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 South Carolina and you can find all of my contact information in the show notes if you need to reach out to me for any of your real estate needs and just a reminder as always please like rate review subscribe all of those good things with regard to the show and that will make sure you don't miss future episodes that will support the show I've got some exciting things coming up I've got a a very special guest that'll be coming up in the month of October that I think you guys will be excited about definitely be if it works out the most high profile guest that I've had on the show no offense to any of my previous guests that are listening but I think that they will agree as well if and when that works out so please make sure you don't miss future episodes because I think you'll regret it I think you'll regret if you if you end up missing future episodes but today's episode I'm probably gonna have to keep this short to be honest I have no notes I am winging it today but this is something I'm that I stay up on top of and it's something that we need to talk about we've talked about it all year but we need to specifically talk about what's happening right now with regard to mortgage rates okay now this is a Greenville centric show but I've told you guys and if you've listened for any period of time you know that Greenville is more sensitive to mortgage rates than a lot of areas of the country now the entire country is sensitive to mortgage rates but there are different areas that are more sensitive than others and Greenville is particularly sensitive to high mortgage rates and the reason for that is that many people move here in order to lower their cost of living well guess what if people are moving from a high cost of living area but they have a 3% mortgage rate their cost of living might not actually be any cheaper here than it is where they're moving from be it California Chicago New York whatever and so when mortgage rates go up OK and particularly when they've been at the levels that they've been the past few years and when you contrast that to how low they were in the years leading up that has a huge effect not only does it affect all that immigration that I just talked about but also affects all of the people who are living here in Greenville that have those 2 3 4% mortgage rates and now are like well I want to move but my monthly payment like if I go to a house that is let's say a third more expensive than the one I'm currently living in but my mortgage rate more than doubles like I could see myself paying three times the monthly amount than I'm currently paying that that's some very loose back of the napkin math but something like that this is and so that's causing what some people have called the lock in effect okay the lock in effect there are a few different definitions of it but the way I the best definition in my opinion is that it's preventing people are locked into let me say that one more time people are locked in with these low mortgage rates it's been called golden handcuffs by some people right it's like okay this is such a terrible thing you've got the world's lowest ever mortgage rate but nonetheless they're locked in with this low mortgage rate and can't move anywhere because they got such a low rate and rates are so much higher than what they have currently that they're in a situation where it would just cost too much more in order for them to move and so they don't well unfortunately the mortgage rate situation is not at the moment improving it had been improving in fact I want to pull up for you guys if you're watching on YouTube I am going to screen share with you all from Mortgage News Daily make sure that alright here we go alright here we have mortgage news daily when I talk about whoops when I talk about mortgage rates and I just did something and I unshared it let me try it one more time sorry think I was brand new at this I'm not been doing it for six and a/2 years when I talk about mortgage rates I'm talking about Mortgage News Daily which tracks is basically an aggregator is tracking daily where mortgage rates are going now this is not necessarily going to be the rate that you can get right it's an aggregate it's averaging out a lot of data from all over the country from a lot of different borrowers some that are going to be more qualified or better qualified or have better credit or whatever better income whatever than you and a lot that are gonna be worse and all of those categories in you so you need to keep all of that in mind when you're looking at this is right now I'm recording this on 8:31 August 31st last day of August and it's saying 6.87% is a 30 year fixed rate mortgage okay again that might not be what you get talk to your loan officer about that very important detail for you but here's the important thing here's the reason why I'm bringing this up right now you can see in 2023 we hit and brushed right up against 8% in October of 2023 so we're going on the three year anniversary where basically mortgage rates went up to 8% and then they they've been pretty much on the decline since then until they hit famously right around 5.99% earlier this year and it looks like Mortgage News Daily it it's hard to find the exact month but there was there was a day where they hit 5.99% right around February of this year and that there we go I found it February 24th they hit five nine 9 and ever since then they've been going basically back up and there's always peaks and valleys to this right there's never just a linear just a straight line like you took a ruler you know like in high school and did a straight line down no these graphs they're up and down but you watch the trend all right and the trend from October 2023 until February 2026 was downward and I remember I turned 40 in the month of February and I was excited because when I was on my I was on a I did a little hiking trip for my 40th birthday with my friend Seth who's been on the show by the way he's definitely by the way when I said about I hope my previous guests are not insulted by me saying I'm gonna have my most high profile guest I actually am hopeful that Seth is listening and is offended by that Seth is like my best friend so I can say whatever I want about him but while I was with him hiking I was checking constantly the 10 year 10 year yield I was checking mortgage. Mortgage News Daily checking to see because it was basically like every day we were seeing these things come down and then what happened well first off Trump has continued the tariff train then the war with Iran happened and then gas prices went up inflation started going up and basically since then we have just seen rates continue to go up until they hit today again I'm recording this on August 31st this is the highest point that they have been let's see here since roughly just since basically June of 2025 so over a year it's been since we've had rates at this level we're starting to approach 