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What is going on in Real Estate and Home Loan Rates (October 2022 Edition)

October 9, 2022 by Kevin Martini

What is going on in real estate and home loan rates is the name of a new monthly series being produced by the Martini Mortgage Group for the Martini Mortgage Podcast. Episode 161 is the inaugural issue.

I truly believe episode 161 is one of the most important, if not the most important, that Logan and I have produced to date.

Kevin Martini, Certified Mortgage Broker

Video Edition of Martini Mortgage Podcast episode 161 called: What is going on in Real Estate and Home Loan Rates (October 2022 Edition)

Audio Edition of Martini Mortgage Podcast episode 161 called: What is going on in Real Estate and Home Loan Rates (October 2022 Edition)

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Transcript of Martini Mortgage Podcast episode 161 called: What is going on in Real Estate and Home Loan Rates (October 2022 Edition)

1
00:00:00,620 –> 00:00:04,726
[kevin_martini]: there’s a lot of scary headlines out
there right now which are highlight in the

2
00:00:04,807 –> 00:00:09,895
[kevin_martini]: sudden rise of mortgage rates the increase
in house inventory people are now talking about

3
00:00:10,035 –> 00:00:15,012
[kevin_martini]: the future of real estate and then
you have inflation two this is a new

4
00:00:15,152 –> 00:00:19,645
[kevin_martini]: special video and audio edition of the
new monthly series from the markin mortgage group

5
00:00:19,725 –> 00:00:26,039
[kevin_martini]: that we are calling what is going
on now before i start mixing it up

6
00:00:26,921 –> 00:00:33,153
[kevin_martini]: i need to make those legal folks
happy so the primary purpose of this podcast

7
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[kevin_martini]: series is to inform entertain and educate
the information opinions and recommendations presented in this

8
00:00:40,285 –> 00:00:46,455
[kevin_martini]: podcast series do not constitute legal or
their professional advice opinions or endorsements of any

9
00:00:46,615 –> 00:00:53,226
[kevin_martini]: kind welcome to the martini mortgage podcast
episode one hundred and sixty one i’m calling

10
00:00:53,287 –> 00:00:58,973
[kevin_martini]: it what is going on in october
twenty twenty two inaugural issue my name is

11
00:00:59,073 –> 00:01:04,983
[kevin_martini]: kevin martini and i am a certified
mortgage advisor and producing branch manager and i’m

12
00:01:05,103 –> 00:01:08,629
[kevin_martini]: less one four three nine six two
with the martini mortgage group back gold star

13
00:01:08,870 –> 00:01:16,377
[kevin_martini]: gage financial group corporation and les three
four four six equal house seen lender with

14
00:01:16,477 –> 00:01:21,811
[kevin_martini]: all that said let’s dive into the
news on friday october seventh the bureau of

15
00:01:21,931 –> 00:01:29,558
[kevin_martini]: labor statistics reported that two hundred and
sixty three thousand jobs were created in september

16
00:01:29,658 –> 00:01:36,473
[kevin_martini]: twenty twenty two and this was above
the expectations the unemployment rate decrease from three

17
00:01:36,574 –> 00:01:42,724
[kevin_martini]: point seven to three point five per
cent to the data from these reports spook

18
00:01:42,864 –> 00:01:48,934
[kevin_martini]: the markets because it provides an unofficial
signal that the fad will continue on its

19
00:01:49,115 –> 00:01:55,306
[kevin_martini]: tightening journey and it is likely to
be very aggressive to get inflation under control

20
00:01:55,427 –> 00:02:02,926
[kevin_martini]: moving forward let me be clear the
fan needs tightening because they need to reduce

21
00:02:02,966 –> 00:02:10,218
[kevin_martini]: demand in the market place and this
reduced demand should be the thing that teams

22
00:02:10,278 –> 00:02:15,824
[kevin_martini]: the beast and that beast is inflation
it is my opinion the fed will raise

23
00:02:15,984 –> 00:02:22,195
[kevin_martini]: rates in the november and december meetings
i also believe the fed fung rate could

24
00:02:22,255 –> 00:02:30,295
[kevin_martini]: be increased by one and a half
point it is an undisputable fact we have

25
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[kevin_martini]: not seen inflation at this level for
decades and the fens actions to be transparent

26
00:02:35,945 –> 00:02:43,097
[kevin_martini]: have helped but they’ve helped incrementally but
inflation is still persistent and high this is

