All Forum Posts by: Larry Bailey

Fixed-rate and adjustable-rate mortgages (ARMs) are two standard mortgage products.

A fixed-rate mortgage has an interest rate that stays the same for the entire loan term, usually 15 or 30 years. This gives borrowers a regular monthly payment that doesn't change, making budgeting easier.

On the other hand, an adjustable-rate mortgage has an interest rate that changes over time based on market conditions. The initial interest rate is usually lower than the interest rate on a fixed-rate mortgage, making monthly payments lower. However, this rate can change periodically, leading to potentially more significant monthly payments in the future.

When deciding between a fixed-rate and adjustable-rate mortgage, it's essential to consider your financial goals and risk tolerance. A fixed-rate mortgage may be a better choice if you value stability and predictability. If you're comfortable with some uncertainty and are willing to take on the risk of higher monthly payments in the future, an adjustable-rate mortgage may be a better fit.

It's important to carefully review the terms and conditions of both types of mortgages, including the interest rate, loan term, and any caps on how much the interest rate can change, before making a decision. Speaking with a financial advisor or mortgage professional for personalized guidance is also a good idea.

Mortgage rates play a significant role in housing affordability. Higher mortgage rates increase the cost of borrowing money to purchase a home, making homes less affordable for potential buyers. This can result in lower demand for homes and a decrease in home prices. On the other hand, lower mortgage rates make borrowing money to purchase a home more affordable, increasing demand for homes and potentially leading to higher home prices.

When interest rates rise, monthly mortgage payments also increase, making it harder for some potential buyers to qualify for a loan. This can lead to a slowdown in the housing market, with fewer homes being sold and a decrease in home prices. Conversely, when interest rates fall, monthly mortgage payments decrease, making it easier for potential buyers to qualify for a loan and potentially increasing home sales and prices.

It's essential to remember that mortgage rates are just one-factor affecting housing affordability, and many other factors, such as economic growth, job market conditions, and government policies, can also play a role. Overall, mortgage rate changes can significantly impact the housing market and affect the affordability of homes for potential buyers.

Here are some common mistakes made when investing in real estate:

1. Not researching the market: Not researching the real estate market and local economic conditions before investing can lead to poor investment decisions.
2. Overpaying for a property: Overpaying for a property can negatively impact the potential for rental income or appreciation and lead to a loss.
3. Underestimating expenses: Failing to budget accurately for property management, maintenance, and repairs can quickly eat into any profits.
4. Ignoring Location: Location is a crucial factor in real estate investment, and properties in undesirable locations are unlikely to appreciate or generate high rental income.
5. Not thoroughly evaluating properties: Not thoroughly evaluating properties before purchasing, such as neglecting to have a property inspection or ignoring structural or repair issues, can lead to costly surprises down the road.
6. Neglecting to diversify: Relying too heavily on a single property or market can be risky and lead to significant losses if that market experiences a downturn.
7. Not considering tax implications: Failing to consider the tax implications of real estate investment, such as depreciation and property tax deductions, can result in missed opportunities for savings.
8. Not having a clear exit strategy: Not having a clear exit strategy for when you want to sell the property or dispose of your investment can lead to missed opportunities for profit.

It's essential to be aware of these common mistakes and consider all factors before making any real estate investment decisions.

Stocks are lower and Mortgage Bonds are higher to start the day. The Fed kicks off their two-day meeting today, with their statement due for release at 2:00pm ET. Fed Chair Jerome Powell will follow up the statement with a press conference, where he will take questions.

The Fed is a lock to hike 25bp, but their commentary on inflation, recession, job growth, Quantitative Tightening, and how many hikes are left will all be in focus.

After today, the next meeting is March 22, where it’s expected for now that the Fed will hike another 25bp. Remember, there is almost always a big knee-jerk reaction after the statement & press conference before seeing the true intention of the market.

ADP Employment Report

ADP released their employment report, showing that there were only 106,000 job creations in the month of January, which was much weaker than the 175,000 expected. Looking at the sectors, Leisure and Hospitality led the gains once again.

ADP also reported that annual pay for job stayers increased 7.3% year over year, unchanged from the previous report. Job changers saw an average increase of 15.4%, up from 15.2%.

ADP said, “In January, we saw the impact of weather-related disruptions on employment during our reference week.” While ADP is blaming the number on poor weather in some parts of the country during the week of the 12th, when they collect data, we are reading this as a weak figure. It is winter, and there are supposed to be seasonal adjustments for this type of thing.

Additionally, it’s been very mild in most of the country.

Mortgage Applications

The MBA released their Mortgage Application data for last week, showing that purchases fell 10% last week after rising 28% over the previous two weeks and are now down 41% year over year.

Interest rates decreased ever so slightly to 6.19% from 6.2%. Last year at this time, rates were roughly 3.75%, which means rates are around 2.5% higher today. Refinances fell 7% last week after rising 49% in the previous two weeks…albeit from very low levels. Refinances are now down 80% from this time last year.

The MBA said, “Purchase activity is expected to pick up as the spring homebuying season gets underway, bolstered by lower rates and moderating home-price growth. Both trends will help some buyers regain purchasing power.”

Technical Analysis

Mortgage Bonds continue to trade in their well defined range, almost testing the upper limit at the 101.671 Fibonacci level. If we get a Bond-friendly Fed meeting, the next stop is the 200-day Moving Average. If things don’t go well, there is a strong dual floor of support that has limited the downside in Bonds, formed by the 25 and 50-day Moving Averages. Begin the day carefully floating ahead of the Fed.

2:05 PM : The Fed has increased the Fed Funds rate by the expected 25 basis points to a target range of 4.50-4.75%.

The statement included hawkish language noting that the FOMC still sees the need for 'ongoing increases in the target range.'

@Steven Foster Wilson - any idea where I can find out what was on a post when it is flagged and removed from a forum?

thank you @Steven Foster Wilson

this thing on?