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 your realtor right here in South Carolina
yes your realtor
if you're listening to this
hopefully
I have been or will be at some point your realtor
and you can find all of my contact information
in the show notes
just in case you don't have that right
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if you don't have my contact info
which by the way if
if you ever have a hard time reaching me
make sure that you that you text me
make sure that you don't just assume that
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a lot of times people will email me
that's the main one where you run into problems
because sometimes the
the spam folder will filter out those emails
so please make sure really the
the most foolproof way is just to text me
I will receive this text and I
if I don't respond to something
I just didn't get it right
I respond to everything
and that's not me bragging that is a
a part of my job I'm required to respond to everything
now right now I am
currently in exercise clothes
because that is the way I am dressed at the moment
because I am trying to get you guys content
and it's been a crazy week alright
it's been truly
truly a crazy week tons of stuff going on right now and
and you know
sometimes in August we get this kind of late
like kind of last
last gasp of the busy season
and that is exactly what I have been experiencing
at least
and I and I've heard that some others are experiencing
it as well
so this podcast obviously goes on the back burner right
my clients get priority
but here I am I just did a little bit of exercising
I've I haven't even had time to shower yet
but you guys need content
and I am going to get you some content
so we're going to be talking about mortgage rates
and I honestly I'm so discombobulated
I don't remember if I told you guys
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Who I'm a little rusty on the podcast thing right
I have actually
this is the first time that I've been behind in a while
I've actually recorded out my podcast
for quite some time
and of course the one time I don't do it
I get super duper busy and now I'm running from behind
but that's okay I'm gonna wing it a little bit today
because we have some stuff to talk about
when it comes to mortgage rates
so mortgage rates have been doing some
interesting things lately I'm actually going to
screen share for you guys and show you real quick
you'll bear with me one second
so currently on Mortgage News Daily
which just disappeared on me
so let me pull that up here
currently on Mortgage News daily
the 30 year fixed rate is 6.58%
now I am going to clarify for those that care
that that doesn't mean that
that is what you will qualify for right
these are aggregates
these are averages
this is not inherently what
just anyone will qualify for
you may qualify for that
it may be higher it may be lower you never know OK
depends on a lot of different things
now
with regard to where that puts us in general
if you're looking at the chart
if you're on YouTube
you'll notice that we are near the bottom
I mean well we're pretty much at the bottom
I mean not completely at the bottom
but we're pretty much at the bottom
for where we have been for the year right
and you'll notice there was this big drop off
that happened end of July into early August
what happened there well there's a few things
that have been happening that have been impacting
these rates and have caused this decline
you can see they peaked out in may
and they've kind of come down a little bit since then
and right now like I said
they're lower than they've been at any time since late
last year what is going on
there's been a few things in the works okay
one of those things is that it got leaked
maybe intentionally maybe not that
the Trump administration is now considering replacing
their they're now frontrunner for replacing Fed Chair
Jerome Powell
which you may or may not have heard about this right
the Fed Chair
does not normally become a mainstream person
that people are talking about
but Trump has you know
he does things that are just different right
and people are talking
you're hearing things about Jerome Powell
you know there's a whole photo op with Trump
and him with hard hats on
it was funny at least to me it was
and so it's
it's very clear that Trump
who appointed Fed Chair Powell is not happy with him
and honestly I can't blame the president
I'm not happy with Fed chair Powell either
he's got a major problem okay
and that is that he focuses on lagging data
he stopped paying attention to his models
and I told you guys this years ago
I told you guys
that the Fed was no longer focusing on forecasts
and modeling out what was gonna happen
they were only relying on lagging data
well that's a problem
because that's how we end up in recessions
or that's how we end up in bad financial crises
is when you're only looking backwards
and you're not looking forward right
the Fed's job all of us can look backwards right
I can look at the old jobs data
I can look at the old economic data
