What in the world is going on with the mortgage rates?
In this video Mark Schreier a Licensed Sales Associate with Century 21 American Homes Real Estate along with Quentin Hardy of Movement Mortgage Huntington, N.Y. https://movement.com/lo/quentin-hardy/office will get into the details of what is actually going on with the mortgage rates. We will talk about the Federal Reserve, Stock Market, and other things to consider in the mortgage rate equation. Will the rates keep going down? Will they go up? If you are thinking about buying, refinancing, or selling a house this is a must watch video...
Transcript of Video
Mark Schreier : What in the world is going on with the mortgage rates. That's the topic of my next video.
New Speaker: [inaudible]
Mark Schreier : Hello everybody this is, I'm Mark Schreier from century 21 American Homes and this is my first journey on zoom video conferencing saves me and in this case Quentin, a lot of time when we want to get some good content out to everybody, uh, out there and Facebook and YouTube land. So Quentin is from Movement Mortgage. He is a moment that I use and I figured I'd ask Quentin the, the famous question, what in the world is going on with mortgage rates? I remember about 15 years ago I refinanced and they said the rates are never going to be lower then they are 15 years ago. And luckily for me there are a lot lower now than they were back then. So Quentin can you introduce to some a little more and tell us about that?
Quentin Hardy: Sure. My name is Quentin Hardy of Movement Mortgage. I am a 17 year mortgage industry veteran. Um, and I worked for a company that is the sixth largest purchase money lender in the country. We just passed Chase last year. So we're a significant purchase bank, mortgage bank, but we just opened our first branch here in Long Island in July of 2018 we were licensed. So the name is not very well known here in the area, but it's a, we're in 49 States. Big bank. And um, yeah, but lots of good information. Lots of good loans, lots of good stuff happening right now in the market.
Mark Schreier : Uh, what are the, um, why are the mortgage rates going down? I mean, in general, I know things change. If I had a crystal ball, I'd be making a lot of money. Uh, so what do you think from a mortgage person's viewpoint, what's going on that these, it's happening? You know,
Quentin Hardy: I'll give you the answer a sort of a layman's answer, but first I'm going to tell you why they're not going down. Because most people believe that the interest rates go down with the Federal Reserve. The reserve makes a change. And every time the fed cuts rates, I hear people say, I heard the fed just cut mortgage rates, which is interesting because they never ever say that. And I'm always wondering, why do people, why do people think it's mortgage rates and why didn't I say I heard the fed cut student loan rates or car car note rates, or they always say mortgages what they think, but it, believe it or not, the fed is cutting what's called the overnight funds rate. That's nothing to do with mortgages directly. And usually when the fed cuts rates, mortgage rates go up. So that begs the question then why is it that they cut rates and rates went down?
Quentin Hardy: It's has nothing to do with the Fed. So when the Fed cuts rates or raises rates, there's not a direct correlation. It doesn't always go up or down based on what the fed does, but we have to understand why the fed is cutting rates. The Fed's job in the Federal Reserve's job is to keep our on track. If it's going too fast, we're growing too much. They want to cool things down by raising interest rates and making money expensive, and they do the opposite. If things are going not going so well. So I've been cutting rates. What they're saying is that our economy starting to get a little too cool and they want to heat things up now realize that they raised rates in December of last year. So they were trying to go the other direction and now they're trying to reverse. And what's really happening is last year we had a, a growth in the our economy, about 2.9% and this year it's about 2% it went all, it's only 0.9% you know, that's not a third less.
Quentin Hardy: So they're, they're concerned that we're slowing down too much and they're trying to get things picked up. So the mortgage interest rates are impacted by a whole lot of things, whether it's something called quantitative easing, whether it's what's happening around the world and other markets, if a lot of it is really tied to the 10 year treasury yield on, on bonds, that has to do with more of the bond market than the federal reserve of the stock market. But, uh, just to give you another example, even the politics of what happens is last time, if they'd cut rates, interest rates went down. This was in July, and everybody's like, see the Fed cut rates, mortgage rates went down where people sometimes didn't catch it. The next day the white house came out and basically said that we're going back to a trade war with China. That's what moved the stock market down and made mortgage interest rates come down.
