Mortgage & Real Estate Update: Forbearance, Interest Rates, Guidelines and Real Estate Predictions

Mortgage & Real Estate Update: Forbearance, Interest Rates, Guidelines and Real Estate Predictions

Broker | Owner | Mortgage Consultant
Josh Lewis
Published on May 6, 2020
Josh Lewis Jeb Smith California Mortgage Real Estate Market Update

Mortgage & Real Estate Update: Forbearance, Interest Rates, Guidelines and Real Estate Predictions

Josh Lewis, Broker/Owner of BuyWise Mortgage, and Jeb Smith of Coldwell Banker in Huntington Beach, California share their thoughts about the Mortgage & Real Estate market.

Verify my mortgage eligibility (May 16th, 2022)

Hey guys, welcome back. So over the last couple of weeks when we’ve done this update with Josh with BuyWise Mortgage, we’ve talked about everything really from interest rates to forbearance to guideline changes and more or less everything in between.

We’ve addressed a lot of questions that you guys have had that you commented on the videos and I encourage you guys to keep doing that.

Verify my mortgage eligibility (May 16th, 2022)

But today what we’re gonna do is we’re gonna get into a little bit more detail about what’s happened over the last week with regards to interest rate changes, some of these things affect what happens in the future as well as guideline changes.

And then some things have come out with regards to forbearance that I’ve done videos on and maybe you haven’t seen them that we’ll get into a little bit of detail as well. But we’re gonna start with interest rates.

But before we do that, again, I’m Jeb Smith. I’m a Real Estate Broker here in Southern California and I wanna thank you for taking the time to watch this. Josh with BuyWise Mortgage as I mentioned is the other gentleman that you’re looking at there.

Verify my mortgage eligibility (May 16th, 2022)

Do me a favor, if you like this content, give us a thumbs up and if you’re new to the channel, hit subscribe if you like all things real estate, whether it’s mortgage finance, any real estate related topics, trending topics, all that good stuff.

So I mentioned fed funds, the Federal Reserve, in our conversation prior to this coming out with a statement, Josh, where they said that they’re basically going to keep interest rates, the fed funds rate, at 0% or until full unemployment is reached, or till full employment is reached rather.

And you and I were having a conversation prior to this that what does full employment mean? In the past historically it’s meant somewhere around 5 or 6% of unemployment. So when you get down to 5 or 6% of unemployment, that means that we more or less have full employment in the United States.

Verify my mortgage eligibility (May 16th, 2022)

But recently, we got down to as low as 3 1/2%, which is really, really low numbers which basically means anybody in America who has a job and wants a job or I’m sorry, who wants a job has one. Some of them have two.

So does that mean that interest rates are gonna stay that low for forever? And what does it mean, if I’m somebody right now, I’m looking at buying a house, I’m looking at refinancing and they make that statement, does that mean that there’s a chance that interest rates get really, really low and I should wait to buy a house or refinance? How should I approach this based on that statement?

– It’s a really important question, but there’s a lot of things that go into it. So the federal funds rate does not directly impact mortgage rates or any other rate of what you borrow besides things that are tied to the prime rate.

Verify my mortgage eligibility (May 16th, 2022)

So when they cut the federal funds rate to zero, they also cut the prime rate to 3 1/4, so home equity lines are based off of prime, while the credit cards are based off of prime. So consumer stuff like that, it’s gonna help you. On mortgage rates, not so much.

Mortgage rates, there’s a couple of components that go into what make up the interest rate that you pay on a mortgage. You have what mortgage-backed securities are selling for on Wall Street and those have tracked pretty closely with fed movement.

When the fed cut to zero, they also stepped in and started buying mortgage-backed securities. So remember interest rates go down when the price of the bonds go up, mortgage bond prices are at all time highs.

Verify my mortgage eligibility (May 16th, 2022)

So when they say hey, we’re gonna keep rates at zero, they’re probably gonna do their best to also keep mortgage bond prices at or near all time highs.