I can look at the old inflation data
anyone can do that
the whole reason why we have a Federal Reserve
at least one of the main reasons why
I shouldn't say the whole reason
but one of the main reasons why we have them
is to have a group of so called experts
who can actually forecast what's going on our economy
and what are monetary policies
that can help to produce growth
and that can help to avoid recessions and
and negative GDP prints and all of that
well Jerome Powell is not up to that task
and this is not a recent phenomenon
this goes back to Covid right
he was slow to the punch on so many things with Covid
now he
he did reduce rates very aggressively during Covid
I wouldn't say he was slow to the punch on that
but he was way
way slow to the punch on increasing rates
by the time we started to increase rates
inflation was already way out of control
and it was already too late
and so then he had hike rates way too high
put a whole system shock into the economy
and here's what we have you know
now the economy has just kind of been struggling for
for several years now
in large part directly as a result of the Fed
the Fed caused inflation by what they did
by reducing rates way too low for way too long right
that was a big part there were other things
there were supply chain shocks as a result of Covid
there was all that
fiscal stimulus that was being pumped into the system
that Trump and Biden both did
but a lot of in my opinion
a lot of the inflation
the reason why we're still having inflation
we're well past all of that stimulus
we're well past all of the covid supply chain shocks
so why do we still have this inflation
it's because the markets still haven't recovered
from what the Federal Reserve did
in my opinion okay
and I'm not an economics
expert by any means but I track this very closely
and I follow
and I read a lot of people that are experts
that I trust and that
that have tended to be correct
for quite some time
or at least have a good track record
so it came out that the president wants to
currently the
the front runner to replace Fed Chair Powell is Fed
Governor Waller that is great news
now if you know me
you know
I am not personally a huge fan of the president
it is what it is
not gonna have that discussion on this
on this show but there's a lot that I
that I don't care about I also didn't care for
for Biden either so this isn't a partisan thing
this isn't oh
stand the big Liberal no
actually I'm actually a
a libertarian generally speaking
loosely speaking
and I just
struggle with the policies of both these presidents
but I love the idea of Governor Waller be
replacing Powell as the Fed chair
I think that that would be fantastic on multiple levels
and not just because Governor Waller has said that
he thinks we need to reduce rates which
which he has said we need to
to do that but he actually has data
he's actually focused on data
focused on forecasting not just lagging data
and he can actually coalesce the entire Federal Reserve to
to row in a direction right
that's one thing about Jerome Powell
is he has gotten the Fed to
to row in this direction of these higher
for longer rates that have
have been very damaging to a lot of the economy
he's convinced them to go along with him
well we need someone that can convince them
that can convince the other Fed voters
governors and presidents of the Fed that
that it's time for rates to come down
that we need to do this and I believe that
we need to do this to save the economy
me personally
this is has nothing to do
with real estate we've already been in a recession
in real estate for three years
I mean what would be another three years of that right
nobody's coming to save us
but the economy is a is a whole another story
and I think that Governor Waller is the guy okay
I think he is the guy who could come in
who could
who could show the other voters of the Fed that hey it
the time has come we need to start tapering things off
slowly but steadily and find a neutral rate
that is lower than where it currently is so
so that our economy doesn't tank
I think that is immensely
immensely important
and so the markets really really like that OK
bond markets really like that
people started
started buying Treasury bonds
and that causes
Treasury yields to
come down
which then in turn causes mortgage rates to come down
OK then we had
some weak job numbers now and some weak economic data
that then is what caused
when you saw that straight line down
that I showed you on the on the mortgage rates
that was precipitated by the 10 year yield and
and bond years and
and be bond yields in general coming down
because here is generally speaking the
the
conclusion
that people have about the current Federal Reserve
and this is not an unwarranted conclusion
this is essentially what the Federal Reserve has said
they are focused on the job data
the labor data right
jobless claims unemployment
what sort of raises people are getting
you know in terms of the actual
the actual data on
on wages gosh
that was a hard one for me
wage data all of these things
those are the data points the Fed is focused on right