Quentin Hardy: It wasn't really the fed as much as it was the political reaction to it. So we have to understand is that mortgage interest rates, do you have to operate in a vacuum? Just like stocks, bonds in any other interest rate is moved by a whole different bunch of factors. Right now we are seeing very, very close to the lowest rates we've ever seen since 2012 and anybody who tells you the lowest they're ever going to be, obviously no one can predict the future. So, um, by the time that people watch this video, the rates can be a little bit higher or a little bit lower. They change on a daily basis. And when there's a lot of volatility like we have now, sometimes they change multiple times in a day. Right now we are seeing rates out a very near of the lowest we've ever seen. So on a lot of 30 year fixed products, you're going to see rates in the threes, 15 year fixed products. You're going to see the low three, sometimes even the twos, depending on the product, your qualifications, where the house is, there's about a dozen things that go into determining what your interest rate is. So there is no interest rate. There's interest rates on different products in different programs. So I think that's a long answer, but did I give you what you were looking for?
Mark Schreier : That was definitely a long answer and I'm in the real estate business, but for the layman, let's cut it down into couple of things. rates are the pretty much the lowest they've been since you've been in real estate, uh, in mortgages.
Quentin Hardy: Yeah, we're really close to the bottom.
Mark Schreier : About 17 years. We've been doing this 17 years. Okay. So next question is 30 year versus 15 versus the difference between an investment property and a second. Um, house, so you know, like a vacation house for somebody and how mortgage would that be higher or lower for those things without giving specific numbers? Because like you mentioned, they always change.
Quentin Hardy: Sure. It's really simple and it really all comes down to risk. When a bank makes a loan, they're trying to determine what is the probability that the money will come back to us and in a timely manner. So a primary home has the lowest risk. A vacation home has about the same risk as a primary home, statistically speaking or second home vacation home and investment property does not, let me think about it. If you fell on hard times and you had to let one of your properties go or you know, let the one go that you and your wife and your children live in, or will you let the investment property go. So the investment properties have usually about half a percent, sometimes more depending again on the down payment and credit and programs and products, et cetera. It could be half percent or more higher than the standard 30 year fixed, for example.
Quentin Hardy: Um, on a primary residence. Second home should be about the same. I always warn people, however, because sometimes people tell me that this is their second home or the vacation home when it's really an investment that's called fraud. So don't tell the bank that you're going to be living in a house. You're not. And I think the example you and I discussed is the person who lives in Roslyn saying that they are buying a, a second home in Hempstead, right? Nothing's wrong with Hempstead or Roslyn. But the point is nobody goes to vacation in Hempstead, hence that if they live in Roslyn. Now, if you're living in Roslyn and you're going to buy a house in the Hamptons, or you are buying a house in Manhattan, a condo in Manhattan, because you work in Manhattan and sometimes stay there two or three nights a week because you're a surgeon that has to be in the ER at three in the morning, okay? Those are things that make sense. That's a second home or vacation.
Mark Schreier : So it's gotta make sense. What did I make faced where a family member, you know, wants, I'm a father and mother want to buy a home for their kids that might be right down the block and the kids live in that house. Is is the bank and to say, well this is an investment property. Or if they can document and show that either, well the title could be in the parent's name but the kids are living in there. Is that problematic or is that something that could be done?
Quentin Hardy: That's a very complex one. There are programs, uh, for example, I did, I did have a uh, a physician who lived on Long Island buying a second home near NYU for his daughter to live in that counted as a second home even though he wasn't going to be staying there. That's a family situation. That's okay. Now if you're just buying one at the end of the block, um, there are certain programs that will count that as a second home for people. For example, people who are buying for aging relatives. I have had people do that. Um, and sometimes it's really an investment property. That's, that's a case by case. You've got to delve deep into what's actually happening with the home, who's going to be living there. So sometimes that's a, that is a truly a second home and other times it is an investment property.
Mark Schreier : So basically you just gotta if this is what you're, you gotta be able to back it up with a legit documentation to prove your case to the bank and then it shouldn't be a problem whatsoever with the same interest rate as your primary residence. Alright, well, uh, don't want to go too long on this video, so thank you very much. Quentin Hardy from movement mortgage. We be doing this again in the future. Now that I'm learning how to use zoom.
