Mortgage Rates May Stay HIGHER Longer—The Fed’s Dot Plot Changes Everything

0:00This year's girls trip to Telluride was the best. We went up ourselves with my Sapphire preferred card, and with five times points on Chase Travel plus three times points on vacation homes with top brands, we got this incredible cabin. It was a mansion. And with three times the points on dining, we ordered a Wagyu-Stake dinner, and that pistachio gelato was too good. So, where should we go next year? I've got ideas. Chase Sapphire preferred, the card that's preferred for a reason. Carns issued by JP Morgan Chase Bank, a member of FDIC, Subtractor Credit Abruble, Terms Applied. Well, yeah, they did it. The Federal Reserve hike race yesterday. So now what's in it for mortgage rates? But I'm going to show you a couple charts here, because yesterday when the Federal Reserve announced that there were hiking rates, the market actually got a little bit better until... That's what we're going to talk about today, show folks. So my name's Dan Frio. I'm the host of the rate update. My Go-H-D is explained to you guys what in the world is going to go on with mortgage rates today. What happens with this when the Fed comes in? And what's our outlook on all these things? So let's get over to the... I first thing I want to start is right through here.

1:00I like to start each day with the chart. Look at this thing. It's crazy. Think of this as your stock price, because it's going up and then it plunges. But I want to show you something in here that's pretty interesting. So hopefully we can zoom in at this, but the Federal Reserve came out yesterday, and they came in right about... I'll say about here. What time was it? Let's see if I can chart that in here. 1 o'clock. Okay, the number was 9744. If you look down through here, I'm getting to something. See how the market rallied up until this. And then what happened? Well, he started speaking to the media. Then he presented us something and it's called the dot plot. And once the media saw that, they're like, oh god, here's what happens. And you got to realize, each day when I come in, I start with that number right up through there. If it's green like we see today, that's good news. That means mortgage rates are going to get a little bit better. But this yesterday, this plunge, this pushed up mortgage rate. So what happened? It's like that Sesame Street. One of these things is not like the other.

2:01If you're looking at this, all of a sudden you're chugging along, and then boom, the floor falls out. Today we're starting up here. This is what we call a gap. I don't like those because a lot of times we fill. I mean, let me explain to you what happened. Okay, so let's get over here. Rates yesterday went up a little bit. If you want to track these things, I'll give you this, how to get to this website here in a second. But here's what the Federal Reserve looks at. Now, I need you to pay attention to these areas. The Federal Funds rate over through there. That's the rate that the Federal Reserve controls. Okay, all it controls is short term lending. Truly, with that controls is interbank lending. If one bank needs money, that can go to another bank and say, hey, I need some money and they get that rate. So here's how they look at. They're like, okay, the Fed, you just raise rates on us. We're going to hike rates on all of our clients. But they don't control mortgages. That's controlled by a bond. Let me explain all this to you. Here's what happened yesterday. The Federal Reserve came in and they hiked rates for the first time in three years. Okay, the last few times they actually cut rates. So what happened is the markets are saying, okay, that's okay because we expected this.

3:03It was built into the market. So here's what happened. The Federal Reserve came in. They increased rates by 25 base points. That's a quarter of a percent. The new target rate is 3.75 to 4 percent. So they was 3.5 to 3.75. So they raised it a quarter percent. The FOMC was unanimous that everybody voted for this increase. But here's where it gets a little odd. And here's what they said they weren't going to provide us. A dot plot. Like future expectations or forecasts. That's when it got interesting. So if you go down through here and you look at the dot plot, you see something in there that's just weird. Okay, so right now, remember the Federal Funds rate is 3.75 to 4. But we have all these members. All these members up through here saying, well, we want the Federal Funds rate at 4.125. That means there's another rate hike coming. I don't think the markets were expecting this, nor was I. So at that point, you saw the markets just clit, clobbered.

4:03But I always say, you know, wait and let the dust settle. Because in the background, you look at a lot of the fundamentals in our country. Jobs are pretty good. The economy's clicking with the GDP. The other things that the Federal Reserve looks at. And then you go to today's economic news. This is what we want to highlight today. Because every day we want to come in. And I want to explain to you how today's news, yeah, today's news will be affecting rates. Because if you said, okay, six months ago, here's what's going to happen. You didn't know the war was going to extend this long. So even like the Federal Reserve says, we're going to be daily dependent on this data. So here's what I want to show you guys. For Thursday, here's what we got so far today, building permits. They were pretty much right online. About 1.4 million, a little bit off. We want to look at the jobs market. We want to look at what the Federal Reserve looks at. So they look at initial jobless claims. It's under 200,000. That's fantastic. So that's good. But what I like to do too is saying, okay, if you lost your job, we're able to find a job. Because are these things starting to compile on themselves? You go to continued claims.