27
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[kevin_martini]: critical because inflation is the nemesis or
the arch enemy to mortgage rates you see

28
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[kevin_martini]: mortgage rates are not controlled by the
federal reserve nor do mortgage rates come from

29
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[kevin_martini]: the stock market mortgage rates live in
the bond market inflating a road the return

30
00:03:03,075 –> 00:03:08,185
[kevin_martini]: of a bond just because there is
inflation it does not mean the markets will

31
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[kevin_martini]: stop in the simplest of examples market
makers will offer a higher yield to a

32
00:03:14,616 –> 00:03:22,748
[kevin_martini]: mortgage bond investor when more gage bond
yield is increased that means mortgage rates will

33
00:03:22,948 –> 00:03:28,823
[kevin_martini]: go higher now i feel that the
feds actions will get inflation under control in

34
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[kevin_martini]: the first quarter of twenty twenty three
it’s critical that i share this based on

35
00:03:34,628 –> 00:03:40,517
[kevin_martini]: history the fact has always been late
to the party and they stayed too long

36
00:03:40,597 –> 00:03:45,305
[kevin_martini]: to the party they were clearly too
late to this party because they thought inflation

37
00:03:45,405 –> 00:03:54,367
[kevin_martini]: was transiatory not sticky the developing story
is what will they do when inflationary pressures

38
00:03:54,728 –> 00:04:02,437
[kevin_martini]: are east stay tuned i think they
will stay after the party is over and

39
00:04:02,517 –> 00:04:10,841
[kevin_martini]: then they will promoting growth rapid massive
growth and this growth will provide a sharp

40
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[kevin_martini]: drop in mortgage rates by the way
that’s just not me fan may has said

41
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[kevin_martini]: that too let’s talk about mortgage rates
for a hot second for some the current

42
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[kevin_martini]: rate environment was not possible however for
a long term fans of the martini mortgage

43
00:04:29,742 –> 00:04:35,176
[kevin_martini]: podcast they were advised that this was
likely to happen and for those new fans

44
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[kevin_martini]: let me be clear it is probable
that mortgage rates will get worse before they

45
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[kevin_martini]: get better it is not unthinkable that
mortgage rates could start with an eight sooner

46
00:04:49,154 –> 00:04:56,289
[kevin_martini]: than later there are advanced strategies offered
by myself and fellow morgan strategist logan martine

47
00:04:56,349 –> 00:05:02,279
[kevin_martini]: to help today and in the future
too if home ownership is right for you

48
00:05:02,459 –> 00:05:07,227
[kevin_martini]: as first time home buyer or as
a repeat home buyer one of the many

49
00:05:07,488 –> 00:05:14,900
[kevin_martini]: options is the martini mortgage group no
contract lock program with a free flow down

50
00:05:15,561 –> 00:05:22,993
[kevin_martini]: up to ninety days this is a
very simple program but it is very powerful

51
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[kevin_martini]: here’s how it works a future home
buyer ken lock their mortgage rate at to

52
00:05:29,084 –> 00:05:35,334
[kevin_martini]: day’s price and that price can be
protected for up to ninety days in the

53
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[kevin_martini]: event there’s an improvement in the rate
when the future home buyer goes under contract

54
00:05:40,183 –> 00:05:44,815
[kevin_martini]: for their new home they will have
the option to float the right down to

55
00:05:44,856 –> 00:05:53,546
[kevin_martini]: the improved right how cool is that
this unique no contract lock program can be

56
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[kevin_martini]: combined with a seller paid by down
program offered by the martini mortgage group for

57
00:05:59,335 –> 00:06:04,504
[kevin_martini]: more information about the seller paid by
down check out episode one five nine of

58
00:06:04,544 –> 00:06:12,057
[kevin_martini]: the martini mortgage podcast since it explains
it in great detail the benefits of a

59
00:06:12,157 –> 00:06:18,903
[kevin_martini]: seller paid by down just give you
a glimpse if that’s okay real belief fly

60
00:06:18,983 –> 00:06:23,990
[kevin_martini]: there are three types of by downs
there’s a one one by down there’s a

61
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[kevin_martini]: two one by down and there’s a
three to one by down for illustration only

62
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[kevin_martini]: let’s assume your rate you lock with
our no contract lock program at six per