Mark Schreier: Hello. Yes, I'm talking to you, the person that watched my video to the very end. Thanks a lot for watching. If you enjoyed it, please give me a big thumbs up. Subscribe to my YouTube channel like me on Facebook. I am a licensed real estate agent in New York state, but I also have a referral service that deals nationwide. So if you're looking for to buy or sell a house anywhere in the United States, please send me a text, contact me via phone, and I'll set you up with a local professional in your area. If you're in my vicinity of the more than happy to help you out in any of your real estate transactions that you'd like. This is Mark Schreier from century 21 American Homes, and I'll talk to you soon.
New Speaker: [inaudible]
Mark Schreier : Hello everybody this is, I'm Mark Schreier from century 21 American Homes and this is my first journey on zoom video conferencing saves me and in this case Quentin, a lot of time when we want to get some good content out to everybody, uh, out there and Facebook and YouTube land. So Quentin is from Movement Mortgage. He is a moment that I use and I figured I'd ask Quentin the, the famous question, what in the world is going on with mortgage rates? I remember about 15 years ago I refinanced and they said the rates are never going to be lower then they are 15 years ago. And luckily for me there are a lot lower now than they were back then. So Quentin can you introduce to some a little more and tell us about that?
Quentin Hardy: Sure. My name is Quentin Hardy of Movement Mortgage. I am a 17 year mortgage industry veteran. Um, and I worked for a company that is the sixth largest purchase money lender in the country. We just passed Chase last year. So we're a significant purchase bank, mortgage bank, but we just opened our first branch here in Long Island in July of 2018 we were licensed. So the name is not very well known here in the area, but it's a, we're in 49 States. Big bank. And um, yeah, but lots of good information. Lots of good loans, lots of good stuff happening right now in the market.
Mark Schreier : Uh, what are the, um, why are the mortgage rates going down? I mean, in general, I know things change. If I had a crystal ball, I'd be making a lot of money. Uh, so what do you think from a mortgage person's viewpoint, what's going on that these, it's happening? You know,
Quentin Hardy: I'll give you the answer a sort of a layman's answer, but first I'm going to tell you why they're not going down. Because most people believe that the interest rates go down with the Federal Reserve. The reserve makes a change. And every time the fed cuts rates, I hear people say, I heard the fed just cut mortgage rates, which is interesting because they never ever say that. And I'm always wondering, why do people, why do people think it's mortgage rates and why didn't I say I heard the fed cut student loan rates or car car note rates, or they always say mortgages what they think, but it, believe it or not, the fed is cutting what's called the overnight funds rate. That's nothing to do with mortgages directly. And usually when the fed cuts rates, mortgage rates go up. So that begs the question then why is it that they cut rates and rates went down?
Quentin Hardy: It's has nothing to do with the Fed. So when the Fed cuts rates or raises rates, there's not a direct correlation. It doesn't always go up or down based on what the fed does, but we have to understand why the fed is cutting rates. The Fed's job in the Federal Reserve's job is to keep our on track. If it's going too fast, we're growing too much. They want to cool things down by raising interest rates and making money expensive, and they do the opposite. If things are going not going so well. So I've been cutting rates. What they're saying is that our economy starting to get a little too cool and they want to heat things up now realize that they raised rates in December of last year. So they were trying to go the other direction and now they're trying to reverse. And what's really happening is last year we had a, a growth in the our economy, about 2.9% and this year it's about 2% it went all, it's only 0.9% you know, that's not a third less.
Quentin Hardy: So they're, they're concerned that we're slowing down too much and they're trying to get things picked up. So the mortgage interest rates are impacted by a whole lot of things, whether it's something called quantitative easing, whether it's what's happening around the world and other markets, if a lot of it is really tied to the 10 year treasury yield on, on bonds, that has to do with more of the bond market than the federal reserve of the stock market. But, uh, just to give you another example, even the politics of what happens is last time, if they'd cut rates, interest rates went down. This was in July, and everybody's like, see the Fed cut rates, mortgage rates went down where people sometimes didn't catch it. The next day the white house came out and basically said that we're going back to a trade war with China. That's what moved the stock market down and made mortgage interest rates come down.
Quentin Hardy: It wasn't really the fed as much as it was the political reaction to it. So we have to understand is that mortgage interest rates, do you have to operate in a vacuum? Just like stocks, bonds in any other interest rate is moved by a whole different bunch of factors. Right now we are seeing very, very close to the lowest rates we've ever seen since 2012 and anybody who tells you the lowest they're ever going to be, obviously no one can predict the future. So, um, by the time that people watch this video, the rates can be a little bit higher or a little bit lower. They change on a daily basis. And when there's a lot of volatility like we have now, sometimes they change multiple times in a day. Right now we are seeing rates out a very near of the lowest we've ever seen. So on a lot of 30 year fixed products, you're going to see rates in the threes, 15 year fixed products. You're going to see the low three, sometimes even the twos, depending on the product, your qualifications, where the house is, there's about a dozen things that go into determining what your interest rate is. So there is no interest rate. There's interest rates on different products in different programs. So I think that's a long answer, but did I give you what you were looking for?
