Waiting for the storm to pass

We wanted to get an update out to our past clients as we have been quiet for some time now.  We are still here!

Inflation has been running rampant for over a year now. We are all feeling its effects. So here is a quick breakdown of what is happening and how it is affecting all of us.

How did we get here?

• The stimulus from the covid relief packages (PPP, EDIDL, ERC) injected a massive amount of liquidity into the market.
• Fed buying mortgage-backed securities (QE) helped bring artificially low mortgage rates, which then allowed many folks to do a cash-out refinance (more liquidity into the market).
• The Fed shut down the requirement of student loans to be paid for over 3.5 years! Again, more liquidity into the market.

Why are we so quiet?

We are smack dab in the middle of the storm!

So, business is slower now than at any point (including the Great Financial Crisis) of doing this over the last 25 years.  It just does not make sense for a lot of folks to get a mortgage in this environment… only those that have to move.

The Federal Reserve has been raising interest rates (over 5 points) since early 2022 trying to fight inflation. Mortgage rates have moved up from the low 2’s to over 7 in that same time frame. Auto loans, HELOC’s and credit card rates are insanely high. There really is nowhere to hide right now.

New construction is dominating the market right now and builders are using their in-house mortgage companies so they can subsidize the borrowers costs (inside the cost of the home). Purchase transactions are back to 1995 levels and it makes almost zero sense for someone to attempt a refinance right now.

We had to close down our Florida and Arizona offices and go back to work from home to weather the storm.

What will happen next?

The Fed has vowed to keep the rates higher for longer. This means a long, slow ride until we can see some light at the end of the tunnel.

There will be a time soon when many people will need to evaluate their home loan again to consider consolidating consumer debt and Home Equity Loans that are at crazy high rates.

We look forward to catching up with you again soon!