5:03And this is a great number. So last time we were 1.76. They thought it'd go to 1.78. It went to 1.73. The jobs market's really good. So then you go over to it. Okay, what's the culprit behind all this? Here's what I keep telling you guys. You got to go to oil. I'm going to ask you to watch two things if you're trying to track rates. And I'll give you my forecast here in a second. If you're trying to figure out where rates are going to go, all you need to do is watch this over here. Oil is oil goes up. Think of it this way. It causes the prices of everything to go up. You're taking your kids to the school. You're going here. You're taking the car. How many times do you fill in up each week? Think of it then as jet fuel. All these jets now, their prices just dramatically went up because of fuel. Now you have diesel over $6 a barrel or $6 a gallon. That's the highest I think it's ever been. So this is going to bleed into the economy. The longer, like I said, it stays here. Well, the longer the inflation has to start rooting in the rest of the system. So watch oil. We need the war to be over soon

6:05because we need oil to retract back down to maybe $70 a barrel and stay there. Then you need I ran to basically abide by the rules for about a month. Then once the market say, okay, maybe this is going to work. You're going to start seeing things ease. Until then, it's going to be up and away because the Federal Zerfs backs against the wall. And they say, okay, there's a 98% chance we were supposed to increase rates yesterday. So we had to. So now let's get over to the Federal Zerfs so to do it the next meeting. So in 41 days, we're already getting those forecasts. Let's go down through here. And here's one I'll show you guys. There's a 50% chance, 51% chance. We'll say it that way of a rate increase at the next meeting. So let's take a snapshot of this and it's going to be dependent daily on how this economic news comes out. So here's one I'm advising my clients. I'm telling them to watch two things. One is watch oil because the oil goes up, inflation goes up and the Federal Zerfs eventually has to increase rates. The other thing is watch my channel. Just subscribe down over through there.

7:05Each day I'm going to come in. I'm going to show you the breaking news of the day, the bond market, actually where we are right then and there. The economic news, the feds forecast, and then my forecast. And then I'll give you some free tools like I'll get to here in a second. So if you're looking to buy a house right now, I'd love to help you out. If we already got your pre-approved, you've been blessed to get a house under contract, we're going to lock you in right now because I don't really know what's going to go on. We're going to go back to the bond market because it's still starting to rally. So I'll probably hold off on locks right now to see if this rally continues. But if you're looking to buy your build down the road, I got people saying, okay, Dan, I'm looking, I'm closing in January or February, what do I do? You know, watch my channel and then go here. Here's our website. Here's a lot of things you guys can do. So if you're a home owner right now and you want me to monitor rates, so maybe you want this war over rates, get back down to 5.99, you could probably save a lot of money on that mortgage payment. Maybe you're just like, okay, I'm at this rate, but I got a pretty big loan. If I can save 300, 400 bucks a month, let me know. We can do all those things and you can plug your data and write through here where it says, rate watch. If you're already out there and you got some quotes,

8:06so let me tell you what I do and how I might be able to help you. So my name is Dan Friot, like I said, on the host of the rate update, I'm also a licensed mortgage loan officer in all 50 states as well as Puerto Rico. I work at a bank that provides me that license. The cool thing is this, our slogan. One application, one credit, but we're gonna compare your loan almost 40 different lenders. Now here's why. You come to me to help get educated and track rates and things like that, then you're like, okay, now I really need help. I'd love to help you. So here's what we do. We're set up with about 38 different lenders to make sure we're competing all over the country for you guys. Otherwise, here's what you're gonna do. You're gonna go to bankrate.com lending tree, the credit union, the banker there, the one bank online in the bank you use. They're all gonna pull your credit, ruin your credit. Some are gonna turn you down, some are gonna prove you, your confuses all get out. Well, I got a solution for you. Upload your loan estimate rate in here, the best one you have. And here's what I'm gonna ask you to do, please. Call that lender and say, is this the best you have? I'm gonna shop you one more time and that's it. Send it to me right through here, the loan estimate review.

9:07If we can beat them on the rate and the fees, and you got at least two weeks to close, I'm hoping to win you as a client. And then there's a whole bunch of other tools up through here. So check those out. If you're even an investor, you realize we do DSCR loans all the way up to eight units, just using leases alone. And we have a lot of other products up there. So those are our stuff for today, your free tools for today, right through here, free tools go to it. There is a slew of calculators here and they are all free. So check that out, I'll rate through there, but otherwise let's get back to that bond chart. For a one day chart, 49 ticks, I'm giving this a double thumbs up. But it was up just a little bit more earlier. So let's see, hopefully this gap doesn't fill. But if it can step through here, look, we were testing these levels, the lows of yesterday. So the market's starting to stabilize. We'll see how it goes the rest of the day. So, I mean tomorrow morning, I can show you how today ended and what I outlook is for tomorrow. So thanks for watching. God bless, have a fantastic afternoon. If you need some help with the mortgage, reach out to us, we'd love to help you.

10:09Otherwise have a great day. Don't forget to subscribe down there. See you tomorrow. Bye bye. This year's girls trip to Telluride was the best. We went up ourselves with my Sapphire preferred card and with five times points on Chase Travel plus three times points on vacation homes with top brands, we got this incredible cabin. It was a mansion. And with three times the points on dining, we ordered a Wagyu-Stake dinner. And that pistachio gelato was too good. So, where should we go next year? I've got ideas. Chase Sapphire preferred. The card that's preferred for a reason. Cards issued by J.P. Morgan Chase Bank, a member FDIC, Subjector Credit Approval, terms apply.