Mark Schreier : That was definitely a long answer and I'm in the real estate business, but for the layman, let's cut it down into couple of things. rates are the pretty much the lowest they've been since you've been in real estate, uh, in mortgages.
Quentin Hardy: Yeah, we're really close to the bottom.
Mark Schreier : About 17 years. We've been doing this 17 years. Okay. So next question is 30 year versus 15 versus the difference between an investment property and a second. Um, house, so you know, like a vacation house for somebody and how mortgage would that be higher or lower for those things without giving specific numbers? Because like you mentioned, they always change.
Quentin Hardy: Sure. It's really simple and it really all comes down to risk. When a bank makes a loan, they're trying to determine what is the probability that the money will come back to us and in a timely manner. So a primary home has the lowest risk. A vacation home has about the same risk as a primary home, statistically speaking or second home vacation home and investment property does not, let me think about it. If you fell on hard times and you had to let one of your properties go or you know, let the one go that you and your wife and your children live in, or will you let the investment property go. So the investment properties have usually about half a percent, sometimes more depending again on the down payment and credit and programs and products, et cetera. It could be half percent or more higher than the standard 30 year fixed, for example.
Quentin Hardy: Um, on a primary residence. Second home should be about the same. I always warn people, however, because sometimes people tell me that this is their second home or the vacation home when it's really an investment that's called fraud. So don't tell the bank that you're going to be living in a house. You're not. And I think the example you and I discussed is the person who lives in Roslyn saying that they are buying a, a second home in Hempstead, right? Nothing's wrong with Hempstead or Roslyn. But the point is nobody goes to vacation in Hempstead, hence that if they live in Roslyn. Now, if you're living in Roslyn and you're going to buy a house in the Hamptons, or you are buying a house in Manhattan, a condo in Manhattan, because you work in Manhattan and sometimes stay there two or three nights a week because you're a surgeon that has to be in the ER at three in the morning, okay? Those are things that make sense. That's a second home or vacation.
Mark Schreier : So it's gotta make sense. What did I make faced where a family member, you know, wants, I'm a father and mother want to buy a home for their kids that might be right down the block and the kids live in that house. Is is the bank and to say, well this is an investment property. Or if they can document and show that either, well the title could be in the parent's name but the kids are living in there. Is that problematic or is that something that could be done?
Quentin Hardy: That's a very complex one. There are programs, uh, for example, I did, I did have a uh, a physician who lived on Long Island buying a second home near NYU for his daughter to live in that counted as a second home even though he wasn't going to be staying there. That's a family situation. That's okay. Now if you're just buying one at the end of the block, um, there are certain programs that will count that as a second home for people. For example, people who are buying for aging relatives. I have had people do that. Um, and sometimes it's really an investment property. That's, that's a case by case. You've got to delve deep into what's actually happening with the home, who's going to be living there. So sometimes that's a, that is a truly a second home and other times it is an investment property.
Mark Schreier : So basically you just gotta if this is what you're, you gotta be able to back it up with a legit documentation to prove your case to the bank and then it shouldn't be a problem whatsoever with the same interest rate as your primary residence. Alright, well, uh, don't want to go too long on this video, so thank you very much. Quentin Hardy from movement mortgage. We be doing this again in the future. Now that I'm learning how to use zoom.
Mark Schreier: Hello. Yes, I'm talking to you, the person that watched my video to the very end. Thanks a lot for watching. If you enjoyed it, please give me a big thumbs up. Subscribe to my YouTube channel like me on Facebook. I am a licensed real estate agent in New York state, but I also have a referral service that deals nationwide. So if you're looking for to buy or sell a house anywhere in the United States, please send me a text, contact me via phone, and I'll set you up with a local professional in your area. If you're in my vicinity of the more than happy to help you out in any of your real estate transactions that you'd like. This is Mark Schreier from century 21 American Homes, and I'll talk to you soon.