63
00:06:35,730 –> 00:06:42,560
[kevin_martini]: cent and let us assume you negotiate
or two one seller paid buy down this

64
00:06:42,700 –> 00:06:47,027
[kevin_martini]: would mean in the first year your
rate would be four per cent and in

65
00:06:47,068 –> 00:06:50,914
[kevin_martini]: the second year your rate would be
five per cent and then it would go

66
00:06:51,114 –> 00:06:57,733
[kevin_martini]: to six for your three through thirty
seller paid buy downs are a win win

67
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[kevin_martini]: since this program benefits both the seller
and the buyer too it’s not just me

68
00:07:06,783 –> 00:07:16,610
[kevin_martini]: but it is many experts believe that
the mortgage rates will significantly improve towards the

69
00:07:16,731 –> 00:07:22,039
[kevin_martini]: end of twenty twenty three to the
beginning of twenty twenty four the experts that

70
00:07:22,140 –> 00:07:26,447
[kevin_martini]: our bullets she that could be as
soon as the second quarter of twenty twenty

71
00:07:26,487 –> 00:07:31,242
[kevin_martini]: three to be transparen i think the
bulls are being a little bit too aggressive

72
00:07:31,302 –> 00:07:36,603
[kevin_martini]: and running too fast here is the
punch line the home loan rate you get

73
00:07:36,683 –> 00:07:40,190
[kevin_martini]: today is not likely going to be
the home loan rate you will have in

74
00:07:40,230 –> 00:07:45,891
[kevin_martini]: a couple of years because when the
thed gets inflation under control again when not

75
00:07:46,071 –> 00:07:51,736
[kevin_martini]: if and while they are staying at
the party too long which they will there

76
00:07:51,876 –> 00:07:57,876
[kevin_martini]: are going to be re finance opportunities
according to fanny may as i said earlier

77
00:07:58,156 –> 00:08:04,515
[kevin_martini]: they expect rates to start with the
four sometime in twenty twenty three this is

78
00:08:04,635 –> 00:08:11,869
[kevin_martini]: why the phrase marry the house and
date the rate is being said so frequently

79
00:08:11,949 –> 00:08:20,737
[kevin_martini]: by myself my fellow mortgage strategist logan
martini and others let me break it down

80
00:08:21,770 –> 00:08:28,080
[kevin_martini]: it is very probable that mortgage rates
will increase over the next three to six

81
00:08:28,280 –> 00:08:34,497
[kevin_martini]: months to levels that millennials have never
seen and even some folks that are generation

82
00:08:34,800 –> 00:08:42,117
[kevin_martini]: exerts mortgage rates are not the only
thing going up rents are going up to

83
00:08:43,090 –> 00:08:48,900
[kevin_martini]: don’t believe me well let me share
the facts in rale north carolina from july

84
00:08:49,100 –> 00:08:54,589
[kevin_martini]: twenty twenty one to july twenty twenty
two rents for one bedroom apartment went up

85
00:08:55,250 –> 00:08:59,657
[kevin_martini]: two point one per cent and a
two bedroom apartment went up forty four point

86
00:08:59,838 –> 00:09:05,848
[kevin_martini]: eight per cent in durham the bull
city of north carolina for the same period

87
00:09:05,928 –> 00:09:11,250
[kevin_martini]: of time to every apartment went up
fifty four point two per cent you know

88
00:09:11,310 –> 00:09:17,861
[kevin_martini]: what else is going up home values
did you know that three point eight four

89
00:09:18,122 –> 00:09:24,574
[kevin_martini]: per cent is the average annual growth
in home prices from ten eighty nine to

90
00:09:24,735 –> 00:09:32,198
[kevin_martini]: two thousand nineteen check it out i
took out the eighteen point five per cent

91
00:09:32,338 –> 00:09:38,068
[kevin_martini]: of annual appreciation per year for the
last two years of this calculation because the

92
00:09:38,730 –> 00:09:46,075
[kevin_martini]: home christ growth during the presence of
the eagle pandemic was a typical so three

93
00:09:46,155 –> 00:09:52,880
[kevin_martini]: point eight four per cent is the
past what about the future it is my

94
00:09:53,001 –> 00:09:58,890
[kevin_martini]: opinion what one person says about the
future of home values is irrelevant for me

95
00:09:59,491 –> 00:10:04,239
[kevin_martini]: and for the families the martini mortgage
group serves the gold standard of future home

