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 right here in

Greenville, you can find all of my

contact information in the show notes if

you need a realtor, or if you're looking

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things whe with regard to the show all

right so I have some more Greenville

specific content coming I promise okay

for those of you that listen to this

primarily for the Greenville specific

content I have more of that coming okay

but there's just been a lot of

different things going on and and

quite frankly those things deserve in my

opinion to be covered now I recording

this the the the news cycle right now is

so fast I mean I can record something

and it become obsolete very very quickly

so I'm recording this on Sunday February

the 2nd I don't know if I've ever

recorded an episode on a Sunday before

but we got a very busy week coming up

here I'm going to be going to

Columbia for a couple of days this

upcoming week for a conference that been

to a few a few years in a row now

it's a political you know it's about our

political advocacy regarding private

property rights things of that nature

and so I kind of have to plan

everything around I have to really think

ahead to prepare you know when I've

got a week where I'm missing a few days

I have to do everything like way

beforehand so here we go that's what

I'm doing right

now but long story short there's

obviously been a lot happening a lot

of headlines right now about different

you know Trp tariffs tariffs

against Canada tariffs against Mexico

we've talked about this a little bit on

the show but I want to explain this real

quick okay because I get questions about

this all the time apparently from people

that aren't listening to to the show or

maybe they're they're not listening to

the part where I get into this here

is the concern that people have when it

comes to Trp tariffs okay the Trp

tariffs increase the cost of things

right those tariffs don't they they

don't inherently cost they're they're not an

inherent cost to Mexico or Canada right

not inherently they are a essentially a

tax that then gets imposed on the end

buyer which is if you're a buyer of

avocados and your avocados get a come

from Mexico and they're tariffed then

they're just going to be marked up by

that tariff amount okay now the

confusion that people have is well how

does this help the American people well

it could result in more favorable trade

agreements or you know it could result

in things coming you know for

instance manufacturers coming over to

the US like Trp for instance mentioned

tariffing Taiwan in order to

have them move some of their operations

over to the United States those are

just some some examples but in the

short-term usually tariffs mean

inflation because prices go up and

then inflation is what the FED is

looking at to determine what the FED

does with rates and then that then If

the Fed were to for instance not reduce

rates this year or if they were to God

forbid go up on the FED funds rate this

year then that would result in mortgage

rates probably coming up from where they

are so this is it's all interconnected

in a lot of different ways now here's

what we don't know we don't know how

long these these tariffs are going to

actually be in place we don't know if

they'll get renegotiated Trp in his

first term way back when made a lot

of threats even said we're imposing

tariffs today and then was there was

a renot a last minute renegotiation that

happened that that result in those

tariffs not happening to the extent that

they were expected

to also understand this that economists

when they say that tariffs cause

inflation

I think you know there's a lot of a

lot of support for that but there's a

lot of economic modeling going on and

and if we know one thing if there's one

thing that we've learned from the past

three years is that economic modeling is

really really difficult so difficult

that the Federal Reserve has

functionally said we're not really

relying on our models anymore the

Central Bank of the United States can no

longer trust their own models that is

something to keep in mind as well

because you know you'll hear people say

this is definitely going to happen as a

result of tariffs and then you'll hear

people on the opposite end of the

spectr argue the exact opposite and

the the reality is that nobody knows who

is going to be right at the end but

there are some things that we need to

think about from a from the

standpoint of real estate and and

specifically mortgage rates right

everything right now hinges on mortgage

rates mortgage rates is what is what's

calling prices to sell out mortgage

rates are what's causing buyers to

not be able to get in the home that

they want that they wish that they could

afford that they could have afforded a

few years ago everything comes down to

mortgage rates so anything that could

cause mortgage rates to go up or even

down is something to look at so I've

already discussed the scenario where