The big thing that we’re seeing right now is a secondary component to the mortgage interest rate that you’re paying is what servicers, the people that you make your monthly payment to, are willing to pay to acquire the servicing rights.

They get paid a percentage of your monthly payment to service your loan and they’ll pay a premium upfront to buy those rights. Right now because of everything that’s going on with forbearance, no one knows what those servicing rights are worth and if the servicers are uncertain what happens with rates going forward and rates might go down, the servicing rights that they own on their portfolio are devalued because they’re likely to lose some of those loans as people refinance going forward.

Verify my mortgage eligibility (May 16th, 2022)

So servicing rights right now are basically at all time lows. So we’re seeing rates higher than what they should be. Our historical number that we look at is the 10-Year Treasury plus 1.75 for the last 10 years or so up to about 2% is what your 30-year fixed would look like.

So if we’re at .64, .65, we closed whatever the market closed at yesterday on the 10-Year Treasury, mortgage rates should be at about 2.65 or a little bit lower than that. We’re nowhere near that because of two things. We have lender capacity issues and then we have those servicing issues.

The capacity issues are slowly working themselves out. The servicing stuff is gonna be a bigger issue. So everything that we’re looking at here, I hate when you watch and we live in the age of experts so someone is an expert on something, they can’t go on TV, they can’t go on the internet and say, I’m not sure.

Verify my mortgage eligibility (May 16th, 2022)

So they tell you this is gonna happen, this is the way it’s gonna be. Everything right now is gonna be really data dependent. That’s what the fed was telling you with that move and essentially what they’re saying is until we get to full employment whether they consider that 5% unemployment, 3 1/2% unemployment, they’re gonna keep rates pinned near that lower bound.

There’s a million other reasons. The fed does not directly control interest rates. If investors that are buying treasuries, buying mortgages feel like they need a higher yield, if there’s no demand for it, yields will go higher regardless of what the fed does, but the fed is using every tool in their arsenal to keep them low and they’re gonna be data dependent.

One piece of that data is obviously where unemployment is at and where that goes going forward. You and I were talking about the weekly jobless claims reports. They’re starting to moderate. Everyone’s expectation was when this thing first hit that we were gonna see unemployment go to 20%.

Verify my mortgage eligibility (May 16th, 2022)

Now it’s looking depending on what happens in the next month or two that we won’t quite hit 20%. The initial jobless claims which had peaked up over 6 million in a week compared to 250,000 prior to the Covid crisis.

We’re down to 3.4, 3.5 million. It’s still an astronomical number any way you cut it, but much better than it was. But because the continuing claims, the number of people who remain on unemployment have gone down largely due to the Paycheck Protection Plan, some employers realizing they panicked furloughing and letting people go.

We’re just under 20%. So we need to see that data. How long are we quarantined? How long are we at home? What businesses can reopen? What does that look like for restaurants that let all their waitresses go or they’re on unemployment right now but now they can open up, but they only have 50% of their capacity?

Verify my mortgage eligibility (May 16th, 2022)

We need to see that. That data is what we’re gonna be watching going forward. But in terms of interest rates, the scary thing for anyone, I tell anyone there’s numbers, there’s a calculation that says does this make sense to do your loan today?

And if it does, I wouldn’t wait for lower rates because we don’t know if that’s six months from now, 12 months from now, 18 months from now. The lower the rates go, it means that the economy is doing worse, that we’re not recovering as fast as possible.

The faster things recover, the less lower rates will go. We also have other issues of how solid is your employment. If rates go lower ’cause the economy’s not doing well, do you have a job? Did home values dip?

Verify my mortgage eligibility (May 16th, 2022)

And we’re gonna talk about that. I don’t think that’s the case, but if the numbers make sense and you can do a refinance at low to no cost right now, absolutely do it and if in 12 months, unemployment is still at 10% and rates are super low and we see a 2.75 30-year fixed mortgage, by all means, you can do it again because you don’t have sunk costs.