because if those get bad then inflation is
is going to come down right
so they're less focused on the inflation data right now
then they are focused on the jobs data
so what happens is the mortgage
rate is indirectly pegged to the 10 year yield
right to the bond market
people start buying bonds
that means mortgage rates come down
specifically the 10 year
we need to see the 10 year yield get bought up
we need to see those yields start to come down
that causes them mortgage rates to come down
what
bond traders do is they try to time the market
so they try to get ahead of the Federal Reserve
so if they think
the Federal Reserve is going to immediately
start to reduce rates then
bond traders will start to buy Treasury bonds
and then that will cause mortgage rates to come down
ahead of what the Federal Reserve is doing okay
that's what's happening here
and so when that
kind of poor jobs data came out
poor economic data came out
that's exactly what happened
now I'm recording this on August the 12th
we had some not so great inflation data came
that came out well
we didn't see a huge fluctuation in the bond market
the bond market kind of held the line
and again that is because
they don't really care too much about the inflation
date anymore
like we've seen for the most part a steady decline
and it's bumpy it's noisy some
some months up some months down
some quarters up some quarters down
but the trend has been downward
and ultimately like I already said
if the
if the economic data continues to deteriorate
the inflation data is going to go down
and so this is what everyone currently is focused on
and so and
and rightfully so
I think it's the right thing to focus on
so we have mortgage rates down at the
at the lowest point they've been in quite some time
hasn't really helped
hasn't helped the market that's not why I've been busy
by the way has nothing
I haven't had any clients come off the sidelines
because oh
rates have come down
I don't think that most people are even aware
that mortgage rates have come
down a little bit it
it's marginal right we're talking about from the
the low sevens to the mid sixes
that's not enough to bring people off the sidelines
it probably needs to go into the very
very low sixes or high fives to really start to see
like actual movement
in terms of people getting off the sidelines
and realizing oh
I can I can maybe afford
you know that next house
or maybe I can maybe afford my first house finally
that's my personal opinion
we've talked about that before
but where we are at
in this moment
is we're seeing some stability of mortgage rates
kind of in the mid sixes
and unless the economic data starts to come in better
I think that we're going to continue to see that
Now depend enough economic data continues to deteriorate
we'll see the 10 year yield come down
we'll see mortgage rates come down
kind of pick your poison right
do you we don't want the economy to go into a recession
but at the same time
we need it to kind of toe the line
in order for some of these rates to
to actually come down now unfortunately
the president just fired and hired his own
person in charge of the Bureau of
what is it the BLS Bureau of Labor Statistics
nobody likes
whereas everyone like Governor Waller as like
hopefully the guy that
that Trump is going to pick to lead the Fed next year
nobody liked who we picked for the BLS
and so now we're going to have moving forward
I don't know what that is going to mean
because we're going to start getting
these this economic data that analysts are going to say
is this even correct or is this all partisan
is it being made to look better than it really is
because Trump picks someone
who he thinks is just going to make the data look good
that's not what I'm saying
I'm saying like
I'm not saying that that's what's going to happen that
that that the guy that he picked is going to do that
I'm just saying that that's what
the chatter is out there
and the chatter is very important because again
like I said markets are trying to
figure out what is happening in real time
and so if they don't trust the data
then markets are just going to
to start guessing
and we don't know what direction they're gonna guess
are they gonna think things are worse than they are
or things are better than they are
I don't know
if they think things are worse than they are
then perhaps
we could actually see rates come down even further
maybe that's the big brain
idea here that the Trump administration has that like
OK I'll put someone in there that's gonna say things are
better but the markets are gonna think it's worse
and so the public is gonna hear things are better
but the markets are gonna think it's worse
and then the markets are gonna drive rates down
which is what I want in the long run
I don't know
that would be that would be an
an insane strategy
and if it works that would be even more insane
but we live in insane times
I have I have no idea
all that I know is that
we don't know anything right now
but I am excited about the possibility
for Governor Waller being the Fed chair
next year the possibility