96
00:10:04,520 –> 00:10:10,791
[kevin_martini]: uses the home price expectation survey done
every quarter by pullsnomics and that is because

97
00:10:10,871 –> 00:10:17,091
[kevin_martini]: it’s not one person’s opinion it is
the opinion of over one hundred experts oh

98
00:10:17,191 –> 00:10:23,201
[kevin_martini]: by the way the home price expectation
survey is expecting a five year cumulative appreciation

99
00:10:23,762 –> 00:10:30,739
[kevin_martini]: of over twenty four percent closer to
twenty five actually let me get granular for

100
00:10:30,800 –> 00:10:37,347
[kevin_martini]: a hot second let me not use
the current forecast from the home price expectation

101
00:10:37,487 –> 00:10:43,959
[kevin_martini]: survey data nor the data from the
past twenty years prior to the evil pandemic

102
00:10:45,400 –> 00:10:51,792
[kevin_martini]: let me be super conservative and let
me just say three percent appreciation a year

103
00:10:52,293 –> 00:10:59,012
[kevin_martini]: for the next five years what would
this mean simply put a fifteen thousand dollar

104
00:10:59,072 –> 00:11:05,478
[kevin_martini]: down payment on a three hundred thousand
house could grow to sixty two thousand dollars

105
00:11:05,558 –> 00:11:12,033
[kevin_martini]: over five years twenty five thousand dollar
thou payment on a five hundred thousand dollar

106
00:11:12,114 –> 00:11:19,370
[kevin_martini]: house could grow to a hundred and
four thousand dollars in over five years a

107
00:11:19,590 –> 00:11:25,600
[kevin_martini]: forty five thousand dollar down payment on
a nine hundred thousand dollar home could grow

108
00:11:25,801 –> 00:11:33,723
[kevin_martini]: to a hundred and eighty eight thousand
dollars over five years not owning a home

109
00:11:34,364 –> 00:11:42,005
[kevin_martini]: could not just cost you thousands but
tens of thousands it’s in we all have

110
00:11:42,065 –> 00:11:46,902
[kevin_martini]: to have a roof over our head
some will rent it and when you rent

111
00:11:47,222 –> 00:11:52,716
[kevin_martini]: you pay a mortgage you’re not paying
your mortgage you’re just paying for your landlords

112
00:11:52,816 –> 00:11:59,365
[kevin_martini]: mortgage for them others will own that
roof and logan martini and myself help them

113
00:11:59,525 –> 00:12:05,734
[kevin_martini]: secure the proper mortgage strategy for that
roof let me say this another way for

114
00:12:05,814 –> 00:12:13,037
[kevin_martini]: the people the back the growth in
home appreciation has decelerated in twenty twenty two

115
00:12:13,398 –> 00:12:19,288
[kevin_martini]: but just because home prices have decelerated
it does not mean homes are going to

116
00:12:19,368 –> 00:12:27,025
[kevin_martini]: depreciate in the aggregate poets are going
to continue to appreciate and grant it in

117
00:12:27,245 –> 00:12:34,970
[kevin_martini]: some markets that were extra frothy we
may see a decline from their peak key

118
00:12:35,151 –> 00:12:43,426
[kevin_martini]: word is some markets right now home
buyers can still find opportunities and i believe

119
00:12:43,506 –> 00:12:52,690
[kevin_martini]: that today a home buyer has the
proper conditions to secure more buying power if

120
00:12:52,730 –> 00:12:56,817
[kevin_martini]: you’re thinking of buying a home for
the first time or as a repeat home

121
00:12:56,837 –> 00:13:02,486
[kevin_martini]: buyer simply give a mortgage strategist with
a martini mortgage group a jingle by dialing

122
00:13:02,546 –> 00:13:08,784
[kevin_martini]: nine one nine two three eight forty
nine thirty four because it should always be

123
00:13:08,885 –> 00:13:15,885
[kevin_martini]: home long first and then go find
your home okay okay okay let me talk

124
00:13:16,025 –> 00:13:21,185
[kevin_martini]: about this elephant that’s in the room
many good people were hurt during the housing

125
00:13:21,265 –> 00:13:26,734
[kevin_martini]: crisis in two thousand eight if you
are not directly impacted is likely that someone

126
00:13:26,794 –> 00:13:33,524
[kevin_martini]: you cared about was negatively impacted is
sad what happened during the housing crisis but