What I’m seeing that’s crazy especially on the high balance loans and some of the other products, I hear people call in and saying, “I talked to someone and they can get the rate “that I want, but I have to pay $7,000 for it.”

I wouldn’t pay $7,000 for anything right now when there’s a good probability that rates will go lower. If a loan makes sense right now at low to no cost, by all means, do it. If someone’s asking you to pay a bunch of points, that’s a sunk cost. You’re never getting it back. I wouldn’t do that in the current market when there is a probability of rates going even lower.

Verify my mortgage eligibility (May 16th, 2022)

– Got it, so you said two things in that that I wanna elaborate on. One was you mentioned the prime rate and that being tied to home equity loans. So Chase has come out and they said we’re not doing home equity loans anymore. If you have one, that’s great.

We’ll allow you to use it, which they may even cut that off at some point in the future just because of everything going on, but right now, you have them, you could use them. Now, Wells Fargo came out this week. Again, another big bank.

These guys are the leaders if you will in the industry with regards to home equity loans and that sort of thing. So it’s probably a trend that other banks are gonna follow. Maybe you can elaborate on that in a moment.

Verify my mortgage eligibility (May 16th, 2022)

But the other thing you mentioned was you said part of the interest rate that are out there are being tied to the servicers because of servicers not really wanting to take on the costs of or the potential liability if you will of out there buying loans in the market.

And that takes us into forbearance which I’ve talked about in the past, but I wanna elaborate on something just for those who haven’t maybe seen that video is that when you make your mortgage payment every month, you’re making it to in most cases you’re making it to a servicer, not to the person that actually owns your loan and then your servicer, that person you make your payment to is then required to pay the mortgage bond holder the interest on the payment that you’re making every month.

Well, for the longest time, or not the longest time, I mean, we’ve only been in this six weeks, but it felt like a very long time, there was no expectations, there was very little knowledge of what would happen if you allowed me to get forbearance.

Verify my mortgage eligibility (May 16th, 2022)

You’re the servicer, you offered me a three month forbearance, there’s no knowledge to see what would happen if it went beyond that. Well, Fannie and Freddie have come out and two things this week. They’ve come out and they’ve said, if I’m not able to make my payment for more than four months, essentially Fannie and Freddie are gonna step in and pay the bond holders on behalf of those servicers.

That does two things. The first thing it does is it gives those servicers some expectations. It gives them some expectations of how their books will look if it goes beyond that four months. And it also gives those servicers the ability now to offer real terms to somebody that’s suffering.

Fannie and Freddie have come out and said they should be giving you up to six months initially and then an additional six months if you need it where you and I are hearing from multiple people that they’re only getting three month terms.

Verify my mortgage eligibility (May 16th, 2022)

And now that there’s some backing to that, those terms should be offered to pretty much everyone now because there’s some liquidity coming in there, there’s some backing because of that. But more importantly, they came out this week and they said, hey, look, if you’ve been told that you have to pay your forbearance, those missed payments in a lump sum, that’s incorrect.

You are not going to have to come back and make any large payment at one time unless you’re able to do so. So that’s huge because there’s a lot of people that reached out on the videos that we’ve done and said, I took it because that was all that was offered to me, I needed something.

I don’t know how I’m gonna repay it, but now they’ve come out and said, hey look, you now have options or they’ll work out a payment plan with you. They’ll work out something with you to give you the ability to repay.

Verify my mortgage eligibility (May 16th, 2022)

So I wanted to throw that out there because it’s something that came out this week and there’s not really a lot to dive into because it’s really just that. If you wanna see more videos, I’ll link to them above or you can catch more information where I talk specifically about forbearance and how that works.

But I brought up to you home equity lines before we got into the forbearance thing. So how does home equity line even though they’re tied to prime rate and whatever, how does that if I wanted to go out and get a home equity line today, can I get one?

