Mortgage Guru Podcast

The Mortgage Guru has a fresh new look with a full video recording of me, as I riff in real time about the week in markets and mortgage rates. This week we had the December inflation data (CPI) and the best mortgage rates in 4-months as the bond market continued to rally, although not as enthusiastically as last week. Nonetheless, the 10-year closed below the key technical level of 3.50% after hitting cycle highs of 4.25% in November. Can the bond bulls continue to thwart the bears and keep 3.50% as the new level of technical support? The upcoming four-day week will be the first test with a stack of housing data scheduled to be released. Meanwhile, yield curves of all shapes and size continue to invert deeper and longer than ever before. What is the bond market signaling, how much higher will the Fed hike their overnight lending right, and what lurks in the shadows of the economy?Join me in this video to find out. Welcome to another episode of the Mortgage Guru Podcast. ———————————— 2022 YEAR IN REVIEW ———————————— I recently shared my financial markets “2022 Year in Review”. You can access all five parts on my blog at http://JKUTS.com [https://JonKutsmeda.com]. You can also jump right to Part 1 by clicking this link: https://jonkutsmeda.com/2022-year-in-review-part-1/ [https://jonkutsmeda.com/2022-year-in-review-part-1/] ——————————- CONNECT WITH JON ——————————- To request a personalized mortgage consultation from Jon contact him through his website at http://JKUTS.com [https://JonKutsmeda.com] You can also follow Jon on twitter at https://twitter.com/JonKutsmeda [https://twitter.com/JonKutsmeda] or on Instagram at https://www.instagram.com/JonKutsmeda [https://www.instagram.com/JonKutsmeda] and on all other social media via his handle @JonKutsmeda. For more Mortgage Guru videos and other video content from Jon, please subscribe to his YouTube channel at https://youtube.com/@JonKutsmeda [https://youtube.com/@JonKutsmeda] ——————– LEARN MORE ——————– Welcome to the MORTGAGE GURU PODCAST, where your host Jon Kutsmeda covers the topics that matter most to homeowners and real estate investors without the industry jargon. Each week Jon helps you to look under the hood of the housing market to make sense of the economic factors which drive home prices and mortgage rates so you can make sound financial decisions. To subscribe to this podcast visit https://www.MortgageGuruPodcast.com [https://www.MortgageGuruPodcast.com]

The new year decided to start with a bang! After a two-punch strike, from the NFP employment data and the ISM Services Sector report, the bond market rallied hard as both reports provided some early comfort, that perhaps, The Fed has slayed the inflation dragon. In this episode, I unwrap the data I just mentioned above and explain what this means for mortgage rates and the housing market. HINT:This seems to be the beginning of a new trend lower in mortgage rates, back down to historic averages. WARNING:Lower bond yields (rates) will likely come off the back of a market crash or recession. At the forefront of that will likely be the housing market, as the most recent bubble appears to have popped with 4-consecutive weeks of price declines. Lower mortgage rates are great news, but not if you are unable to take advantage of them with a refinance because housing price declines have wiped out the equity you need to qualify for a lower rate and payment. —————————————- MORE ON THIS EPISODE —————————————- The non-farm payroll report is a monthly survey that attempts to gauge the health of the labor market. Historically it has been one of the most widely monitored data sets by the bond market as it provides a glimpse into when the underlying economy may be likely to experience inflation or deflation in the coming months, or year. Although it was another month of positive jobs growth, many of those new jobs were multiple job holders (people with more than one job). More importantly, growth in wages had slowed, which was another good sign that inflation may have peaked. Bonds do not like inflation, and therefore the bond market liked this data which resulted in a big bond rally. IMPORTANT Mortgage rates are mostly driven by the price of mortgage bonds, and only indirectly by what the Fed decides to do with their overnight lending rate, The Fed Funds. I discuss the important relationship between bonds and mortgage rates in this episode. Shortly after the NFP report, the ISM Services Sector data was released. The services sector had been “running hot” lately, adding fuel to concerns that inflation could become “anchored”. Not only did the data miss expectations, but it was the biggest miss outside of a major recession or financial crisis. Either inflation is merely cooling quickly, or the economy is headed for hard times. ———————————— 2022 YEAR IN REVIEW ———————————— I recently shared my financial markets “2022 Year in Review”. You can access all five parts on my blog at http://JKUTS.com [https://JonKutsmeda.com]. You can also jump right to Part 1 by clicking this link: https://jonkutsmeda.com/2022-year-in-review-part-1/ [https://jonkutsmeda.com/2022-year-in-review-part-1/] ——————————- CONNECT WITH JON ——————————- To request a personalized mortgage consultation from Jon contact him through his website at http://JKUTS.com [https://JonKutsmeda.com] You can also follow Jon on twitter at https://twitter.com/JonKutsmeda [https://twitter.com/JonKutsmeda] or on Instagram at https://www.instagram.com/JonKutsmeda [https://www.instagram.com/JonKutsmeda] and on all other social media via his handle @JonKutsmeda. For more Mortgage Guru videos and other video content from Jon, please subscribe to his YouTube channel at https://youtube.com/@JonKutsmeda [https://youtube.com/@JonKutsmeda] ——————– LEARN MORE ——————– Welcome to the MORTGAGE GURU PODCAST, where your host Jon Kutsmeda covers the topics that matter most to homeowners and real estate investors without the industry jargon. Each week Jon helps you to look under the hood of the housing market to make sense of the economic factors which drive home prices and mortgage rates so you can make sound financial decisions. To subscribe to this podcast visit https://www.MortgageGuruPodcast.com [https://www.MortgageGuruPodcast.com]

