Barry Habib from MBS Highway had a conversation in the last week with Dr. Lacy Hunt who is one of the top economists in the world and one of very best bond fund managers of all time. Dr. Hunt believes a recession is inevitable but thinks it won’t happen until the first quarter of next year. He also believes inflation will start to slow down by end of this year and that the 10-Year Treasury Bill yield will drop below 2% again next year, which would mean we should see mortgage rates back < 4.50% and possibly into the 3’s if the Fed quits Quantitative Tightening.
Last week we had a buyer tell us they are going to wait to buy until mortgage rates have dropped. Is this a good idea? Only if you believe home prices will drop in the meantime. Let’s say this buyer waits 12 months to when mortgage rates are 4.50%, I fully expect home prices will increase by 8% to 10% over the next 12 months. So, that $600k home will probably cost $650k to $665k in 12 months. Can they buy their new home in 2023 at 2022 prices? NO! You can never lower the price of the home that you are buying; but you can potentially lower your rate and monthly payment in the future by refinancing your home. You can’t “refinance” your home’s price.