– You can, you can, it’s gonna be a heck of a hunt. So the big difference between home equity lines and anything else is there’s no secondary market for home equity loans or credit. The secondary market, private label investors that were selling into Wall Street got so crazy with home equity lines of credit in the last downturn, going to 100%, doing stated income, doing just the most insane stuff.

Verify my mortgage eligibility (May 16th, 2022)

In a past life, I was the VP of Consumer Direct Lending at Stearns Lending and one of our top products was through Hongkong Shanghai Banking Corporation, HSBC. It was 100% stated income, sub prime HELOC.

Just think about that. Those are three things that should never go together, but we were doing a ton of them and they were asking for more until they weren’t. And what we saw because those are in a second position because they were the high loan-to-values.

The most horrific losses in the last downturn were on those products and as a result, no one has come back into the secondary market. So really, you have banks and credit unions are willing to do home equity lines of credit and they’re much more conservative.

Verify my mortgage eligibility (May 16th, 2022)

Some of them will go 95, I’ve see the crazy one out there saying 100, but it’s really for squeaky clean 800 credit score borrowers, 35% debt-to-income ratio. So the big banks as you’ve already said they’re either not doing them at all or cutting them way, way back on loan-to-value.

The biggest bank in the wholesale space. So we’re a broker, when we go to place a loan, almost every one of our lenders has a relationship with TCF Bank that allows them to do the home equity lines of credit. They just came out last Monday as well and yesterday was their last day of accepting submissions for any home equity line of credit.

I’m sure TCF Bank if you went directly to them, you probably could retail get one through them, but what happened is as things got crazy in the jumbo market, as things got crazy in the high balance market, a lot of people were doing the smart thing and switching to a combination loan putting a portion at a lower loan amount with a big HELOC with it and banks just weren’t.

Verify my mortgage eligibility (May 16th, 2022)

They modeled their volume and their risk to say what they’re comfortable for. When the model gets broken and now they’re doing two, three times the volume at twice the average loan amount, they’re just not equipped for that risk.

So the different thing between this downturn and that downturn is they all lost their asses and they never won it back in the market. I don’t think we’re going to see that when we get into the discussion on home values.

We’re not gonna see these things underwater, we’re not gonna see them selling for tenths of a cent on the dollar in the secondary market. So they’ll come back, but as everything here, it’s all data dependent. If by July most people are back to work, unemployment is in the low teens working its way down under 10%, we’ll see those products come back.

Verify my mortgage eligibility (May 16th, 2022)

And it’s also gonna have a lot to do with how does the mortgage market normalize. If we see high balance rates for loans above 510,400 normalize, we won’t have as much of a need for HELOCs, they wouldn’t have as much demand there.

If jumbos come back into the market in a way that works for a lot of the jumbo borrowers, that will normalize that. So I don’t think it’s a thing where we really didn’t have HELOCs for three or four years after the last downturn. We’ll have them back but it could be six to 12 months before they come back.

– Right, so you mentioned something there that I wanna just dive into. We don’t have to get into deep detail on this, but you mentioned that you were able to do a home equity line up to 100% of the value of your loan.

Verify my mortgage eligibility (May 16th, 2022)

So home equity loans now, I don’t even know what you can go to on loan-to-value, but the bottom line is most of these banks, they see what happened in 2007, 2008 and they know that there’s risk associated with that whereas back then, it was like, hey, there’s no risk.

We’re just gonna keep doing this until we can’t like you mentioned. But now they see there’s risks, so they’ve been cutting off certain programs because they don’t want essentially that to happen like it happened in 2007 and 2008, now, the reason I bring this up because there’s a lot of people saying there’s a big foreclosure wave coming.

There’s all of these people that have gone on forbearance are gonna foreclose on their property, everybody’s upside down on their mortgage because home values are dropping and they couldn’t be further from the truth.