The Fed strikes back against animal spirts and investors front-running the potential of a pivot. The Fed raised the overnight lending rate once again in a telegraphed move of a 50-basis point increase; The Fed Funds Rate now sits at 4.50%. This is the most aggressive rate hiking cycle in Fed history, adding all 450 basis points of hikes in 2022. Rate hiking cycles typically end in a recession or a similar type of financial crisis, and that is exactly what the yield curve is implying. The entire yield curve at one point has been inverted, including the Fed Funds Rate and the 30-year U.S Treasury Bond. In this episode I discuss what an extremely inverted curve means for the future of the U.S. economy, including the labor market and the housing market. Of course, we also discuss mortgage rates, which after climbing above 7% for the first time in over two-decades receded back into the low 6% range. This rally came off the back of a critical recovery in long-duration U.S. Bonds as the 10-year closed the week below 3.50% after reaching the dizzying heights of 4.25% in late October. Bond prices drive most first-lien mortgage rates, far more than the Fed and their overnight lending rate. However, rates on 2nd-lien mortgages, especially HELOC’s (Home Equity Line of Credit), are heavily influenced by Fed policies, which I explain in the podcast. Tune in for this week’s episode to learn more about HELOC interest rates and why the time to consider one is probably now behind you. I also share where I think 30-year fixed mortgage rates are headed in 2023 – 2024 and I give you the inside scoop on how to access my financial markets “2022 Year in Review”. ——————————- CONNECT WITH JON ——————————- To request a personalized mortgage consultation from Jon contact him through his website at http://JKUTS.com [https://JonKutsmeda.com] You can also follow Jon on twitter at https://twitter.com/JonKutsmeda [https://twitter.com/JonKutsmeda] or on Instagram at https://www.instagram.com/JonKutsmeda [https://www.instagram.com/JonKutsmeda] and on all other social media via his handle @JonKutsmeda. For more Mortgage Guru videos and other video content from Jon, please subscribe to his YouTube channel at https://youtube.com/@JonKutsmeda [https://youtube.com/@JonKutsmeda] ——————– LEARN MORE ——————– Welcome to the MORTGAGE GURU PODCAST, where your host Jon Kutsmeda covers the topics that matter most to homeowners and real estate investors without the industry jargon. Each week Jon helps you to look under the hood of the housing market to make sense of the economic factors which drive home prices and mortgage rates so you can make sound financial decisions. To subscribe to this podcast visit https://www.MortgageGuruPodcast.com [https://www.MortgageGuruPodcast.com]