I really hope that Trump sticks to his guns
I think he's getting that I
I think he's got Scott
Besant in his ear really encouraging Governor Waller
there's been floated some other names
that would be really really bad
if Trump picked them instead
I think at this point we pretty much know I
for the most part
I think it's going to be Governor Waller
and that's great now I don't
I don't think we know exactly how many rate cuts
the Fed is going to do this year
but now they're starting to be chatter
that there might be as many as three rate cuts
now I don't think that Jerome Powell is gonna want that
and he actually gave out a really snarky
press conference recently
and then looked really bad afterwards when
when that bad economic data came out
because this is his legacy
you know he's coming into the final year
or he or the final few months
he is in the final year
in the final few months of him being the Fed chair the
and the whole thing his whole legacy
hinges on what happens with this inflation
what happens with the economy
and right now the jury is out
we don't know yet
what his legacy is going to end up being
but if he doesn't want to cut rates
he has a
he really runs the risk of there being a mutiny
because he has to convince the rest of the voting
governors and presidents in the Fed
to vote one way or another
on cutting or not cutting and
and staying neutral
and there's been a lot of people from the Fed
coming out saying yeah we
we need to cut and a
and a few of them that are just like
it we might be falling behind here and
and that's really really bad for Jerome Powell
and depending on whether that starts to gain steam
we could see
mortgage rates start to come down even further again
so much depends on this economic data
whether it continues to go in the negative direction
or not in the ideal world
we would see it stay negative
but not get too crazy negative right
we don't want to we again
we don't want to go into a recession by
by any means but
but we want the data to reflect what's actually happening
right that's at the end of the day
what this is all about and you hear everywhere
that the economy is not in good shape
why are people saying that
are they just making that up
I don't think they're making that up
I just think that
the reality that people are experiencing
hasn't hit the data yet
and I think that's my critique of Jerome Powell
is that he's relying on the data
that is absolutely
quite frankly and
and he needs to be you know
talking more to people
about what is actually going on out there and
and believe it or not the Federal Reserve does do that
they do talk to business owners
they do talk to
to heads of corporations to
to try to piece together this whole economic puzzle
knowing that data can be flawed
it's not going to be it's never going to be perfect
and so here we are
we could see mortgage rates
come down a bit for the rest of the year
but now
we have the question of whether any of the data
that the Federal Reserve is
is relying on and that the markets are relying on
is going to even be trusted
and now who knows what'll happen
now there's another thing that we need to talk about
and that is the spread okay
if you don't know or the spreads plural
if you don't know what the spreads are
the spreads are the gap
between the 10 year yield and the 30 year
fixed rate mortgage okay
so we'll talk about that for a second
the 10 year yield as I'm recording this is 4.289%
the 30 year fixed rate mortgage is 6.58
so you take 6.58 and you subtract from it 4.28
what do you get
you get a spread of 2.3 or what most people would say
230 basis points that's the current spread
that is historically quite high
historically we would see 150 to 200 basis points
so where the spread is or
or where the 10 year yield is currently at 4.289
really we should see rates in the low sixes
maybe even the high fives
depending on what you know
if you're looking back historically
what you're looking at what impacts the
what impacts the spreads is market
and perceived market volatility
and so the spreads really got really wide during
you know when all of that inflation went crazy
markets were volatile
people didn't know what was happening
and there's a reason why this happens okay
the reason why this happens is that market volatility
causes lenders to need
to be able to collect more money up
front when they write a mortgage
and so they have to price their mortgages
more expensive than they normally would
in comparison to some of these other products
like Treasury bonds that they could invest in
okay that's a really
really big picture explanation of that
well spreads have narrowed right
they went up to like 300 basis points at one point
they're down to 230
that's good they can come down even further and
and they have in in recent weeks they have come down
and that's part of you know
even though the I
I just said recently
that the 30 year fixed rate mortgage is
is at a pretty low point for the year
the 10 year yield is not at the low point for the year
in fact it has come down
a quite a bit lower than where it is now
several times this year