Verify my mortgage eligibility (May 16th, 2022)

I’m not here to tell you that in six, eight months that the markets gonna be up 5% or 10% or that you should go buy a house today. But what I am telling you is that people have equity in their homes ’cause the market depreciated so much over the last seven to eight years. Since 2012, the market has depreciated on average probably 5 to 7% a year, every year.

And with that being said, there’s income verification, there’s all of these things that they didn’t have at that time. And now lenders are cutting programs to prevent anybody from pulling out excess equity.

So you take all of that and you say, okay, and then the people that are in forbearance, because they’re gonna be given a payment plan or the ability to add it on to the end of their mortgage so they don’t have to come up with these payments, as long as these people regain some sort of employment, in theory, you shouldn’t see a foreclosure wave.

Verify my mortgage eligibility (May 16th, 2022)

I mean, that’s… And again, I’m just looking at numbers. This is a very pragmatic approach. This isn’t me going into any crazy theories. It’s just looking at the numbers. You shouldn’t have that.

– Yeah, look at this way. In economists speak, asset prices in a free market are dictated by the laws of supply and demand. If you have a non free market, yeah, you got all sorts of weird hands on the scales, but that simply means if you have supply going up, prices will go down.

If you have supply going down, prices will go up. Well, for us in California, especially in Southern California, Orange, LA, San Diego Counties that are largely built out, that have slow growth policies, there’s not going to be enough supply coming online to keep up with the demand of people that are located here and wanna buy and own homes.

Verify my mortgage eligibility (May 16th, 2022)

So the only way to flip that equation where you would see a decrease in values, is to increase supply by people losing their homes and you already hit on it, we have a moratorium on foreclosures. In addition to the required forbearance agreements that lenders are having to give, they’re not allowed to foreclose right now.

So if you can’t even start the foreclosure proceedings right now, and you probably wouldn’t be able to start it in six months or 12 months, in California, you have multiple stages here. It’s six to nine months in the most aggressive timeline before you would be able to foreclose.

So when we have a moratorium for six to 12 months and we have a six to 12 month timeline, you’re not gonna see any foreclosures coming on the market. That’s assuming that you would have foreclosures.

Verify my mortgage eligibility (May 16th, 2022)

In the last downturn, the majority of people that lost their home, bought late in the cycle at super high loan-to-value so bought at inflated prices at high loan-to-value or they went back in and borrowed the cash back out to high loan-to-values.

If we look at loan-to-values nationwide, if you take the amount of home value nationwide and the amount of mortgage debt, the average loan-to-value is 50, 55%. So there’s a lot of people that are in there free and clear and there’s a lot of them that are 80, 90%.

But imagine, anyone that bought before 2015, if you bought in 2010 or 2013, you’re golden, but if you bought before 2015, you’re sitting on 25 to 30% appreciation on top of whatever you put down. So are you likely to lose your home to foreclosure?

Verify my mortgage eligibility (May 16th, 2022)

No, you’re not. You might have to sell and if there’s enough of those, you get some pressure downward on prices, but you don’t have those forced sales where it’s just a fire sale.

So depending on where you’re at, depending on what industries you have and how the local economy looks, largely what we’ve seen so far from the unemployment, renters, the renters have been hit disproportionately hard by the unemployment because they have lower end jobs.

Those are the people that were determined to be expendable in the short run. Those jobs are important and will come back online, but owners to a much lesser degree have been hit. And that’s not to say that they haven’t been hit. We wouldn’t have 10% of FHA and VA borrowers in forbearance if they hadn’t been hit.

Verify my mortgage eligibility (May 16th, 2022)

But if we also if we went back to the old regime where you actually had to prove a hardship to get in forbearance, we’d probably have 4 or 5% of FHA or VA loans in forbearance. So you got a bunch of weird stuff.