127
00:13:33,604 –> 00:13:39,553
[kevin_martini]: the events that caused it are not
present today sure the housing crisis caused the

128
00:13:39,633 –> 00:13:45,523
[kevin_martini]: great recession however the great recession did
not cause the housing crisis let me be

129
00:13:46,004 –> 00:13:56,492
[kevin_martini]: crystal clear recession does not housing crisis
today i am reminded by a quote from

130
00:13:56,852 –> 00:14:04,850
[kevin_martini]: warren buffet be fearful when others are
greedy and greedy when others are fearful i

131
00:14:04,890 –> 00:14:10,199
[kevin_martini]: would like to add get educated and
make an educated decision and was right for

132
00:14:10,339 –> 00:14:16,289
[kevin_martini]: you and your family based on the
facts not based on the headline or what

133
00:14:16,369 –> 00:14:22,623
[kevin_martini]: you heard the backyard barbecue there is
never a substitute for education and armed with

134
00:14:22,704 –> 00:14:29,862
[kevin_martini]: a proper knowledge you can find right
now it is time to be greedy because

135
00:14:29,963 –> 00:14:39,130
[kevin_martini]: i have confirmation more millionaires are made
when people are fearful inclosing home ownership is

136
00:14:39,311 –> 00:14:43,874
[kevin_martini]: not right for everyone and the only
way you can truly know if home ownership

137
00:14:43,954 –> 00:14:49,042
[kevin_martini]: is right for you and your family
is by searching for is not by searching

138
00:14:49,102 –> 00:14:55,070
[kevin_martini]: for homes on line or by driving
all over town to visit but houses the

139
00:14:55,230 –> 00:15:00,952
[kevin_martini]: first step is always a home loan
and then once you have clarity of the

140
00:15:01,032 –> 00:15:06,758
[kevin_martini]: cost and the certainty that you can
secure the proper financing for yourself and your

141
00:15:06,819 –> 00:15:12,174
[kevin_martini]: family then you can make an educated
decision if home ownership is right for you

142
00:15:12,756 –> 00:15:20,539
[kevin_martini]: and your family if not it’s totally
fine but you’re making a decision based on

143
00:15:20,719 –> 00:15:25,914
[kevin_martini]: education not got but if it’s right
for you then you can go find your

144
00:15:25,954 –> 00:15:32,423
[kevin_martini]: home being lager focused and with certainty
my name is kevin martini and my fellow

145
00:15:32,503 –> 00:15:37,171
[kevin_martini]: morgan strategist is logan martini and we
are here to help you if you have

146
00:15:37,251 –> 00:15:41,739
[kevin_martini]: questions about what was in this episode
episode one sixty one of the martini morte

147
00:15:41,799 –> 00:15:48,049
[kevin_martini]: podcast no we are here our number
is nine one nine two three eight forty

148
00:15:48,130 –> 00:15:55,314
[kevin_martini]: nine thirty four we both look forward
to help oh by the way our website

149
00:15:55,374 –> 00:16:02,366
[kevin_martini]: has fresh and real information about securing
the proper mortgage strategy along with relevant information

150
00:16:02,687 –> 00:16:09,994
[kevin_martini]: on what one needs to know if
they thinking of buying or need additional resources

151
00:16:10,676 –> 00:16:19,500
[kevin_martini]: check it out by going to w
w w martini mortgage group dot com thank

152
00:16:19,520 –> 00:16:24,213
[kevin_martini]: you for tuning into this new monthly
series called what the heck is going on

153
00:16:24,273 –> 00:16:29,904
[kevin_martini]: in october twenty twenty two and thank
you for sharing this episode with someone you

154
00:16:29,965 –> 00:16:33,941
[kevin_martini]: care about peace and blessings

Filed Under: 1-1 Seller-Paid Buydown, 2-1 Seller-Paid Buydown, 3-2-1 Seller Paid Buydown, Appreciation, Buy a Home, Buydowns, Deprecation, Fannie Mae, Fed Funds Rate, Federal Reserve, Home Loan Rates, Home Loans, Home Price Expectation Survey, Home Values, Housing, Housing Market, Inflation, Kevin Martini, Logan Martini, Martini Mortgage Podcast, Mortgage, Mortgage Podcast, Mortgage Rates, Raleigh, Real Estate, Real Estate Podcast, Recession, Wake County Tagged With: Buying a Home in North Carolina, Buying a Home in Raleigh, Kevin Martini, Logan Martini, Martini Mortgage Group, Martini Mortgage Podcast, Mortgage Podcast, Mortgage Tips, Raleigh, Raleigh Mortgage Broker, Raleigh Mortgage Lender, Real Estate, Real Estate Markets, Real Estate Podcast

Now is the real estate opportunity!

