8% mortgage rates are a very real possibility by September!

Read the full video transcript below:

Anthony Lamacchia: Realtor friends, there is a real chance, a real chance that interest rates go to 8% by the time we get to September. I want to talk to you about that because there’s a couple of things that I think you should do and a couple of things that I think you should be aware of. Number one, this is a real possibility. About 10 days ago, when they revised the first quarter GDP report up and revised the unemployment report down, rates started going up more. Now we’re at about 7.2, or 7.22 and I’m evaluating all this, and I’m saying this is a problem.

In addition to that, my guy Jerry, who’s my senior adviser and studies these things all day, has been more right on interest rates than absolutely any expert that I’ve seen in the business. We follow multiple mortgage interest rate experts and predictors and all these people, and he has been more right than everyone. He is saying there’s a real possibility of that happening. Anthony Lamacchia here with a question in real estate, and I want to talk to you about the possibility of interest rates going to 8% by the time we get to September.

What should you do about that? Number one, tell your buyers about this possibility. You will see me putting out some messaging over the next week on our company platforms talking about this possibility because the word needs to get to buyers. These buyers that have this pipe dream of, “Oh, rates are just going to fall right back down, and I’ll wait till then,” in December, and in January, I was saying to those buyers, they’re not going to come down that quick. They will come down eventually. Undoubtedly, buyers will be able to refinance their way out of these rates, but they’re not going to come down immediately.

I will admit, they are being more stubborn about coming down than even I realized. Jerry predicted. I did not. I felt that by the time we got to summer, we would see some relief with rates and that’s not happening. In fact, the opposite is happening. Now that these updated GDP numbers and unemployment numbers have come up. Even the jobs report the other day came in lower than predicted. That gives a little relief, but it’s not looking good folks.

You need to message this to your buyers. You need to make sure your buyers are clear that this is a very real possibility, and that way, they understand that, okay, if they need to buy in the next six or eight months, they need to do it now because rates are likely going to be higher when we get to fall. That’s number one. Number two, same thing goes with sellers. There’s a lot of sellers that don’t want to risk because they’re saying, “Well, I don’t want to give up my rate.” Okay, we all know that’s going on. It’s old news at this point, but if those sellers can withstand waiting a year or two or three fine, but if they can’t, then they need to get moving, and they need to get on the market immediately.

Get their house under contract, find something else immediately. If more sellers did that in much larger droves in the weeks to come over the summer, it would certainly provide some relief for the market. I said a few weeks ago, three or four, now about five weeks ago, at this point I said the next 90 days is going to be the best time of year to make deals happen specifically with sell-buy clients. I said that at the beginning of June. Well, here we are at the beginning of July, and now we got about 45 days of that left and then we get into the school year starting and all that kind of thing. Particularly in the northern states down south, you guys start the school year earlier. Be aware of this. Talk to your buyers about this possibility and make sure that they understand.

The economy is in a very odd spot. Markets are at a very odd spot and we as realtors, we as professionals have to deal with it. It’s definitely a bit of a downer because it’s going to make the market a bit slower, but it is what it is. There’s nothing we can do about macro problems. We can’t solve it. There are reasons in my opinion. I will bite my political tongue, but there are reasons that rates are staying stubbornly high. There are reasons that inflation came from 9% down to 4% over the last year. The CPI report every month, but going from four to two, which is the Feds target is difficult.

It’s a challenge. It is what it is. Me and those of you watching unless Jerome Powell is watching or perhaps the president is watching, which I don’t think they are, we really can’t do anything about this. We have to just withstand it and put up with it and serve our clients and advise our clients and make sure our clients are in the know and make sure they’re educated. The other thing is late last summer in particular last fall, a lot of buydown programs were happening.

Buyers were able to do 2-1 buydowns, 3-1 buydowns, getting it so that the rate could be 2% lower the first year, 1% lower the second year, and oftentimes negotiating a closing cost credit from the seller, taking that closing cost credit and plopping it on the mortgage to buy the rate down. These will get much more popular in the next few months as the market goes through its typical seasonal slowdown. As rates go up more, I think that you’re going to see buyer demand back off. I think that these will become much more of a possibility.

If you want to learn more about rate buydowns, log on to myratebuydown.com. That’s myratebytown.com, and you will see many videos and graphic illustrations and things that we put together on our website to make sure that everyone is aware. Buyers and sellers are aware. Realtors are aware, so check that out. That’s all folks. I got to get moving. Went to get a haircut this morning, my barber’s out, I guess he took the week off. I didn’t even call him, I should have, and I need to get down to Connecticut for the day. We are looking to expand more in Connecticut and I have several meetings lined up there like all day. Got to get moving. I’ll talk to you soon. Have a great day, everybody. Happy Home Selling.

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