From our trusted lender partner, The Dean Team’s Joshua Dean of Homeowners Financial:
I feel the need to discuss something that is happening in the market.
As many of you have likely heard, Interest Rates are on the move again. Sirens have long be sounded about this day coming. Contrary to the general sentiment though, the upward swing hasn’t been anything backbreaking thus far when looking at this thing from a vantage point of ten thousand feet; it’s happened in a very condensed fashion and there lies the heartburn.
For instance, the rate quoted to a customer on a Tuesday is not something that is still there on a Thursday— That very speed is what’s really creating angst; not necessarily the move itself as that has long been anticipated. This trend started in late December and has picked up steam the very first couple weeks of 2022.
This proverbial gust of wind in the market has shifted the cost of housing money to its highest levels since May 2020. Allow me to provide a little perspective though as it’s easy to get lost in the hyperbole of the moment— Rates are still below where they were in the pre pandemic days of late 2019 and early 2020.
Having level set above, why is this happening?
Our guiding light, The Federal Reserve, has come out and explicitly stated to expect Interest Rate hikes as a common theme in 2022 — Again, this is not breaking news but the fact that we will have more of these upticks than initially projected during the next 12 months is indeed a proclamation- The outlook has been to expect three different hikes and as of the New Year that got “upgraded” to four… sending us into a momentary frenzy; almost an overreaction if you may to start 2022.
As the US Economy grapples with surging inflation and tight labor conditions, this is the plan we’re going with to hopefully neutralize things — This along with The Fed planning to slash the size of its Balance Sheet as early as July…
Well, the pace in which this is taking shape will eventually slow… The tone is set though; embrace it — Interest Rates are without question on the move and will continue to be on the move. However, if we’ve learned anything when it comes to this subject matter, shifting of the winds is also a very probable outcome.
While human nature is to roll down hill with the general partiality happening around us, there are a couple factors that come to mind of which could flip this whole disposition on its head:
- A more severe Coronavirus Variant could cause a repeat of economic upheaval that would trigger us to reverse course on the actions currently being taken
- Geopolitical Unrest could prompt investors to seek safe haven in bonds and as such pull rates back down with them (IE Russian invasion of Ukraine, Escalation in tensions between China & Taiwan, etc)
All we could do on this journey we’re on is stay educated and avoid subscribing to over amplification of what’s happening… Remember folks, control what you can control and keep pushing forward.
Thank you for the opportunity to be your trusted partner.