this period of

time for about one and a half years but

it was an extreme increase during that

period of time but then after

that period of time once we start

getting into June of 2000 rates are

starting starting to go back down and

this is right before

the.com Bubble Burst that if you're

looking on YouTube you can see the

recession in 2001 that's the.com Bubble

Burst and that caused all of this caused

rates to go down we don't see a percent

Point increase again in mortgage rates

at least the rules that I'm talking

about a percent point in a year or less

we don't see that happen again until

2003 so 2003 rates bottomed out around

5.2 percent in in June of that year

in 2003 and then they shot up to into

the the mid sixes by August of that

year and basically bounced around

between the high fives and mid sixes

until the Great Recession so they they

stayed elevated in those levels from

2003 until the Great Recession

in you know basically 2008

or what you know you might not like

the great the term Great Recession some

people call it the world financial

crisis that's another another way of

people refer to that

so rates finally in December of 2008

finally went back into return to the

low fives and again for those keeping

track that is over five years since they

had hit that number in June 2003 and

once again it's triggered by a recession

now we don't see another rate jump

like we've been looking for in a year

until rates bottomed out again so so

they keep going way down after the

recession because you know the Fed was

really trying to trying to control

that recession as much as they as they

possibly could

and so we don't see much by

way of rate hikes until I don't give me

one second here let's see here we have a

bottomed out I have in my notes April of

2013. yeah

April of 2013 they hit into the mid

threes three basically three point four

percent but then by August

it's already back up into the mid 5

sorry in the mid four so in just a few

months we saw that one percent increase

from the mid threes

into the mid fours and then they

mostly hover around four percent until

September of 2017.

