By Matt Joy, Princeton Mortgage Wholesale
It seems as if everyone is paying a LOT of attention to rates, the bond market, housing prices etc. That makes sense though… right? If you sit back and consider everything in play right now… then it really makes sense.
Unless you’ve been living under a rock, you know that the Republican tax plan is now in place. Experts believe that the new law will send home prices up as much as $20k thus, making renting more attractive. However, some other experts (who are these experts by the way?) believe that “favorable demographics” will keep the market healthy and that’s because Millennials are moving into the ‘settle-down’ phase of their lives… clearly buying a home is their next move.
If we compound increasing housing prices, with reports coming from the Fed minutes that spending will increase due to all the extra cash Americans will have because of lower taxes, interest rates will rise sooner than expected. Okay, great… so now we have increased housing prices and higher interest rates. What does that mean for us?! Please can one of these experts tell me what the mortgage industry is going to look like in 2018?! (I really wish I had access to the DeLorean!)
The Wall Street Journal published a great article earlier this week that brought me some comfort around all this madness that is going on and how the bond market will be affected by inflation. The article essentially leaves us with questions, but does elude to the fact that an increase in rates doesn’t mean that there will necessarily be an increase in long-term interest rates… well at least significant one.
The truth is nobody really knows what is going to happen… for example the jobs report came out and while jobs increased they were way off the mark from where the experts (again with this expert thing) were predicting. Their predictions were to see an increase somewhere between 190K - 210K, but the latest report form the U.S. Bureau of Labor Stats showed an increase by 148K.
The way I see it is we’re just going to have to bob and weave with the punches. We’ll have to stay flexible and make sure that our business models are set up to pivot. I mean higher home values, higher wages, more cash on hand… what’s an extra half of a percent on a 30-year fixed (insert nervous emoji face)?
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.