June 28, 2022 by Kevin Martini

 Right now, there is noise about real estate and mortgage rates and sadly the real truth and the real opportunity is being missed. Fluctuating mortgage rates, home price deceleration and looming recession are facts but, is a recession bad for real estate values?  Is there a pure need for real estate?  Are home loan rates just going to get more expensive or are they going to retreat?

In this special episode of the Martini Mortgage Podcast, Certified Mortgage Advisor and Raleigh mortgage broker Kevin Martini takes a glimpse of the headlines and goes deep into the data about where home values are headed and where mortgager rates are headed.

Audio Edition of the Martini Mortgage Podcast with Kevin Martini

Video Edition of the Martini Mortgage Podcast with Kevin Martini

Consumer Price Index (a.k.a. CPI)

raleigh mortgage broker kevin martini cpi
It is critical one understands the CPI is a measurement from the same month last year.  As shared in the Martini Mortgage Podcast, July, August and September 2021 CPI reading was low as compared to where it was in May of 2022 reading was, this signal that higher mortgage rates are coming since inflation drive mortgage rates higher.

Recession and Home Values

raleigh home values in past recessions by kevin martini

The housing market caused the great recession, the recession did not cause the housing crisis. Again, recession doe into mean housing crisis.

Housing Formations

raleigh mortgage lender kevin martini on housing formations

New Home Supply

new housing supply by raleigh mortgage lender kevin martini

Today there are about 1.7 housing starts but a housing start is not a new homes built they are new home started.  So that is not a metric to look at, completed homes and that is at 1.3 million but remember annually there are 100,000 homes that are destroyed. So now there are 1.2 million homes and there is a need for 1.4 million homes so there is a deficit of 200,000 homes.
martini mortgage mortgage group best raleigh mortgage lender

It kinda feels like we are walking the tracks in a very dark tunnel right now however, there is a glimmer of light at the end of the tunnel.  What is that light coming from? Is that light from a train that is coming straight towards us or is that light a from the sunlight where we can be sitting siping a drink with an umbrella?  I know that light is not coming from the bow of the train and I know that light is paradise.

To me, it appears that every news segment leads with the death of real estate or every headline online is talking how high mortgage rates are.  Everyone sees these headlines but only 30% actually read the article. Crazy stat isn’t it?  70% of people make a decision on what to do based on a headline only.  In this special episode of the Martini Mortgage Podcast let me take you beyond the headlines and deep into the story that now one is talking about.  

Welcome to special episode 147 of the Martini Mortgage Podcast, my name is Kevin Martini and I am a Certified Mortgage Advisor with the Martini Mortgage Group which is located in Raleigh, North Carolina however myself along with my very talented crew of mortgage professionals help families in all 100 counties of North Carolina and pretty much in ever state in the U.S. too!  I am calling this special episode of the Martini Mortgage Podcast; Now is the real estate opportunity!

Deceleration of home values, inventory increasing, inflation at a four decade high, six-dollar gasoline, mortgage rates fluctuating upwards, the Fed and the evil ‘r’ word, recession!  So much to unpack where do I start. 

As a primer, one needs to know that mortgage rates live in the Bond market.  The nemesis to a Bond is inflation because inflation erodes the return of a Bond.  When Bond prices fall, to attract more buyers, a higher yield is offered.  When a higher yield is offered it means there are higher home loan rates available in the market.  

Higher mortgage rates did not cause inflation, inflation caused higher mortgage rates.  For the people in the back, let me say it another way…inflation drives mortgage rates so when inflation rises you will see that mortgage rates rise. This is very important to understand because a driving force to Bond prices is inflation.

It is my opinion, inflation is going to get worse before it will get better so that means mortgage rates are going to get more expensive and you know what else is going to get more expensive, homes…yes, granted homes will not appreciate at the levels they have over that last several years but they are still going to appreciate. With that said, I am reminded of what my real estate partner always shares with her clients — she says: “marry the house but date the rate”.  What an amazing analogy and one that is not just timeless but very timely.