tariffs potentially cause mortgage rates

to go up right because the the Federal

Reserve has to potentially has to

increase their own rates which they are

trying to decrease at the moment if

but if they were to reverse course and

if they were to start seeing inflation

come into the data guess what you're

going to start to hear some really

hawkish things coming from the fed and

what that's going to do the end result

of that is going to cause the bond

market to kind of slow down and then

that causes treasury yields to go up and

then that causes mortgage rates to go up

I've told you guys this many many times

if you want to look at where the 30-year

fixed rate mortgage is look at where the

10year treasury yield is going that's

the bond market okay just look at at

where that is the 30-year fixed rate

mortgage and the 10year treasury they

follow each other they follow each other

very very closely and so that's

something that that we have to look at

closely but that's not the only

potential outcome right there is the

potential outcome that these tariffs

don't cause substantial inflation right

they're they're not he's not tariffing

our entire economy we don't get every

single thing from Canada we don't get

every single thing from Mexico or Taiwan

or whatever there are a lot of

potential outcomes the tariffs that

Trp did in 2018 right he didn't do

them in 2016 he waited until 2018 those

tariffs did not substantially impact

inflation they did not substantially

impact rates now what Trp is proposing

right now is more than what he did last

time so so we can't just

automatically say well they didn't cause

inflation last time they're not going to

this time no it's very possible that

they do this time and and cause rates

to go up but it's also possible that

maybe they don't maybe these economic

models aren't accurate as I've already

said there's also a scenario in which

mortgage rates come down as a result of

not I would say this can't just be the

result of the tariffs but just what's

happening broader in our economy but

there is not I mean there is a decent

chance there's some economists that I

follow that really think that that if

these tariffs go through that it

increases the likelihood that we go into

a recession within the next year

dramatically okay the FED thinks that we

you know up until recently the Fed was

pretty confident that we had kind of

evaded the recession risk there are

some people now that are you know

sounding the the the trpet sounding

the horn that this could have

aftershocks of a recession well guess

what if we had a recession then that

would that would mean that the FED would

be then reducing the FED funds rate most

likely in an effort to to

stimulate the economy right if we went

into a recession inflation would no

longer be the concern then the recession

would be the nber one concern and the

way the FED responds to that is by

lowering rates quantitative easing or

what some people like to describe as

printing money it's all functionally the

same thing right no matter how how many

different words you use we're all

talking about the same thing and what

happens when that happens is mortgage

rates come down so those are at the very

least three different scenarios that

could happen we can see mortgage rates

kind of stay where they are I'm going to

get to that in a second we could see

mortgage rates go go up we could see

them go down literally everything's on

the table it all just depends on the

aftershocks of these tariffs and quite

frankly nobody knows right now what

those aftershocks are are going to be

all right let's look at the 10-year

treasury yield if you're watching on

YouTube I'm going to show you something

show you a little something

something oh so

I I changed computers recently

and I just realized that my my zoom

settings are not what I thought that

they were going to be

so I'm going to try something here that

may or may not

work all right desktop one let's see if

this I I apologize guys allow Zoom

workplace to share your screen hold on

I've got to allow this

isn't this so much fun

well unfortunately changing to a

different computer messes up for me

so I'm you you guys are are not going to

be able to look at the nice little chart

that I came up with this is very

frustrating zoom in general so I use

zoom for recording on here and and

usually it works out quite well but

here we go I want to share a screen and

it doesn't it doesn't want me to

to do that screen sharing and recording

yes oh oh actually I may have just fixed

it but it may not let me do this until

oh hold

on

okay I think was I apologize I try I

try to be professional about this but

I also really try to get you guys the

content every week and I did not I have

had this I've been working on this new

computer for several days now and I have

not had this happen the the entire time

I've been working on it so so I

apologize for that and hopefully that

won't happen again all right if you're

looking on YouTube you can see it thank

you for enduring all of that I have