The government is trying really hard to stretch this out because again the big difference between 2020 and 2007 is that was systemic problems that were going to take a long time to heal and recover from. This is much more similar to a natural disaster.

No one saw it coming, it hit once hard everywhere and then now it’s gonna be recover. So we’re all hoping it’s a slow and steady recovery. It could be a recovery and then a setback and then a recovery and a setback.

Verify my mortgage eligibility (May 16th, 2022)

We don’t know what it looks like and the uncertainty that’s left there, we’re all pretty confident we’ve seen the worst of it, but we don’t know how long we stay at these levels and how quickly we recover.

Once that becomes known and starts getting priced into the market, when lenders get a little bit more aggressive, not in terms of progressive lending, but just bringing programs back that we had a month ago, taking away overlays to their guidelines, bringing back home equity lines of credit that market normalizes and it should.

I don’t know. So when we say if you look at the fundamentals today interest rates should be 3/4 of a percent lower than they are. And I would say that they will be, but I don’t know if that’s six months from now or it’s 12 months from now or 18 months from now.

Verify my mortgage eligibility (May 16th, 2022)

And you also have that moving target that, yeah, mortgages are really high relative to the 10-Year today, but what if by the time lenders get comfortable and wanna go back to their normal 2% variance between the 10-Year, what if the 10’s back at 1 1/2 by then? Well, we’re at 3 1/2 right now.

They can meet in the middle. It doesn’t have to be one going all the way to the other. They can absolutely meet in the middle. So we don’t have any guarantees. Anyone that tells you they know for a fact exactly what’s gonna happen, rates for those that qualify are going to be low for quite some time to come.

Whenever it makes sense for you and is logical, take advantage of it. And because of that because we’re gonna say we have rates at all time lows and they’re likely to be here for 12 to 24 months if not longer, that’s yet another support for the mortgage market.

Verify my mortgage eligibility (May 16th, 2022)

Some people who are in trouble, instead of selling might be able to refinance their way out of it, pay off some other debt, get things in line. Other people they will have more buyers eligible and able to qualify because interest rates are lower and that monthly payment is lower.

So in the short run in the next three to six months, by any stretch, you could see in any market a couple of weird sales, forced sales, distressed sales, someone has to move, gets relocated from a job and has to do it, by all means, you could see some weird comps go up and six months from now you might go to refi and get a much lower appraisal than what you think.

But my expectation is we’re gonna go from depending on the expert you pick was saying 3 to 6% appreciation this year, maybe we’re 0 to 2% this year, this calendar year. And it’s gonna moderate growth going forward.

Verify my mortgage eligibility (May 16th, 2022)

When we don’t have full employment, even though rates are really low, we won’t have as much appreciation as we have had, but California’s a weird place. Everyone wants to live here, so you always have plenty of willing demand. It’s just how much able demand do we have?

How many people can get a job that pays enough, can qualify for the mortgage, can scrape together the down payment? So as long as you’re in Orange and LA County, I don’t have a super big worry about home values right now and obviously data dependent.

Let’s come back in another 60 days. Like you had mentioned earlier, we’re only six weeks into this. Let’s come back in 60 days when we’re 3 1/2 months into it, we get a look at how bad the second quarter is. On paper, it’s gonna be really bad.

Verify my mortgage eligibility (May 16th, 2022)

All the reports that start coming out are gonna be terrible. If I pull up the numbers on January and February data for the year-over-year, home prices were tracking up 4 to 6% depending on who’s numbers you look like. We had supply at low levels, demand higher than the last few years.

The most important thing that we have right now is that I actually have some charts queued up here. There’s really only one that I think is important and worth showing here, but this is our biggest tailwind for home values.

You can’t really see what this is but what I wanna show where I’m at right here, that is… Sorry, we got a car alarm kindly going off in the neighborhood. This cohort right here is baby boomers, age 55 to 59. It makes up 11.27% of the population.