Let me talk about the Consumer Price Index, which is also referred to as the CPI for a moment.  At the time of this recording, which is at the last days of June 2022, the CPI had a reading of 8.6%.  It is critical one understands the CPI is a measurement from the same month last year. This is very important to understand, CPI is a measurement from the same month a year ago. 

Here is the the Kevin Martini forecast on inflation and mortgage rates.

First, mortgage rates will be basically at the current level until mid July 2022 and many news outlets will be claiming that inflation has peaked in mid July.  When I say mid July, the pivot to even higher mortgage rates will start on July 13th. 

Why do they believe people say inflation has peaked in July? Well, simply put, we know that in June 2021, the inflation reading was 0.9% and the June 2022 number will be compared to June 2021.  

Here is the thing that one needs to keep top of mind.  In July 2021 the CPI was at 0.5, in August 2021 the CPI was at 0.3% and in September 2021 the CPI was at 0.4%.  Punchline, the CPI was low as compared to today. It is my opinion, with six dollar gasoline and with all the containers just waiting to ship from Shanghai, there will not be a rise and repeat of those percentages and… inflation will rise significantly and so will mortgage rates. Then let us pepper in the the July 27th and September 21st Fed meeting.  

It would be nice if we heard the word ‘pause’ from the Fed at their September 21st meeting however I have found the Fed is always late to the party and they stay too long at the party.  With that said, I see the calgary coming to help mortgage rates towards the end of 2022 but more likely in the beginning of 2023. 

The rate one has today will not likely be the rate they will have in 2023 or 2024 because, based on the data, there will be rate relief and an opportunity to marry a lower rate than one has secured in 2022. 

So why not just wait? Why should one marry the house and date the rate today, why not just date the house, in other words, why doesn’t one just rent and wait. I can understand why one would ask this question. The answer to the question is simple,  because home values will continue to keep growing and growing and growing.  

With an open heart, right now we are living in what people will call in the future the good old days of real estate.  Yes, right now is still an epic time to buy a house to call home and right now is an epic time to buy a house to rent even with the fact that I believe a recession is eminent. 

Yes, a recession is ahead and recessions have proven to be positive for home values.  In the U.S. there have been 6 recession since 1980. 1 of the 6 was the great recession where home values went down 19.7 percent. One need to know this…the demand that was before the great recession was based on speculation and speculation made price skyrocket. The housing market caused the great recession, the recession did not cause the housing crisis. Again, recession doe into mean housing crisis.  

If you take the great recession out of the equation 4 out of 5 times there was a recession in the U.S., home values went up an average of 5.5%. The one out of five time it went down, values only went down 1.9%. 

There was a real estate bubble that created the great recession. The real estate bubble was created in part by speculation.  Today, real estate is needed and there is an under supply.  

Let me go into a little more detail on the need for housing or housing demand. Let me start with household formations.  First, what is a household formation.  Simple put, someone leaves mom and dad and occupies a new place. So, when one occupies a new residence without vacating your residence is a household formation.  Here is another example. A couple is living together but they break up and one moves out, you now need to 2 place not one, this is another example of a household formation. In the U.S. there are 1.4 million new household formations. Oh by the way, household formations are about 20% above the average right now so simply put, this is your real demand based on need.  1.4 million people need a roof. 

Today there are about 1.7 housing starts but a housing start is not a new homes built they are new home started.  So that is not a metric to look at, completed homes and that is at 1.3 million but remember annually there are 100,000 homes that are destroyed. So now there are 1.2 million homes and there is a need for 1.4 million homes so there is a deficit of 200,000 homes.  

Is home ownership right for you and your family, I do not know but what I do know is that you owe it to explore your options that are available.  I truly believe to create generational wealth one needs to own real estate.  I also know that the process of homeownership always starts with the home loan first and then go find your home.  It is never find your home first and then find the right loan. 

My name is Kevin Martini and I am a Certified Mortgage Advisor and I am here to help.  I know in this special episode of the Martini Mortgage Podcast there was a lot of data shared, I am here to answer your questions about it.  If homeownership is right for you, right now is an unprecedented opportunity.

Thank you for tuning in and please share this episode with someone you care about.

Now it is time for the disclaimer: 

This material has been prepared for marketing purposes only. This is not a loan commitment or guarantee of any kind. 

Loan approval and rate are dependent upon borrower credit, collateral, financial history, and program availability at time of origination. 