the 10year treasury yield that is

current what we have right now right now

it's sitting at five

4.54

3% that's the 10-year treasury and

then of course that impacts where the

30-year fixed rate mortgages the 30-year

fixed rate mortgage is now at

7.05 so basically the difference is

about

25% right or 250 basis points Loosely

speaking there are times when spread

as they call it is lower there have been

times where that spread has been closer

to 150 for instance if that if the

spread were 150 right now the average

mortgage rate per mortgage News Daily

would be around six okay but right now

it's closer to a 250 basis point

spread and as a result we have

average rates per mortgage News Daily in

the low

sevens but here's what I want to point

out to you guys about what we're seeing

with the 10-year treasury we're seeing

that it's it's reaching a consistent

ceiling and floor that it's having a

hard time punching through okay now what

I'm what I'm showing currently if you're

looking on YouTube is the 10year

treasury from the past year and what

you'll see from the past year is that it

has not been able to I've got a red line

at the top of of the graph and the

10-year yield has not been able to punch

through 4.8 right it went it came real

close right around when Trp was

elected it went above

4.75 and but since then it has come

back down it's tapered back down since

then it it went up over the smer as

well it went into the 47s over the

smer but it never punched through 4.8

and I've heard this from from a few

different sources is that basically

there are so portfolio managers have

to determine when treasury yields are

high enough that it makes sense to

invest in bonds right that's pretty

pretty normal I've heard for some that

5% is that nber but what I think is

happening is that others have kind of

leap frogged those you know those bigger

portfolio companies and they've got the

nber around 4.8 so I think once we get

close to 4.8 that's when we see people

start to buy bonds and then you see

those treasury yields start to the the

10e treas treasury start to come down

a little bit so I actually believe

that until we see some some major

major concerns right with regard to

specifically inflation I think that

we're going to have a hard time punching

through 4.8 so I think it's pretty safe

to say that we're going to be below 4.8

on the 10-year treasury for the

entire year barring some kind of crazy

all of a sudden tons of

comes into the data and so with a 250

basis point spread you can roughly

asse that mortgage rates if if I'm

right on this mortgage rates should stay

below 7.5 po per mortgage News Daily for

the entire year okay now let's look at

another one now we're going to look at

the floor what I'm calling the floor for

the tenure Treasury and this one I

actually find to be a little bit more

interesting all right pull that up

here so here's the floor now this is

a this is a three-month chart that

I'm looking at if you're on if you're

following on YouTube and so you can

see basically once we hit December 7th

we started to see treasury yields

going up and this was a result of

concerns about some of the messaging

that President Trp was saying that

made people concerned okay there might

be inflation happening combined with

strong jobs data combined with weak

inflation data or or strong inflation

data bad inflation data I guess is what

I should say all of these things kind

of combined in the month of December

early December to cause to cause the

10year treasury yield to soar until it

reached again that that top part

which I said it came real close to 4

.8 and then came back down and

so what I'm looking at what I'm most

interested is that

since December since December let's

see here

roughly December 16 17 something like

that the 10year yield has tried to go

below 4.5 and that's where the I have a

red line on here is Tred to go below 4.5

multiple times and has not been able to

punch below that nber and what I think

that that 4.5 nber is I think that 4.5

nber is the is the Trp nber right

this is the until we know what Trp is

going to do this

is we're going to keep that nber above

4.5 so the the bond market right now is

looking at treasury yields essentially

Bel between 4.5 and 4.8 until something

tells them to do otherwise what could

tell them to do otherwise again if

inflation data comes in starts to

come in really hot you're going to see a

a bond selloff you will see the tenear

treasury

Skyrocket if inflation data starts to

get more respectable starts to show

signs that it's that we've maybe gotten

over that last little hp or we're

making a little bit of progress cuz

that's what's happened the the Federal

Reserve made some pretty good progress

on inflation the past 3 years but it

just hasn't been able to get over that

last little hurdle to try to get us to

2% that they're so obsessed with and

so right now the

market in order to go below

4.5 in terms of the in terms of Treasury

yields I think that the market is really

