Telis Demos

speaker

656 appearances 10 recordings 1 series first heard Jun 2018 last heard Dec 2024

Telis Demos’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Why You Shouldn’t Expect a Rapid Drop in Mortgage Rates · 14 Aug 2024 podcast

And what we've seen is that mortgage bonds have not been bought up with the same gusto that they were prior to when the Federal Reserve started raising interest rates a couple of years ago. voice-verified

And a couple of things are driving that. voice-verified

One is that the Federal Reserve itself was a huge buyer of mortgage bonds, which helped kind of keep mortgage rates down. voice-verified

The Federal Reserve stopped doing that because they didn't want to stimulate the economy anymore. voice-verified

And so they weren't buying mortgage bonds. voice-verified

Big banks, big banks were big buyers of mortgage bonds. voice-verified

Big banks had kind of a little crisis, not so little for some, but had a crisis last year that was partly based around the fact that they were holding a lot of bonds that lost value as mortgage rates went up. voice-verified

And so voice-verified

Banks weren't as big of a buyer of mortgage bonds as they were in the past. voice-verified

And so when you take out these two big buyers, what you're left with is like mortgage bonds got a little more expensive than you would normally expect them to be given where interest rates are, right? voice-verified

So you'd expect mortgage rates to rise when interest rates rise, but they were rising more than you might have seen in the past. voice-verified

And so that's been one of the things that we've been writing a lot about and just sort of talking a lot about is that mortgage rates are somewhat even higher than they might be voice-verified

given where interest rates are because of some other stuff that's been going on in the market. voice-verified

If the Federal Reserve starts to really aggressively cut interest rates, that probably would lead to mortgage rates also dropping. voice-verified

Some of these things that have been happening for the last couple of years, big banks not really being big buyers of mortgage bonds, even some investors who at times were reluctant to sort of jump into mortgage bonds. voice-verified

Those things should probably start to take care of themselves. voice-verified

Also, mortgage lenders probably will get a little more aggressive in their pricing, trying to grab a little bit more refinance. voice-verified

if they think it's there to be had. voice-verified

So there are some forces that should really help push mortgage rates down over the next couple of years. voice-verified

If you're thinking about when exactly to sort of start looking at the market and when that opportunity might come, it may not be as quickly as you hope. voice-verified

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