Verify my mortgage eligibility (May 16th, 2022)

Right here behind it is 25 to 29 and this chart is as of 2018. So the 25 to 29-year-olds who are now 27 to 31 is 11.54% of the population. That group is the biggest group, biggest cohort by generation we’ve had since the baby boomers.

Everyone is aware how the baby boomers changed consumption just because they came into the market en masse, what they bought, there was large demand. Well, when we say 27 to 31, 32, that’s prime home-buying age and that generation will be moving into that.

So they’re getting to their prime earning years. If you say 25, 26, 27, you get started in your career, by your early 30s, you’ve got some promotions, you’re making good money, you got married, you’re probably having your first kid, you feel like you need a home.

Verify my mortgage eligibility (May 16th, 2022)

That’s gonna give tailwinds to the market. Now again, a giant downturn in the economy will change everything, but we’ve got demographic tailwinds. We’ve got low interest rate tailwinds. We’ve got supply demand imbalance in our favor.

There are just a million reasons why we’re not going to see a large decrease in home values as much as some people want it because they feel like they’re priced out and would like to have lower prices.

– Yeah right, so you said again a couple of important things that I just gotta go back on here. You made a comment that in 2007, 2006, whatever you wanna refer to that time as, 2006 through 2008, that it was a, you didn’t say this directly but this is more or less what you were getting, that was a financial crisis.

Verify my mortgage eligibility (May 16th, 2022)

That was a global crisis financially that hit banks, that hit lending, that hit basically every aspect of that business and lending became an issue and it directly hit real estate. That was a direct impact on the real estate market. This time, it has nothing to do with real estate.

It is like you mentioned you referenced it to a natural disaster. It has nothing to do with real estate, it has nothing to do with mortgage. Those are still sound fundamental. The fundamentals of those businesses are very sound.

And so once this event if you will, or I’m gonna say it’s an event because that’s essentially what it has been, once it’s under control whether it’s a vaccine has been created or we get past it or whatever and employment gets back on some sort of level ground, real estate, mortgage, all of this stuff should continue not necessarily where it left off, but it doesn’t have to make up for what it did in 2007 through 2008.

Verify my mortgage eligibility (May 16th, 2022)

The money is still there, the programs are still there. The buyers are still there, all on the back end. It’s not what it was back then. So anybody that thinks that we’re looking just like 2006 through 2008, it’s not the same.

And not to say that something else can’t come and make that happen, but as it stands today, that’s not what we’re dealing with. This is completely separate from that time period and I think like you mentioned, you gotta lot of people out there that missed the opportunity.

I see them all the time. They didn’t buy because they kept thinking prices were gonna go down. They kept thinking I’m gonna get my chance in the market and they still haven’t bought. Everybody’s looking to bottom fish.

Verify my mortgage eligibility (May 16th, 2022)

Everybody wants home prices, interest rates, everything at the very lowest. And while they wait, things continue to go up. And so not to say that that means any, that we’re headed on some great boom, but those are facts. And here’s some more facts.

This week pending home sales are down 22% for March. What does that mean? We’re at the end of, well actually, we’re at the beginning of May now, so that’s a month old. But the new data that came out said that mortgage applications are up I think 12%. So that was this week. That was week-over-week they were up 12%.

– And purchase mortgage applications. Obviously refinances have been up.

Verify my mortgage eligibility (May 16th, 2022)

– Not refinances, that’s purchase, people buying houses. And so the data that’s old is basically telling us what happened in March. Well, March, this thing just came to light. Nobody knew what was gonna happen, of course, applications are down.

Why would you go buy a house or try to buy a house or put an application in if you had no idea what the hell was going on. Now you have a better idea of what’s going on because you’ve had six weeks to get accustomed to it. And so applications are up.

And whether you’ve seen it directly or what have you, that shows that people are one of two things. They’re either just over it and they’re saying this isn’t nearly a big a deal as everybody’s making it out to be. I’ve got a job, I’m still moving forward, I’m gonna buy a house.