and then we see things kind of start to

go back down into into the three

percents but then we see another big

increase that ends up topping out in

November of 2018 right around five

percent I remember so by this point I am

a realtor I've been a realtor for

several years by that point in 2018 and

I remember hearing people talking about

okay this is going to really slow down

the market with rates basically being

in the fives

but then after that happened rates

started going down again and then we had

the pandemic rates went really really

low and now they've been shooting right

back up

as is the story of of today and so

this is a lot of data for us to talk

about

and I don't like to just leave you

with the data and have you you know just

be kind of swimming in all of that

I want to make this practical right

so what are some conclusions that we can

draw from this data I think a few things

first

I would be remiss if I didn't say that

it's completely within the realm of

possibility for us to continue to see

these elevated mortgage rates these

rates hovering between bouncing between

six and seven percent it would be

completely within the realm of

possibility to see them bounce around

in that range for a while prior to more

modern times four to five years was the

norm for these elevated mortgage rates

and so

it would not be outside the realm of

possibility for us to see rates kind of

in this elevated State

perhaps another three another four years

I hate to say that but that's very very

possible

however if we're looking at the more

recent years that's really less the case

Okay in particular it's noteworthy that

until 2022 rate increases were much less

dramatic right so we did have a few of

these rate increases these periods of

rate increases that we talked about but

they generally were smaller jumps than

what we had seen in some of these other

and some of the other data really

between 1987 and the year 2000 after the

the recession of 2000 to 2002 how or

2001 whatever you want to Peg the.com

Bubble Burst those big jumps usually

weren't that big they're usually like

one to one and a half percent until this

most recent one so this is definitely

definitely some sort of definitely what

we're seeing is a modern day anomaly

it's also just a historical

anomaly in general but what does that

mean

in terms of of the future we don't know

because we haven't seen anything quite

like this in recent years

we talked about rates bottoming out

at 3.4 in April of 2013 but even when

they went up and again this speaks to

the stability of of the the past 10 to

15 years even when they went up from

that 3.4 percent they mostly stayed in

the force so it's not like they were

elevated like way way high like they are

right now in comparison to what they

were they were elevated but it was

just kind of like a single percent point

above where they had bottomed out at

I think another important conclusion

is just obviously how impact or

recessions are rates went down every

single recession on record

although you typically do if you look

at all these you typically do have some

kind of a little bump that happens in

rates immediately following the

recession that's pretty much consistent

with all of these with the exception of

the pandemic although it's kind of a

weird the pandemic was kind of a weird

recession

but that bump is still lower than

generally speaking than the the

pre-recession rates

and so recessions have a Major Impact

on what happens in mortgage rates the

FED tends to ease up on rates when a

recession happens so I think it's pretty

safe to say if we hit another recession

rates will go down again and so that's

probably what it will take for us to

break this cycle of seeing rates in the

six to seven percent range

and then the question is how far will

they fall

so if I had to guess at this point I

think the best case scenario from the

standpoint of of rates going down I know

that it's not positive for everyone for

rates to go down but let's just assume

for the purposes of the show that it is

a positive for everyone

I think we could potentially see

rates go into the fours I don't think

they'll go fours but maybe the the mid

to high fours is the most optimistic

scenario I'm not saying it's the most

likely the most optimistic it's possible

now that may seem like a huge decrease

from where they are in the sevens right

now but when you consider that the

spread between the 10-year Treasury and

the 30-year fixed rate is way higher

than normal you have to factor that in

and then once Banks feel like inflation

like the inflation concerns are mostly

passed I think that that alone will

cause rates to go down

even without the FED doing anything into

the mid to high fives and then if the if

the FED lowers rates even more that's

where we could see mortgage rates drop

into the force

what how quickly will that happen I

mean

maybe but maybe 2025 okay

now I do I am hopeful that rates

will come down in 2024 but for the

possibility of them going back down into

the fours I think were were probably not

until 2025.

so I tend to think that we'll see

rates as high as they are

well I don't think that we'll see rates

as high as they currently are for the

four to five year cycle that other rate

Cycles had but I also don't see them

dropping back down into the the twos and

threes

anytime soon like they did during

that short period of time right after

the pandemic it's possible we may never

ever see them drop into the threes again

so as I've been saying on here for a

while the era that we are in is a bit of

a new normal we can't really compare

this era to any previous era I mean

let's just be honest we we experienced a

period where

rates had been going down very

consistently since the 80s

and they couldn't just keep going down

forever and so now we're in this period

where rates are the highest they've been

in 20 years and it's really hard to say

what will happen but I do think that

they'll come down a little bit and I

think within two years in particular

that we'll be having a very different

conversation so we're looking at

something not as Extreme as some of

these five-year cycles that we saw in

the past but something much more extreme

than what we've seen in the most recent

past where it's maybe three years of

rates being close to double what they

were at their lowest point so I think

the best case scenario is probably for

rates to stay where they are roughly for

the next six to 12 months for a mild

recession to happen and then for rates

to start to taper down once again after

that just not likely to be at the at the

lowest levels that they had been

throughout much of the 2010s and 2020s

and I think that that scenario is I

think that there's a very good chance

that that scenario plays out exactly as

as I just described it I think that

that's a very good possibility

and so we'll just have to be on the

lookout for that I don't I think the FED

is going to hold the line they're

they're saying that they're going to

probably do more rate increases I'm not

sure how much that's going to affect the

30-year fixed rate mortgage it seems

like economic volatility and bond

markets

volatility in bond markets impact the

rates at this point a little bit more

than the FED doing slight increases on

their end but we'll just have to see but

there's not I don't think that we're

going to see in 2023 any major relief

from the high rates I think in in

2024 we will see a little bit of of

relief and then I think probably by 2025

we'll see a lot more relief but a lot

can happen between now and 2025 so

that's not a bold prediction

that is more of a gut feeling that I

have but we'll just have to see but most

importantly for now

it seems like for the next six to 12

months everyone can kind of expect rates

to be a bit elevated and perhaps if we

see a recession we'll see rates come

down a little bit at that point all

right I appreciate you guys listening if

you have any questions let me know my

contact information is in the show notes

subscribe like rate review do all

those things with the show and we will

talk again next time