A Drop in Mortgage Rates
In the last few days, interest rates for mortgages have fallen considerably.
By way of example, a few weeks ago I was quoting 7.5% to our best borrowers with high credit scores and ample income. As I type this e-mail, this same borrower could now qualify for 5.875%.
We have not seen this in over a year.
To put this into proper perspective, author David Graeber writes in his book entitled "Debt: The First 5,000 Years" that a 5% rate has been as low as ever in the last 5,000 years of recorded history.
However, trends are cyclical, nothing goes on indefinitely. Rates, as everything else in life, follows a cycle.
Have you ever looked at a Wall Street Stock Chart? Have you noticed that it is jagged? That it has peaks & valleys?
When you look at these charts, you can tell the trend.
If the trend is down, this doesn't mean that everything is going down all the time, it means that it is going down the majority of the time with occasional rebounds.
Same as when going up: The trend is up, but now and then, it falls. It never falls down as low as before. Example: rates hit a low of under 2% briefly in the past, now that low is 5.8%.
Even though this is an impressive rate fall, we are on an Up Trend. This is one of the valleys in the rate chart, which in the future, economists are going to point to.
See this Federal Reserve Chart of Mortgage Rates:
When you are in a valley it is difficult to see that you are in a valley.
According to economist and former hedge fund manager Mr. Martin Armstrong, May 2024 is a turning point at many levels.
At his World Economic Conference that took place in Orlando in November of this year, his data indicates a lot of rate volatility and instability. His message is that the USA is not isolated from international events, and that these events will have an impact that the Federal Reserve cannot control.
Mr. Armstrong and myself backstage at the November World Economic Conference. My wife had painted a picture of his French bulldog Napoleon, which I had the honor of presenting to him. :)
The estimates are that by end of April - at the very latest, we should resume our upwards trend, if not sooner.
This is a terrific opportunity to obtain and lock a mortgage at a historically low rate.
What about the 2% or 3% rates? In my life time these won't be back, but I would love to be wrong!
If recently you have been trying to buy a property, home, condo or multifamily and have been outbid by other buyers or you were priced out due to the high rates, now you have a chance!
This applies to refinancing too. in the last few months we have had a wave of business clients who are refinancing to get cash out to pay expensive business debts and/or take advantage of real estate opportunities.
Whatever the reason may be, this "rate valley" presents you with a historical opportunity to still grab that low rate.
What a Christmas Gift!
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