7% that would be really really bad in general for the market bad for buyers bad for sellers as well nobody benefits when rates are going up like this when it's already at an affordable level the only silver lining you could maybe come up with is that well maybe this will push prices down well and you can make the argument that's already happening but again in the current dynamic it's not pushing them down enough to suddenly create you know a buyer's market or a favorable market for buyers it's still not a favorable market for buyers it's just it would be much more favorable if rates were just lower and that would be more competitive right there'd be a lot more offers there'd be a lot more buyers out there but that would be a buyers would be much happier in that sort of an environment than they are right now well in addition to all of that that I just mentioned we had a major change that happened this year as well we talked about this a little bit the Fed chair got changed over from Jerome Powell over to Kevin Warsh. Kevin Warsh was Trump's handpicked candidate as was by the way Jerome Powell way back in the day obviously that didn't work out super well for the president even though in in my opinion Jerome Powell was pretty good he was a little bit behind on some things but I felt like he took the job seriously he for the most part was a good Fed chair well now it's Trump's new guy Kevin Warsh and what a lot of people thought when Kevin Warsh became a Fed chair was that okay here we go rates are gonna come down right cause this is Trump's guy Trump has been all about rates coming down surely there's some kind of a you know back door arrangement where Kevin Warsh lowers rates well we got the first meeting where they voted to decide what to do with rates and they voted to maintain but several people dissented several people said several voting members of the Fed and then later some non voting members said we think rates need to be raised okay then we had this past week the there is every year a meeting with the Federal Reserve in Jackson Hole and once they had that there's a whole lot of conversations that happened with different Fed presidents and governors and the Fed chair himself and Kevin Warsh did speak and gave what people deemed to be a quote unquote hawkish tone OK a hawkish tone what does a hawkish tone mean alright you either really know it or you really don't like there's not a whole lot in between the hawkish tone it so if the Federal Reserve is being hawkish that means they want to raise rates if they are being dovish that means they want to lower rates right and so what happens is a lot of people try to read the tea leaves on what the Fed chair is saying or what the other voting members of the Federal Reserve are saying in order to determine what direction are they going in so if they're more hawkish there's an Assumption they're going to raise rates if they are more dovish there's an Assumption they're going to lower rates and then what happens is the bond market then tries to get out in front of what the Federal Reserve is going to do so if the bond market thinks rates are going up then bond yields will go up bond they'll start selling off Treasury bills bond yields will go up if the Federal Reserve is more dovish generally speaking then they will bond traders will purchase more of these government bonds and then bond yields will come down and then when basically the 30 year fixed rate mortgage follows these bond yields loosely speaking and so as if they go up so if the Federal Reserve is more hawkish and that causes bond yields to go up then mortgage rates go up with them and on the flip side if the Federal Reserve strikes a more dovish tone and then bond yields go down as a result then mortgage rates generally speaking go down as a result as well that that's not it's not 1 to one because there is what we call a spread between the 10 year yield and the 30 year fixed rate mortgage but that is loosely what happens OK don't come at me in the comments saying that's not exactly what happens I'm this is a I have a wide range of audiences here some people that this is going to be way too simplistic for and some people that are like whoa I didn't know any of that so bear with me I can't get to in the weeds if you really want to get into the weeds go listen to the odd lots podcast great podcast by Bloomberg that they really nerd out about the stuff and they have all sorts of podcast that they do during Jackson Hole week and so you can go here directly from the members of the Federal Reserve which is fantastic highly recommend that so I am going to show you guys a chart of the 10 year yield again if you're looking on the Youtube all right you can see here the 10 year yield it it's really been bouncing around a few different a few different places but you can see that it started to go low basically a week ago it started to come down it was down into the low 4 sixes and then it started to go up from there and then it's really gone up the past few days you know why it's gone up the past few days that's directly because of the hawkish statements by the Fed and so what people what bond traders think is that rates are going back up again and so bond traders trying to get out in front of that by selling off the bonds that they have there's gonna be better deals out there and or they're simply not purchasing options that are out there and so here's where we're at now as I'm recording this the yield has gone up from where it was down at 4.62 at one point just on the 25th it's all the way up at 4.74% and so generally speaking the kind of environment that we've been in has been that the that the spread between the 10 year yield and the 30 year fixed rate mortgage has been basically two one and a half to 2 ish percentage points it's a little bit higher than that right now alright because people are sensing some turmoil in in the markets right now and so we're getting hammered is kind of what I'm saying here on multiple levels when it comes to mortgage rates and here's the big problem with all of this right now is there is no indicator that the that inflation is going to come down and I'm not an economic expert I don't pretend to be that but I track all of this stuff in order to understand where the real estate market is going and just where markets are going in general and basically the inflation data is not great the war with Iran continues Trump is talking about tariffs again which cause more inflation and other countries are talking about tariffing us even more which causes which just compounds all the inflation and so basically the Fed has a blunt force tool to tame inflation and that is increasing the Fed funds rate and so all of this comes downstream from that now there are times when bond traders don't agree with the Fed and in that case you might see a divergence you in in the current environment you're more likely to see that if the Fed reduces rates we had this happen not that long ago we had a