Verify my mortgage eligibility (May 16th, 2022)

Or the other side is that people that just I don’t even know I guess there’s only really one side. I didn’t have another one that people are over it. So they’re ready to buy. Either that or where I was going with that interest rates are low, they see that home prices aren’t going down to drop 30% like the stock market did initially and so they’ve said, you know what?

Maybe now is a good time to buy. So that way I guess that would be my second one. And as you can tell this isn’t edited, guys.

– The thing about this is the covert truth of the coronavirus is that it’s greatest risk to the old and infirm. So who are home buyers? Once someone hits 65, 70 years of age, primarily done buying homes. They’re paying them off and enjoying their golden years.

Verify my mortgage eligibility (May 16th, 2022)

So it’s not impacting a lot of what we have here. And the second piece what I wanted to say about that, 30-year-olds, 40-year-olds, yeah, they’re concerned and aware of the issue and realize that what we younger people do protects those that are older, but you can see.

We’re both here in Huntington. We had a group of aywhos protesting the lockdown, but a month ago, that would’ve been unheard of. Everyone would’ve gone down there and said throw them in prison. But we do have a small vocal group of people saying, hey, we need to get over this.

And most people are somewhere in the middle. We’re feeling out what the new normal is, what our comfort level is and the risk to ourselves personally is actually fairly low. It’s just changing behaviors and that applies to real estate also.

Verify my mortgage eligibility (May 16th, 2022)

For us on the mortgage side, most people don’t choose to come in and meet with us. We can do everything online, we can do a live Zoom meeting just like this and run through all the numbers. For the realtors, it’s a little bit different.

You gotta show them a house, but from digitally signing contracts, virtually looking at open houses before going in and seeing it gives you a better handle on it. It’s just gonna be a new normal, you don’t know exactly what it’s like.

It’s gonna be different than what it was, but we’re getting to that and again in six weeks, it’s much more normal than it was. And six to 12 weeks forward, we’re gonna have a pretty good handle on what this is and what it looks like.

Verify my mortgage eligibility (May 16th, 2022)

– Right, and as we’ve done week-over-week, we’re gonna continue to update you on that, any changes in the market, any top trending news that may affect you as somebody buying real estate, selling real estate, investing in real estate or hell, maybe you’re just a homeowner and you wanna know what the future looks like.

We’re gonna continue to do those updates, but I encourage you guys if you’re still watching, I mean, it’s 32 minutes into this thing, to comment, leave comments, tell us. We’re answering these questions as you put them in there and we don’t have all the answers.

And if we don’t, we’re telling people, hey look, we don’t know the answer to that, but I encourage you guys to comment, contact us directly. You guys have done a lot of that, there’s been a lot of people saying thanks and, or reaching out to Josh to refinance or have questions. So I encourage you guys to keep doing it. I’ll put Josh’s contact information again in the description. Any final parting words there, Josh?

Verify my mortgage eligibility (May 16th, 2022)

– No, we’re just slowly thawing and getting back to normal. It’s gonna take longer than any of us would like, but six, 12 months from now, we’ll be 90% normal in the mortgage industry and there’s gonna be a lot of opportunity for people.

If that opportunity exists today, if you’re at… Talked to a lady earlier this week, she’s at 3.75. We can get her to 3.25 with zero cost there. That makes sense today. Talk to someone else, it’s a high balance loan, the numbers aren’t there.

So we’re just keeping the watch list, keeping in contact, keeping people up to date, so watch the videos. Check in with us, most everyone’s gonna have an opportunity to benefit from these low rates before this is over.

Verify my mortgage eligibility (May 16th, 2022)

– Cool, so yeah, I think that’s a good note to end on. But thank you guys for watching.

– All right, have a good one. See you next week, bye.

Show me today's rates (May 16th, 2022)
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Josh Lewis Broker | Owner | Mortgage Consultant
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