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Your Guide to the Housing and Mortgage Markets; The Martini Factor (September 26 – October 2, 2022 Economic Update)

September 26, 2022 by Kevin Martini

The Martini Factor is curated by Certified Mortgage Advisor and Raleigh Mortgage Broker Kevin Martini to provide a glimpse of what is likely to impact Raleigh mortgage rates this week.

The top 2 items likely to impact Raleigh mortgage rates this week

RECESSION FEARS

As expected, the Fed increased short-term interest rates last week by 0.75%. Even though the news of an increase in the short term rate was expect, the news that rattled the stock and bond market was Fed Chairman Powell’s firm position to continue hiking rates aggressively until inflation comes down. This certainly shouldn’t have been market-moving news given that this message is being screamed from the rooftops over the past several months. However, investors apparently got spooked that continued aggressive rate hikes are likely to trigger a massive recession, with perhaps unforeseen dire consequences for the economy.

SPECIAL REPORT: The Fed Rate Hike

PCE INFLATION NUMBERS THIS THURSDAY AND FRIDAY

The Fed’s favorite measure of inflation is PCE (Price Consumption Expenditures). The revised Q2 numbers are scheduled for release this Thursday (9/29/2022), and last month’s numbers are scheduled for release this Friday (9/30/2022). Either of these reports could trigger a market reaction that could negatively impact Raleigh mortgage rates.

Oh by the way…

It is never too early to start to explore your homeownership options and you are not too late either. The first part of the homeownership journey is the loan and then after you have the certainty and being armed with price and cost clarity, the second step is to go find your home. The Martini Mortgage Group offers trusted advice with a frictionless digital mortgage process that provides certainty. To contact Mortgage Strategist with the Martini Mortgage Group simply call: (919) 238-4934.

Things to Consider when Buying a Home

If you are a first-time homebuyer or a repeat homebuyer, there are many things to consider when buying a home. Certified Mortgage Advisor Kevin Martini and Senior Mortgage Strategist Logan Martini curated the Fall 2022 Martini Buyer Guide to simply explain the current real estate and mortgage markets plus vital information about buying a home and the process of getting a mortgage. The Fall 2022 edition of the Martini Buyer Guide has a dozen of informative articles that talk about things one needs to know about the current real estate and mortgage markets.

How the Fed Rates Hikes May Impact Raleigh Homebuyers and Homeowners

September 24, 2022 by Kevin Martini

The Federal Reserve increased short-term interest rates (known as the Federal Funds Rate) by 0.75% on September 21, 2022. This means the Fed Funds rate is currently at 3.25%. The Fed Funds Rate is the interest rate that banks charge each other to lender/lend overnight.

It is critical to know, the Prime Rate (i.e. the interest rate the banks charge their top tier clients), is based on the Fed Funds Rate. The Prime Rate is set by large banks and is often used to determine the interest rates on lines of credit and credit cards. The formula for Prime is very simple…Fed Funds Rate plus 3. This means the Prime rate is currently 6.25%.

Raleigh Mortgage Rates

Raleigh Mortgage rates and all mortgage rates on fixed-rate mortgages are NOT impacted by changes to the Federal Funds Rate. Raleigh mortgage rates fluctuate based on the supply and demand for mortgage bonds in the bond market.

The Fed has been the biggest buyer of mortgage bonds in recent years with an unprecedented pandemic-era bond-buying program. Simply put, this is why there has been record low Raleigh mortgage rates recorded. The Fed is currently in the process of exiting their bond-buying programs. This unwinding is why the average interest rates on fixed-rate Raleigh mortgages have gone up by more than 3% so far this year according to data from Freddie Mac’s weekly survey of mortgage rates.

The Martini Mortgage Group expects Raleigh mortgage rates to continue drifting higher as the Fed continues to exit its pandemic-era bond-buying programs.

HOME EQUITY LINES OF CREDIT (HELOC)

Interest rates on HELOCs change whenever the Fed changes rates. This is because HELOCs are based on the Prime Rate, which went up to 6.25%.

HELOCs are typically quoted at Prime plus a certain percentage. For example, if your HELOC is Prime plus 1, your HELOC interest rate would be 7.25%. HELOC interest rates are likely to continue moving higher as the Fed continues to hike interest rates.

The average annual gain in home equity was $60,200 per homeowner from July 2021 to July 2022.
Raleigh Mortgage Broker Kevin Martini

Home prices have climbed 15.8% year-over-year from July 2021 to July 2022, according to the latest Home Price Insights and Homeowner Equity reports from CoreLogic, a leading global real estate data provider. If you currently have a HELOC it is important to know that it is highly probable that the Fed will continue raising the Federal Funds Rate which could significantly impact your housing costs. It may be smart to consider a ‘Cash-Out Refinance‘ right now to lock in your housing costs.

CREDIT CARDS

Interest rates on credit cards change whenever the Fed changes rates. This is because credit cards are based on the Prime Rate, which went up to 6.25%. Credit Cards are typically quoted at Prime plus a certain percentage, just like a HELOC. For illustration, if your credit card is Prime plus 10, your credit card interest rate would be 16.25%.

Credit card interest rates are likely to continue moving higher as the Fed continues to hike interest rates. If you have credit card debt today, perhaps you should consider ‘Cash-Out-Refinance‘ to unleash your equity and use it to payoff credit cards and other high interest debt.

Logan Martini

Kevin Martini

Your Guide to the Housing and Mortgage Markets; The Martini Factor (September 19 – September 25, 2022 Economic Update)

September 19, 2022 by Kevin Martini

The Martini Factor is curated by Certified Mortgage Advisor and Raleigh Mortgage Broker Kevin Martini to provide a glimpse of what is likely to impact Raleigh mortgage rates this week. This week it is all about the Fed, for the people in the back let me say it again, this week it is ALL ABOUT THE FED!

WHAT’S GOING ON IN THE ECONOMY THIS WEEK AND WHY DOES IT MATTER?

Mortgage bond prices opened sharply lower on Monday, and bond yields have spiked across the board as the market places bets on the Federal Reserve’s interest rate decision, scheduled for this Wednesday. Investors are betting that a 0.75% rate hike will take place, although many, to include the Martini Mortgage Group are betting that the Fed may hike rates by a full 1% in response to recent data showing that inflation has not yet peaked.

It is my opinion, if the Fed increases rate by 0.75% on Wednesday, mortgage rates may actually improve. Now if the Fed increases rates by 1%, mortgage rates may deteriorate.
Raleigh Mortgage Lender Kevin Martini

Most investors are betting the Fed will hike short-term rates by that amount, although some are betting on a full 1% rate hike.

IMPORTANT

Trying to time the market in this environment is a bit like trying to catch a falling knife: the odds are such that you’ll likely get cut deeply however you play it. Be prepared for lots of volatility in the market this week. For questions and live up-to-the-minute updates, contact the Martini Mortgage Group buy calling (919) 238-4934.