scenario well we've had this happen a few times lately where the Fed actually reduced rates and bond yields went up and that was a a situation where either traders had leveraged in one way and then corrected or they just disagreed with the Fed altogether and they're just like no the economy is not as good as you think it is and or not as bad as you think it is one way or the other they can they can go in either direction and so if they disagree with the Fed they may make decisions that go against the hawkish or dovish direction as the Fed what this is telling me right as I'm looking at the 10 year yield is that bond traders agree with the Fed rates need to go up and it seems almost certain the next time we have the Fed vote on this that we are going to see an uptick in rates and now that doesn't necessarily mean that these bond yields are gonna continue to go up and that mortgage rates are gonna continue to go up it's hard to say right because they're basically pricing that all in right now so the question is gonna be at what point have they fully fully priced it in and there's not going to be you know and we've hit the ceiling on that we don't know and this is where you know if I if I were an economic expert I could probably prognosticate and this is kind of the limit of how knowledgeable I am about all of these things excuse me if you're watching on YouTube my hair is kind of crazy I got out of the shower I took a I took an afternoon shower and I didn't put any product in my hair so it's like kind of crazy at the moment but the going way off the rails here the point of all of this where I'm going with all of this is that bond yields here let's actually I'm gonna pull up that 10 year yield again so you guys can see it alright senior yield let's back this out if you go back a year you can see just how high the yield is in comparison to where it had been I mean it is a steady incline the past year for comparison a year ago it was right around 4.3 just a hair below 4.3 and then it quickly went down to 3.99 and now we're at 4.75 alright so and this is with having a president that has just been pushing for rates to come down but the thing is that you have to the White House has to and this is not a critique of the president inherently like I'm not trying to come on here and be political I don't wanna do that but this is the result of the policies that have happened like this is a logical result and when the various policy decisions that have been made have been made all of the economic experts that I follow on social media they are all just like yeah this is gonna cause inflation it's gonna cause rates to go up like people predicted that two and a/2 years ago during the presidential campaign and so this is all just like if anyone that's surprised by this just hasn't been paying attention to the right the right people the right communicators the right experts in my opinion and oh and we've got this actually kind of interesting if you look at let me show you the sorry I'm nerding out here if you look at the at the 10 year yield from the one day rate you can really see you can really see the spike that's happened and here's the thing that the you know there there's not any trading that happens over the weekend so when things opened up this morning we saw a big sell off in bonds that caused the bond yield to go up quite a bit and so where am I going with all of this what does all this mean what this means is that if you're asking are mortgage rates are rates coming down next year nothing indicates that that's gonna happen okay maybe they'll come down a little bit but there has to be meaningful pressure on inflation has to come down for rates to come down any further and Kevin Warsh he's outnumbered like the he is what he wants even if he were to be dovish right now which he's not okay but even if he were he doesn't have enough voters siding with him right now right now it seems overwhelmingly like the vote is going to be for a a rate a rate hike of the Fed funds rate and that's just because of the inflation data what is going to cause that dynamic to change maybe something with the elections in November possibly like that I'm holding out hopes for that that maybe something happens in November with our midterm elections that causes a change of some sort I don't know what that would be but some sort of a change that has the ripple effect of inflation coming down in some way not super likely but that is perhaps the most optimistic scenario of course the biggest one is just and we've talked about this a bunch the war in Iran wrapping up that would be the single biggest thing that could happen that would that would have a positive effect rolling back tariffs that also would do it I don't see that happening under the current administration so I think we can pretty much take that off the table and so here we are in in a in kind of an odd spot where nobody really exactly knows there's not a whole lot of obvious scenarios that for change right now and you know you need to be prepared for that like right at this moment looking forward I'm bracing myself Labor Day is pretty pretty near I'm bracing myself that the market in Greenville which typically has a slowdown after Labor Day is going to slow down quite a bit and people need to be prepared for that because there's not a whole lot working in our favor real estate wise right now when it comes to rates the broader economy etcetera etcetera next year you know I think if rates went above 7% I think we could find ourselves in in a challenging market in a challenging market we really need rates to be not just below 7 but really below six and a half percent for the market to be able to like really function and for people to feel like they can move and so we could find ourselves in a situation where even going into the busy season of next spring where it is just not as there's not as much activity as expected and you know we talked about a few weeks ago with the monthly indicators that GGR produced that the median sales price had the lowest decline that we've seen in quite some time okay you might call it a depreciating market that is a direct result of all of this and that will probably keep happening unless the unless we see some kind of change in mortgage rates so this is not necessarily the most optimistic episode that I've ever published but I always tell you guys what I see not what I want to see and this is what I'm seeing right now and I hope that's helpful and will help you to prepare for the future I think if you're looking at moving anytime soon like just understand this dynamic there's no obvious path to this dynamic ending and so that will hopefully inform your decisions moving forward that's it for today's episode thank you so much for watching or listening please like rate review subscribe please reach out to me my contact information is in the show notes if you need a realtor in the Greenville, Spartanburg, Anderson market, I'll talk to you guys again next time!