Back to 5% Rates!? | How Mortgage Rates Could Crash in 2023

Sick and tired of this gurus talking and talking and nothing they say actually happened.. they just want views

I think job market will decline as discretionary spending falls and companies are required to trim the fat off the budget and lay off people, which will result in housing sales coming to a SCREECHING HALT. Rates will be forced to drop sharply, and housing prices will drop DRASTICALLY (really just back to reality pre-pandemic moderate growth levels) Rental Market should stay strong but lending will tighten. Cash Heavy investors will have an opportunity to LOAD UP on rentals at a discount. LETS GOOO

The average American has difficulty affording the average home because the average America is a BRAT…..
SAYYYYYY NOOOOOO.
my car is a 2003 f150… runs fine
My wife has. 2010 Rav 4….runs fine
Our mortgage is less than 25% of the value of our house.

Houses USED TO BE priced at “ one annual income… “ in 1965, my dad made $17,000/ year and we bought a three bedroom house for $17,000.
.But now houses cost FOUR times an annual salary… joe average makes $70,000 and a house costs $280,000.

But if we would all just say the magic word….NO ! We could stop or slow housing cost inflation..
But of course we want every one ELSE ..to say the magic word…Because Americans are BRATS.

Instead of one or the other, it feels like a combination of 2. (better handle on inflation) and 3.(global recession) will cause"interest rates" to stabilize in the coming year+.

Thank you making complex systems so clear and concise! You are a great teacher and I love that you keep an objective perspective and provide different scenarios. I’m grateful for your content!

dave great video i feel an economist now ..someone hand me a demand and supply chart!!!!

Can't predict only based on mortgage rates. What about increasing inventories, massive white collar layoffs, reduced rent, etc

Usually FED funds is the lowest on the curve. But the 10yr actually just went BELOW it.

I think they come back to 5-5.5 % around May 2023

Your Scenario 2 seems highly likely over the next 2-6 months

Wishful thinking, the macro economic issues of the world are leading us to a recession no doubt about it. First quantitative easing 2nd quantitative tightening and step 3 quantitative easing again which will be the final blow to send the market into a crash. I predict interest rates will go up to 10%. People please have a savings account that will cover for at least 6month of your expenses incase you lose your jobs. Good luck everyone and stay safe.

In order to achieve sustainability in the housing market, the rates will probably end up at close to 4% at some point. Attempting to force home prices to substantially below what it would cost to replace a home in a given location won't fly for long.

Mortgage rates will not go to 8% or higher.

What ever happened to the 1% increase in mortgage rates = a 10% drop in housing prices. Not seeing it on a National basis.

I mean people loooveee a bad deal. I’m sure houses will still sell.

Rates will always decrease in a recession. Always have and always will. However , doesn't mean you will get that low rate for a mortgage. 2008 is a good example. Rates dropped in the recession but banks wouldn't lend. Same will happen this time. Homes are over priced, housing bulls need to cool off and go speculate elsewhere for some time.

Yikes worst analysis yet

They may come down, but rates above 6% are going to be with us for quite a while. Being a real estate agent is going to suck for most of 2023

They let me lock in mine at 5 flat only because I had to put more down @ 24%

Fed Pivot: there is a thought on the web that JP wants to remove wealth effect as barometer of one’ ability and desire to spend. If really true that make FED keep raising rates. Then there is one inconvenient fact, the FG tax collection is below the interest they are paying on debt.
The big lender CCP is either moving away gradually and doing nothing new to invest their trade surplus into Treasury. Bottom line demand if 10YT treasury will decide what would be the yield. The curve relied on to predict interest rates may see a diversion.

7to10 % should be the norm .or offer five with 59%down so the risks to the lender minimizes .plus closing .so a five hundred thousand dollar home all you need to bring to the table is three hundred thousand dollars .

No experts are predicting higher rates next year. The fed rate increases don’t correlate to mortgage rates.

That shit is going to 10%

What a great explanation

Mortgage rates will go to 10% until there is a Republican President.

Even at 5% your still looking at 3,000 dollars a month 😂 what a joke

crash to 3% in january pls

U people don’t understand the fed and the purpose. Everyone is expecting a V recovery and wont see this time around

Is 5.6% today

Housing correction? In my area houses have stood the same a few have gone down 5% from being 40% overpriced.

now we have too much inventory and now one wants to buy. if rates do not go down, then everything will cost more to produce than what people are willing to pay for it.
this black friday was a complete disaster for many retailers.

it amazes me how stupid some real estate agents are. its a slight dip, because demand for mortgages has dropped off the face of the planet and we are getting into slow months in most housing markets. If demand and prices continue to drop together for the next 6 months, we may see rates tick down slightly.