It was a jam-packed week with the FOMC rate decision and the first report on Q2 GDP. The bond market rallied after the Fed raised the policy rate, the Fed Funds, by 75 basis points. This brought the 10-year Treasury Bond below the 2.75% resistance level, ending the week right around 2.65%. The yield curve has been inverted across different parts of the curve for months. This is a very strong predictor of recession and just prior to The Fed announcement the 2-year and the 10-year was inverted more than 30-bps. Speaking of recession, an advance GDP report on Thursday showed the economy contracted again in quarter 2. The -0.9% drop marks two consecutive quarters of negative GDP, which is considered an official recession. After the rate hike announcement and the GDP report the ongoing bond market rally which started a month ago picked up further momentum and as a result mortgage rates dropped to the lowest level in nearly 3-months. How can mortgage rates drop if the Fed is hiking rates? Tune in for this week’s episode to find out, and to hear an explainer on why mortgage rates do not actually drop but instead lower rates merely become less expensive. ——————————- CONNECT WITH JON ——————————- To request a personalized mortgage consultation from Jon contact him through his website at http://JKUTS.com [https://JonKutsmeda.com] You can also follow Jon on twitter at https://twitter.com/JonKutsmeda [https://twitter.com/JonKutsmeda] or on Instagram at https://www.instagram.com/JonKutsmeda [https://www.instagram.com/JonKutsmeda] and on all other social media via his handle @JonKutsmeda. For more Mortgage Guru videos and other video content from Jon, please subscribe to his YouTube channel at https://youtube.com/user/JonKutsmeda [https://youtube.com/user/JonKutsmeda] ——————– LEARN MORE ——————– Welcome to the MORTGAGE GURU PODCAST, where your host Jon Kutsmeda covers the topics that matter most to homeowners and real estate investors without the industry jargon. Each week Jon helps you to look under the hood of the housing market to make sense of the economic factors which drive home prices and mortgage rates so you can make sound financial decisions. To subscribe to this podcast visit https://www.MortgageGuruPodcast.com [https://www.MortgageGuruPodcast.com]

The June CPI data came in red hot on Wednesday. The Consumer Price Index, a measure of inflation, reported an increase of 9.1%, the highest reading in 41-years. As a result the Fed is likely to raise their benchmark Fed Funds Rate by 100 basis point (1%) when the FOMC meets July 26-27. However, the CPI is a lagging indicator and according to forward looking data it appears the Fed will be aggressively hiking into a recession, which will likely deepen the recession and exacerbate its impact. The market has been sniffing out the likely policy error and in anticipation has push interest rates on long duration bonds lower than short duration bonds; a phenomenon known as an “inverted yield curve”. The most watching yield curve is between the 2-year bond and the 10-year bond, which ended the week 20 basis points (0.20%) inverted, the deepest inversion since the start of the century, even after the near record high inflation data. Normally, high inflation is bad for bonds, but investors are running for the safety of cash-flow. As a result mortgage rates also declined, as the price of mortgage bonds rallied alongside US Treasuries. Will this drop in mortgage rates continue, and will it be enough to keep housing from crashing along with the rest of the economy? ——————————- CONNECT WITH JON ——————————- To request a personalized mortgage consultation from Jon contact him through his website at http://JKUTS.com [https://JonKutsmeda.com] You can also follow Jon on twitter at https://twitter.com/JonKutsmeda [https://twitter.com/JonKutsmeda] or on Instagram at https://www.instagram.com/JonKutsmeda [https://www.instagram.com/JonKutsmeda] and on all other social media via his handle @JonKutsmeda. For more Mortgage Guru videos and other video content from Jon, please subscribe to his YouTube channel at https://youtube.com/user/JonKutsmeda [https://youtube.com/user/JonKutsmeda] ——————– LEARN MORE ——————– Welcome to the MORTGAGE GURU PODCAST, where your host Jon Kutsmeda covers the topics that matter most to homeowners and real estate investors without the industry jargon. Each week Jon helps you to look under the hood of the housing market to make sense of the economic factors which drive home prices and mortgage rates so you can make sound financial decisions. To subscribe to this podcast visit https://www.MortgageGuruPodcast.com [https://www.MortgageGuruPodcast.com]