What Surprises Does the Remainder of 2022 Hold for Us?

What does the rest of 2022 look like? Well, it's time to look ahead. This week on India's real estate gurus.

Advisors Mortgage Group is proud to present in these real estate gurus hosted by Rick Ripma, the hard working mortgage guy, please contact Rick for all of your mortgage needs at HardWorkingMortgageGuy.com That's HardWorkingMortgageGuy.com. Now, here's the hard working mortgage guy, Rick Ripma.

Thank you for joining us today. I'm Rick Ripma, your hard working mortgage guy,

and I'm Ian Arnold with the Advisors Mortgage Group. And thank you for tuning in to us today. And if you did miss our past show, which was a very good one, about the do's and don'ts of buying going through a mortgage, they're all very good. Oh, great. touches on our podcasts on Indys Real Estate Gurus, or you can do our website HardWorkingMortgageGuy.com

Yep, it's HardWorkingMortgageGuy.com. And everything's right there also. So you can go there.

Alright, so now let's get into what I like to call Rick's perspective on what you sold this week. You know,

this has been a it's really been a tough week, but it's been a tough month so far. And it's it's kind of been a tough summer really started out in June, you know, we hit we hit the highest level of mortgage backed securities, that we could not dollar wise. And when they go up more, I'm sorry, they hit the lowest level when they go down, mortgage rates go up. So we hit the highest level of mortgage rates, the lowest level on the bonds, the lowest level we had seen in over 10 years. We had, you know, from June, July, August rates stayed in that same range. They were up, they been up over what we saw a couple of years ago. But those are record lows, so of course they're going to be up. But now with the inflation. And that's really what's doing us in right now or what's really causing our problems is the inflation numbers. And you know, and you have you know, I've said it before inflation is the arch enemy of bonds, mortgages are traded as bonds, has mortgage backed security bonds. And so it's really important that we have low inflation. Well, inflation is out of control because the Feds thought it was transitory. They went from thinking it was transitory and what in less than nine months they thought it was transitory. They told us it would be no big deal. They told us it would be a soft landing to now though there's going to be pain. And all because they did not react in a timely fashion. Correct. And if they just reacted as as in that, you know, they'll say, Well, I don't you know, I don't know how anybody knew well, everybody else knew the feathers. This is what they're supposed to do.

Yeah. And this, this week's numbers did not help out at all. No, this

week, the see the what's called the consumer price index. That's our reading on inflation. It went from it was 8.5. And it went to 8.3. That's the headline number. And that sounds pretty good. But it was estimated to be at 8.1. They thought it would drop considerably. It did not. Now the core inflation, they pull out energy and food. On the core inflation, the core inflation went from 5.9 to 6.3 with an estimated estimate of 6.1. So that's way up. That's up point four. That is a that is not a good thing. The other problem is is that as this is year over year inflation, and as you look at what numbers are going to replace, it's very likely going to get worse for the next couple months. Yeah,

I mean, it's just this what we talked about months ago, is we had a couple low point 4.2 that we were hitting during these basically dog days of summer, so to speak. But now we're starting to now now when you get to the September numbers, October, they started to go up. So you might reach a plateau for a little bit. But yeah, it's it's not going to be a drastic, oh, let's come back down in two months.

Right. And the other thing is, is when the feds, the feds are doing, they've got a lot wrong, but they're raising the federal funds rate. So in the federal funds rates gonna go up again, the expectation, I think it's in six days, seven days is three quarters of a point. You hear a lot of the media talking and they say oh, that that's going to raise interest rates and it does raise the short term rates does not raise the long term rates, in fact that it should help the long term rates but it doesn't help them necessarily immediately depends on the reaction in the market. It can help it can hurt right immediately but long term. It helps Stop inflation that helps put inflation in place, as it puts inflation in check, then you're going to see mortgage rates get a little better. So that's the hope. And then again, they do it on November 2. And again, we think that would probably be another three quarters. It's a little early to tell. But all of this takes some time to filter into the economy. So what we think is, it'll be late this year, first quarter of next year, we're going to start to see the rates come back down. Nobody's projecting the same low, ridiculously low, unbelievably low record low rates that we had, but they are expecting us to get considerably lower than we are today.

Yeah, and like we've talked before, though, even if you get low rates, these, it's going to take a year for some of these high numbers, like for instance, this, I never, we just got to come off. It's going to stay there for for one year, right? I mean, so you have to look at it as long term is this inflation and everything is not going to go away for a little while.

Right? So what does this mean to a customer so, or borrow or somebody's looking to either buy a house or refinance a house? What does this mean? What it means is you want to pay as little out of pocket cost for the loan as you can, you don't want to buy points to get the rate lower, unless it's ridiculously inexpensive to do so. You, you know as a whole, you want to not, you want to you want to go ahead and take even even if you can, it depends on on the market, the market is really tough right now. But if you can take a little higher rate and help pay some of the costs. And then when the when the rates come down, you refinance out of it, and your money ahead may cost you a little bit monthly payment up front, but not that much. And then you know, in less than a year, you'll likely be refinancing at a significantly lower rate.

