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Here’s what we’ve got for you today:

1. CPI Print sends an earthquake through the bond market 🌎

2. Zillow Chief Economist: Housing Freeze ❄️

3. How to Pay Sub-6% Interest Until 2027 🤑

By the way, this article on Best Tools Top Realtors Use is the most clicked link in this newsletter, you should check it out if you are interested.

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Rates Today 📉

CPI Print sends an earthquake through the bond market 🌎

The much anticipated CPI print was released Tuesday morning and sent the bond market soaring.

CPI printed as follows:

• Month-over-Month: +.2% (forecasts were +.3%):

  This indicates that prices are slowing faster than experts are projecting.

• Year-over-Year: +4.0% (forecasts were 4.1%):

  Again, this indicates that prices are rising slower than anticipated. As a comparison, look at how inflation has fallen since May:

  • May: 5.3%

  • June: 4.8%

  • July: 4.7%

  • August: 4.3%

  • September: 4.1%

  Slowly but surely, Fed hiking and policy tightening are decreasing prices.

On paper, these numbers don’t look groundbreaking (dropping .1%) - so why was there such a reaction in the market?

Let me remind you of the Fed’s Dot Plot from their September meeting. 

The Fed indicated in their projections that there would be one additional rate hike in 2023 (meaning December) if the data warranted it.

The print Tuesday completely erases the possibility of a rate hike in December. That’s what the market is reacting to.

We are seeing bond traders re-underwrite the risk of a Fed hike.

Here is a snapshot from CME Group FedWatchTool - this predicts the Fed actions. They currently have the probability of a hold in December at 95%. So, excluding any wild jobs data, we should be in the clear of rate hikes this year.

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For agents wanting to see the real impact of these rates coming down - watch this reel from Tuesday - to visualize to clients what it means for their monthly payment.

- You can follow @mf.lending on Instagram for more like this. -

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In summary, rates have improved by .75% in just two weeks - a huge relief for clients shopping for homes today.

Next week is Thanksgiving. With the markets closed Thursday and Friday, it should be a rather calm week in the bond market. Expect these rates to stay solid until the first week of December.

Zillow Chief Economist: Housing Freeze ❄️

A couple of highlights from this interview I found interesting:

• “New listings are remarkably low”.

  • The market has both supply and demand issues

• Owner needs an incentive to sell - right now outside of death, divorce, and job loss, the incentives aren’t there

• Current owners with a rate above 5% are twice as likely to sell in the next 3 years.

  • For agents - this could be one of the best pools for deals moving forward. Those clients and contacts that have higher interest rates already who purchased in 2021

• “Is there a magic number in mortgage rates” when we may see thawing in the market?:

  • Around 6% allows a lot more relief for buyers on their monthly payments.

How to Pay Sub-6% Interest Until 2027 🤑

Seller concessions are ballooning in the market today as sellers become more motivated to get their properties sold.

I have seen more concessions on existing homes than ever before in my career, and I have yet to do a deal this quarter without them.

But, it’s hard to conceptualize how to use these savings…

So, I decided to take a home that had a recent price cut in East Nashville and show you - how your client can pay less than 6% interest until 2027:

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Here is the home I use in this example: 106 Douglas Ave, Nashville TN 37207 | Current List Price - $674,900

Your Offer - $699,000 with $30,000 in seller concessions (the house recently had a price cut from 699k)

Loan Type - Conventional 10% down - 30-yr Fixed with a 3-2-1 Buydown

Here is the breakdown for this client’s loan:

Fixed 30 yr @ 6.99%:

• Yr 1: 2024-2025 (3% Discount) - 3.99% - $1,174 savings per month

• Yr 2: 2025-2026 (2% Discount) - 4.99% - $803 savings per month

• Yr 3: 2026-2027 (1% Discount) - 5.99% - $411 savings per month

Yr 4 (2027) is the first time your client will be paying above 6%, when your loan goes back to your true 30-yr rate of 6.99%.

The best part of all of this: the seller is paying for it.

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When a buydown occurs, the mortgage company takes the 30k in concessions and puts the money into a separate escrow account for the buyer.

Then each month, they take the difference between the payment at the discounted rate and the payment of the non-discounted rate, from the escrow account.

What happens if you refinance before the end of the buydown?

No problem. Whatever balance you have not used in the escrow account, will be applied directly to the principal balance at the time of the refinance.

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Rates above 7% suck. Correct.

But there are ways to combat the high interest rate seen in today’s market, and it is possible to get affordable payments for your clients - you just need to get creative with the lending.

If you want more information on how this works, want to run a scenario of your own, or need a calculator telling you exactly how much you need to ask for in concessions - DM me @mf.lending or leave a note in the and I’ll send it all to you!

There are deals out there. Go get it 😎🪩✨

Thanks for reading - that is all we have for today 😎

Please forward this to your friends and colleagues if you found it valuable.

— Michael F DiLucchio