and so
what has happened is the spreads have gotten better
people have gotten a little bit more comfortable
the markets have gotten a little bit more comfortable
with the state of the economy and
and it's not about that the economy is in great shape
it's more that there's a predictability element
the unpredictability of tariffs on
tariffs off
and again I
I apologize for being really political
I'm really not trying to be political
this is literally just this is just the truth
this is just the reality you can say oh
this is this is being really partisan
I'm not being partisan like just talk
talk to some people
read some books about the economy they'll all
anyone that is not partisan
will agree with what I'm saying
and
and that that talks about that is an economic expert
they will they will confirm this but all the
the tariffs on tariffs off is it gonna be
you know 15% tariffs
it's gonna be 75% tariffs up 1,000% who knows
that's not good for
from the standpoint of volatility
people don't know what's gonna happen well
they finally started to get more comfortable
they finally started to get markets
that is traders investors
they finally started to get more comfortable with okay
we kind of have a sense for what the president is doing
we kind of have a sense for what the economy is doing
for what Congress is doing
for all of these different things
and so that's caused the spread to loosen up
and to narrow a little bit
we need it to narrow even more right
that would really
that's the simplest way for mortgage rates to go down
is if that spread goes down
will it happen I
I personally at the moment don't think so
I think that there's still
there's still so much concern
and we probably won't see
you know a
a major element of
of that spread coming down until
maybe elections next year it
it's really hard to say
it's really unpredictable
but we have a few different ways that mortgage rates
could come down
that is
it's more likely that they'll come down at this point
than that they'll go up but
there is one more
little twist that could cause them to go up
that we don't want to happen
and that is the privatization
of Fannie Mae and Freddie Mac
this is something that has been talked about for
for quite some time
you'll remember back in the day pre financial crisis
Fannie Mae and Freddie Mac were private
after 2008
they basically were
were taken over by the government
by the government by the federal government
and are kind of this quasi private
public entity right now well for
for several years now
there's been a push to make them private again
and basically
for the government to completely
be out of the mortgage business
there is some wisdom in that
I don't think that the government should inherently
be in the mortgage business
however there's a question of
of timing right
is this the right timing to do this
because if it's not done right
it will cause mortgage rates to get higher right
whenever you take something that's functionally
government subsidized and
and just privatize it overnight
that thing usually becomes more expensive
at least in theory right
these all of these things are in theory now
and of course
anyone any of my libertarian leaning friends
trust me I know
there are a gazillion examples of that not happening
I understand please don't come at me in the mentions
however come at me in the comments if you want I do want that
but that is another factor I'm
I'm hearing that we might have
Fannie and Freddie open to the public
to be privately traded
as early as the fourth quarter of this year
and if that happens
that could have a negative effect on mortgage rates
as well so I don't know if the timing is right for this
if I were the president I would probably wait
I'd probably hold off a little bit
but he seems like he feels like this is his time
where he has the most political capital
to make these sorts of of big moves
and so he might feel like
this is really the best time to do it
and quite frankly he might be right from
from a political capital standpoint
so we have a ton of moving parts here
and I'm going to be with you guys every step of the way
telling you what's happening
but for right now
we got mortgage rates somewhere in the mid 60s
loosely speaking depending on what your credit is
depending on what you can qualify for etcetera
they could go up they could go down
nobody knows we got spreads
we've got privatization of Fanny and Freddy
we've got market volatility
we've got a whole bunch of fun stuff coming up
for the remainder of this year
I'm gonna keep you guys on track with it
for the entire year but that's it for today's episode
hey I winged it
did I do pretty good let me know if I did pretty good
that was just all off the top of my head
I wasn't relying
I normally have like notes in front of me
I had no notes I
I completely did that entirely
I just adlibbed it so
is that the right word I don't know
but let me let me know what you guys think
my contact info is in the show notes
if you need to contact me
for any of your local real estate needs
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