Rates and terms are subject to change without notice. 

The Martini Mortgage Group at PCL Financial is a division of Celebrity Home Loans, NMLS # 227765 with a Branch address of 507 N Blount St Raleigh, North Carolina 27604. 

You can contact Certified Mortgage Advisor and Producing Branch Manager, Kevin Martini NMLS# 143962 by calling the Branch and that number is 919.238.4934. For a full list and more licensing information please visit: www.NMLSConsumerAccess.org or by visiting www.MartiniMortgageGroup.com – Equal Housing Lender

Filed Under: Buy a Home, Fed Funds Rate, Fed Interest Rate Decision, Federal Reserve, Home Loan Rates, Home Loans, Home Values, Housing, Housing Market, Inflation, Kevin Martini, Logan Martini, Martini Mortgage Podcast, Mortgage Podcast, Mortgage Rates, Raleigh, Real Estate, Real Estate Podcast, Wake County Tagged With: Future Home Values in Raleigh, Kevin Martini, Martini Mortgage Podcast, Mortgage Podcast, mortgage rates, North Carolina, Raleigh, Raleigh Mortgage Lender, Real Estate, Real Estate Markets, Real Estate Podcast, recession

The MartiniFactor | last week and this week with real estate and mortgage rates | April 8, 2022 Edition

April 4, 2022 by Kevin Martini

The MartiniFactor provides a glimpse of what happened last week in real estate and in the mortgage arena.  In addition, it shares thoughts on what to keep on the radar for the week ahead.

last week (4/1/2022) & this week (4/8/2022)

LAST WEEK

Employment Data

On Friday, April 1, 2022, we learned that 431,000 jobs were created in March of 2022. The market was expecting 500,000 jobs however there were upward revisions to the January and February reports which made up for the miss and confirmed that hob creation was strong.

Inflation 

This past week we saw data on Personal Consumption Expenditures (PCE). The PCE is the Fed’s favorite measure of inflation.  The headline number indicated that inflation is on the rise since it rose 0.6% in February. Year-over-year the PCE increased from 6% to 6.4% which is the highest level in 40 years.  Core PCE strips out volatile energy and foods prices  and that was up 0.4%…year-over-year, Core PCE increased from 5.2 to 5.4%

 The nemesis to mortgage rates in Raleigh is inflation. 

Raleigh Mortgage Lender & Certified Mortgage Advisor Kevin Martini

Housing News

The Case-Schiller Home Price Index, which measures the changes in sales prices of single-family homes certain markets showed a home prices increased 1.1% in January and 19.2% year-over-year.  The Federal Housing Finance Agency (FHFA), measures home price appreciation on single-family homes with conventional (a.k.a. conforming) loans rose 1.6% in January and 18.2% year-over-year.

THINGS ON THE MARTINI MORTGAGE GROUP RADAR THIS WEEK

The economic calendar is relatively quiet this week after last week’s wealth of data. Many are thinking that the Federal Reserve could move interest rates significantly higher than the markets currently expect. The Martini Mortgage Group will be  paying close attention to the minutes from last month’s Federal Reserve monetary policy meeting, scheduled for release this Wednesday. 

Raleigh mortgage rates have already increased by more than 1% since the beginning of the year. Even so, the market may take a little break from the recent volatility due to a relatively quiet economic calendar this week. That doesn’t mean the volatility is over.  

The Martini Mortgage Group Bottom Line

Right now, real estate and the current mortgage rate environment remains an opportunity. The Martini Mortgage Group is here to talk about what you have just read and here to help you on the path to buying you home. Contact the Martini Mortgage Group by dialing (919) 238-4934.

Kevin Martini | NMLS 143962 | Certified Mortgage Advisor and Producing Branch Manager | Martini Mortgage Group at PCL Financial Group (powered by Celebrity Home Loans, LLC NMLS 227765) | 507 N Blount St Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | nmlsconsumeraccess.org | Equal Housing Lender

Filed Under: MartiniFactor, Mortgage Rates, Raleigh, Real Estate, Uncategorized Tagged With: Buying a Home in North Carolina, Buying a Home in Raleigh, Buying a home this spring, Kevin Martini, Martini Mortgage Group, MartiniFactor, Mortgage Markets, Mortgage Tips, Raleigh, Raleigh Mortgage Broker, Raleigh Mortgage Company, Real Estate Markets

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