Its basic math and economics. macro and micro economics and basic algebra should be required for a real estate agent.

rates will not go down much until prices start to collapse as they have in certain markets.
unless, the fed starts pumping more monopoly cash into markets and buying Mortgage Backed Securities and causing even more inflation. NOT POLITICALLY FEASIBLE FOR EITHER PARTY.
Their balance sheet is overblown by trillion. they are now selling the risky assets, causing chaos in the bond markets.

2023 will continue to see high interest rates and the collapsing of prices and equity unless inflation miraculously drops to normal levels of 2-3%. That won't happen until interest rates are near or above inflation rates of 9-10%.

In my view mortgage rates will likely be higher than 5%and could move much higher if inflation does not come down fast . In 1980's mortgage rates had to be raised up to 20% when inflation did not even reach 13%, it was 7% above inflation . In the 2nd half of 2023 we will have recession and we might see interest rate going down slowly in the begining of 2024 but will likely stabilize mortgage rate above 3 percent .

Make those housing investors out of market! They ruined affordable houses

Rates are 100% going up next year. Market is going down and the tech sector is going to be in a recession..

it's 2022. you said rates doubled in 2023 lol.

You should not be giving this type of advice to novice investors.

You need to disclose the catastrophic market impacts of a “global recession”

You need to opine on how that can affect the spread and push it even larger as a function of dramatically increased risk.

Lastly, in a global recession, investors move to cash and gold and other currency adjusted investments.

But it’s nice to be hopeful I guess

Im a home owner and im telling you the housing market needs a collapse for people to be able to afford them…

A few things wrong here...

1) The federal reserve can and does more than just control the 'fed funds rate'. They also, as part of their assistance package to the economy in 2020 & 2021, bought over 120 BILLION dollars of treasuries and mortgage backed securities (the real driver of mortgage rates) PER MONTH, which artificially lowered rates to keep the housing market from slowing... good plan Clark, mission accomplished. 🤦‍♂ This caused the fed's balance sheet to balloon from just a hair over 4 trillion in 2/20 to a hair under 9 trillion in April 2022. Because of this, the fed has started to sell the bonds on their balance sheet to try to reduce this over time. As the man on the video explains, as people buy bonds, rates go down... however, when people sell them, rates are more likely to go up. You have a big seller adding lots of bonds to the market and you also have fewer foreign governments buying them because of inflation and the strong dollar. So, while a global recession would undoubtedly add buyers, this won't drop rates like back in 2020/21 unless its nasty and the fed reverts to buying MBS again. No one want this. This is not to say that rates won't come down some... we've already seen a dip in rates that have brought them down close to a 100 bps from their highs but, IMO, it won't last as the reality of the feds statement is not that they'll stop raising rates or even lower rates, but just slow their increases (likely from 75 to 50 bps), but they've still commented that the length they'll hold rates higher will be longer than anticipated. The current situation is just the reality that Wall Street is just as addicted to free money as the rest of America and they are grasping at any shred of hope that they can have one more hit before they have to go to rehab.

2) mortgage rates are not set based on a banks profit level they want to make based on the spread between the FFR and the rate they charge (this is the case on some products offered) but as I stated before, rates are set based on the markets appetite for the bonds. While bank and other fees do go into the offering rate, the actual market rate is based on demand (higher the demand for mortgage bonds, the lower the rate) and the end investor (the one reaping the benefit of the interest charged on the mortgage) is NOT the bank, but the governmental body, institutional investor or even individual investor that buys the underlying mortgage bond. (Yes, you can buy an investment that pays you a portion of your principal back plus interest every month when mortgage payments are made). 😀

Bs

Really good job

Wow! You basically told us nothing

Laughs in 1,8%

Sorry but you might confuse many viewers who does not have general knowledge of economics. Some of your views are based on pure speculation. You should mention that the interest rates are going high only due to high inflation as you can see by recent data the current rates stopped inflation already and now there is stalling cool down period which could take several years until rates will go down AND once the inflation is tackled and going down only then interest rates will go down. You should do some research on US10Y gov bonds graph that will tell you where economy goes.

Can they come back to 2.5% 😁

Mortgage rates CRASHING to 5% in 2023!!! Is that really considered a crash???

5%???? Rates were 1.05 in Canada 10 months ago. 6-7% is criminal

You explained this great, especially the fed v bonds v mortgage rates section, well written/said!

Rates will probably stabilize around 6-7% for 3-4 years.

Hopefully rates stay above 6 percent until housing drops another 20 percent and certain over heated markets in the west crater