Reaction to January 30 to 31 Fed Meeting With Matt Hoppe

Reaction to January 30 to 31 Fed Meeting With Matt Hoppe

Markus:      So today I'm talking with Matt Hoppe over at Success Lending about what just happened with the Fed meeting.

Matt, would you let us know what happened today?

Matt:          Yeah.

So kind of as as expected today, the the Fed left interest rates unchanged.

They basically kept them exactly the same.

And one thing I should kind of clarify for everybody out there is that kind of contrary to popular belief, the Fed actually does not set mortgage rates, the other rates that the Fed deals with and then you hear about whenever the Fed meets, you know, 910 * a year, the rates that they deal with are very short term interest rates.

Like bank to bank interest rates, sometimes only for a matter of matter of hours.

But as we know like mortgage rates are very long term rates.

So while the Fed and their announcements do have a big impact on it and impact on the markets that determine rates, they actually don't.

Most likely done with raising interest rates as they did last year to kind of combat inflation.

They raised them a lot last year as most people are well aware to combat and so they're they're done with that.

Hopefully that's what they definitely alluded to today.

And then they kind of they basically left the door open as to when they were going to actually start potentially decreasing them.

You know the next Fed meeting is in March and then the next one after that is in like April, May area.

So hopefully at one of those they might start decreasing them.

You know I I think the consensus is maybe like the June meeting, but you know we'll have to see a lot of that just kind of depends on some market data and economic data that comes in and the in the upcoming months.

Markus:     Gotcha.

So you're you're saying that the mortgage rate is uncoupled, but very closely related to still what the Fed rate is.

So how did the mortgage markets respond to the news of no change today?

Matt:          Yeah, so that's a good question.

So even with the no change in the federal funds rate today, mortgage rates actually went down by about 1/8 of a percentage point.

So, so we're kind of like in the mid to upper 6% range right now.

Which is still like a huge, a huge amount lower than where they were let's say like in mid to late October and in that time frame they were like in the low 8% range.

So they're they're down a good like 1.5% just in the last like you know 60-75 days.

So it's still a huge decrease and you know I think a lot of people are anticipating that an interest rates at some point kind of start to slide back down this year.

You know, I don't think anyone thinks the rates of 3-4% are coming back anytime soon unfortunately, but you know any, any, you know any movement in the right direction is obviously good for anybody so.

Markus:      I'm with you there.

I would love your hot take.

When are we gonna hit 5%?

Matt:         Oh, wow, that's you put me on another pressure here, 5%.

I'll be honest with you, I don't know if that's, I don't know if 5% is coming back anytime soon.

I would, I would advise not to hold your breath.

I think most people think maybe 6% is in flat later this year.

You know with you know a lot depends on the market.

You know maybe even like the the presidential election this year can have you know an impact on the markets.

There's just always so much going on with with economic news like world events, it's really tough to say, but I I think most people are hopeful or optimistic.

I'd say that that maybe later this year that comes back.

Markus:     Gotcha.

Matt:         But it's one of those things just like the stock market where it's, it's impossible really to time in so many cases you know so for any potential buyers out there I mean I always like to remind them                      that you know once you get into a home you know you're you're obviously locked in to that rate even if things go up.

And usually for the most part refinances are are pretty quick and easy typically you know so let's say you lock in something now and rates go down a point you know you can you should be able to refinance at the appropriate time pretty quick and easy and refinances are usually a much less expensive and you know terms of any costs as compared to a purchase as well.

You know, so you have an advantage there where a lot of the basic costs built into a purchase are much less expensive for a refi.

So you can't really time it.

But yeah, hopefully things continue to trend down for sure.

Markus:      Well, personally I I think you're a little pessimistic, pessimistic on it.

I'm, I'm aiming for 5% by the end of the year.

That's that's my prediction.

It might be a little bit too, too aggressive on that, but we'll see, we'll see.

Matt:          I would love that too.

Don't get me wrong.

Markus:      No, I mean you you know more about the mortgage markets than I.

So you said that the Fed is meeting again in March.

So we'll be having another little recap after that meeting then.

Do you think, do you think it's like a 50-50 shot that we'll be seeing a rate decrease?

Matt:          I mean a lot depends on like economic data that comes out by that.

But it it seems like you know when the Fed spoke today they they basically mentioned that they're probably not going to have enough data to make a decision in March.

So I mean I think the odds are that they're going to leave rates unchanged again in March, and then maybe in April, May, you know, maybe in in June, hopefully there's enough data that bring for them to bring the rates down at that time And then rate, I mean it kind of depends on the data that comes out between them because again they don't, they don't determine mortgage rates, but they have a big influence on economic conditions and bonds and the markets that do determine those interest rates so.

There's always a lot going on.

But yeah, I mean the overall trend is definitely in the right direction.

You know that There's definitely no argument there.

And yeah, we're hoping, we're hoping that by the middle of the year they start coming down for sure with with the Fed.

Markus:      Now one last question for you here, any other news happening in mortgage world right now?

Matt:          Yeah, so one, so one of the big, big announcements that came out maybe 30-45 days ago is that a Fannie Mae made a big change to their down payment requirements for multi unit properties.

So whereas in the past for a 2-3 or a four unit property the the down payment was always between 15 to 20% typically for those.

For a conventional loan and then so Fannie Mae made a huge change where now for a multi unit property you can get in with only 5% as long as it's an owner occupied mortgage you know basically meaning that the the buyer or the homeowner is actually going to live in one of the units.

So that's a huge change for anyone that wants to start a little you know their little investment portfolio with a multi unit instead of having to save up for 15-20%, you can get in with 5%.

So that's a really massive shift just in the last like I think 30-45 days that came out.

So yeah, anyone wants to get into a multi unit which is a great investment and you know you can get in and have have your tenant pay a big chunk of your mortgage, pay that down.

So it's a great opportunity for for anyone looking in that direction right now.

Markus:      You heard it here.

Any of you house hackers out there? If you are looking to get into a multifamily property, you can get into it with a lot less down than before.

Matt, thanks so much for being with us today.

And my name is Markus with Exp Realty and we'll see you in March.

Matt:          Appreciate it.


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