wanting to see that either the economy

is slowing down or inflation is slowing

down perhaps both of those two things

combined and so

here's what I'm looking at I am

expecting right now until things

actually change until we get data that

shows that there's something changing or

unless the Federal Reserve comes out and

says hey things have changed we're we're

going to start raising rates or we're

going to start dramatically dropping

rates we're concerned about a

recession till something like that

happens I think that we're going to see

this I'm not going to predict that we're

not going to go above 4.8 or below

4.5 but I think what you're going to see

is that there's going to be these

temporary moments where we dip below 4.5

and then immediately go back above we

might dip above 4.8 and then immediately

dip back below and so that's going to

have a direct effect on mortgage rates

by the way none of this is investment

advice I'm just telling you what I think

is happening based on based on what

I've heard so if we stay above 4.5

that basically gives us a floor of

mortgage rates being around 7% you know

again the spread can tighten a variety

of ways that that that that can

happen and if the spread tightens we

could see mortgage rates you know go to

6.8 6.7 something like that but at

the moment the spread has has held

has been pretty stable in fact I will

I'll show you on here the mortgage

news daily numbers so you guys can see

that as well

all right here's the mortgage news daily

numbers so you can see here when when

the 10-year yield went up had that

Spike where it went up around

4.8 mortgage rates followed per mortgage

News Daily they hit about

7.26 and then they basically have

been coming down pretty steadily since

then now the past week they've been

hovering in the low sevens but they

have been coming down a little bit and

so a lot of that does have to do with

that spread between the 10-year yield

and the 30-year fixed rate mortgage

tightening up a little bit but at the

same time we're not seeing you know any

major you know we've not seen any like

really major

fluctuations really the past two

weeks so we will keep track of this

but but I am basically

expecting what we see basically since

October is that since the middle of

October yeah basically since the middle

of October we've seen rates basically

hovering between

6.6 and

7.25 and I feel like it's really really

realistic right now borrowing again

something dramatic happening in the

broader economy and that being

publicized in a big way by the media

by the Federal Reserve etc

etc barring something like that

happening I think we're just going to

see mortgage rates in this bandwidth

right now 6.6 we'll just call it 7.

three that's what we can expect for

this data now it doesn't mean that's

what you're going to get if you apply

for a mortgage and in fact you can see

if you're looking at on YouTube

there's actually three indices that

are on here we have the the mortgage

News Daily one which I like because it's

an aggregator but then you also have

the Freddy Mac weekly survey can that

can lag a little bit you've got the

Mortgage Bankers Association weekly

survey and the FH fa monthly

survey as well, those are all reflected

in this data, and you can see that the

mortgage News Daily, one is the highest

out of all of them, the other ones are

in fact lower and that's simply a

result of the fact that again not

everyone is going to qualify for the

same rates, I'm really overly simplifying

it overly simplifying things here, but

a lot of people if mortgage News

Daily says the rate is 7.05% like it

does today I have a lot of people that have

good credit scores 700s 800s good

income all of that they're going to be

able to to get a better a more

attractive rate than that but you've got

to talk to your lender about that I am

not a loan officer so I can't help you

with that but I can connect you with

with good lenders who can and and

I think that's a good way to to put tie

a bow on the show

right connect with the lender if you're

interested in buying these rates scare

you see what they can offer there are

pro programs out there there's ways you

can buy down rates there's all sorts of

creative ways in order to make your

monthly payment more attractive there

are loans that eliminate

PMI I have a client right now

attempting a mortgage assumption

that's something maybe I'll do a show on

a little bit later getting a mortgage

at 2.99% which probably will never see a

30-year loan at 2.99% again I hope not

because that would mean our economy is in

the trash most likely but

there are some creative ways in order to

get the rates a little bit lower than

what you see on these numbers, so talk

to a loan officer if you need one,, please

reach out to me I can connect you with a

lender my contact information is in the

show notes, Piper Insurance Group also in

the show notes reach out for a free

quote today, and please like, rate, review

subscribe all those good things and we

will talk again next time