Yeah, this is what we're talking about is more looking towards the future. Not looking at not looking at the back of the hand, but we want to look at that front of that hand, right out in front of you. We want to help you get get the house that you want when you need it. I mean, if you didn't need a house, then you're one you're listening to us. So thank you. But I mean, most people listen to us because they are out there. They're they have questions

or looking at refi. Yeah, they have market questions, real estate real estate questions, or they could just have finance quest.

So with that is, we can help you look towards the future. It's not bad to buy one because guess what your house is still going to appreciate. And this is what we've talked about before. So don't again, get scared by interest rates. That's a small little ticker on there, compared to the big the big outcome later on. Right.

But what we're looking at right now is this is the way to do it. If you're going to do something, either buy a house or looking at maybe any cash out refinance, is you take the higher rate, yep. You don't pay anything to buy the rate down. That's the number one don't pay anything unless you have to some some sometimes with cash out and that you just have to there's no way around it. Because the way the market is right now, there just isn't anything to do. But you do you get as low a cost as you can at the time. Don't worry so much about the rate, and we're very low cost. Don't worry so much about the rate. And then once once we get to the point we can refinance rates drop, you know, that can be that can be a big bid, let's say they're let's say they're looking at doing a cash out refinance. What that does is you no longer have the cash out costs, okay, which increase the interest rate, you no longer have, you probably have, if you're paying off debts, things like that, you probably have higher credit scores, all that improves your interest rate without the rent rates improving, correct, you could refinance at an improved rate. But then if rates improve, you can you're that much farther ahead. So it is something that makes a lot of sense to do today, as a refinance, cash out refinance, or as a purchase. If you know it's there. A lot of people out there buying it's okay to buy just your plan should be the way we want to plan it is what are we going to do in the future, like you said, Let's not look at, we know what's happening, we know what we believe we have a pretty good idea of what's going to happen based on on the past that we are going to see better rates and there, we expect to see them you know, reasonably soon. So it can make a lot of sense to move forward at this point in time. And then take advantage of those rates when they come out. With that, we want to talk today about the future of our market.

So normally we do this beginning of the year and usually about halfway but I thought with everything going on. Let's look at the next three months. What do we see between now and the end of the year? What What can should our customers be looking to looking at weather how rates gonna go? How is looking for a house gonna go and stuff like that? So let's get into that word. So just to Your expertise? Where do you see, do you see rates going up for the next three months? Or do they say in the same are dropping?

I believe, based on the what, when you look at your year, year over year numbers for inflation, and what we're replacing, I think for the next month to two months, we're gonna see rates stay the same if we're lucky, or go up, we may get lucky, they may drop a little bit, but most likely, I think they're going to stay the same or go up a little bit. Then, as the Feds raise the federal funds rate, which they do next week, we expect that to be three quarters of a point. And then November 2, I think is the meeting, we expect another three quarters of a point increase in the federal funds rate. So to understand that the federal funds rate is whatever what what member banks of the Federal Reserve loaned money to each other overnight, it's a very short term rate. It does not directly affect long term rates. 30 year fixed rates are the longest term rates right there, they're very long end of the of the rate spectrum, inflation is going to affect them very, very much. Now, your prime base mortgages, your home equity lines of credit, things like that they're going to be affected immediately, because they're going to be tied to prime prime is tied to the federal funds rate. So when they raise the federal funds rate, three quarters of a point, what happens to your prime goes up three quarters of a point. Yep.

Right. I mean, it's the same thing with credit cards and stuff. Do you see that there too? I see a lot more people see that. The interest on those go up quite a bit. And I know some people have home equity line, but if you don't, then yeah, that will, you'll see it is your credit cards. Yeah. Any

short term. Yeah, any short term is like a credit card and the credit cards I was reading or heard on the radio or something that they went up there up, like, the interest rates up three percentage points or something, you know, so, you know, the average is like 18 19% right now. And and we have a huge amount of people putting their debt on their credit card. Correct. So it's, it's a tough, tough situation. We're going to talk more about what's going on what we expect to happen through the rest of the year after the break. Thanks for joining us.

Advisors, mortgage brokers licensed by Indiana Department of Financial Institution equal housing opportunity. NMLS 33041 Rick Ripma NMLS 664589

Hi, I'm Rick Ripma. With the hard work and mortgage guys and advisors Mortgage Group where we believe delivering the best mortgage for you is why we exist and it's how we all succeed. We believe

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at hard working mortgage guys, we believe in custom tailored loans, not the one size fits all approach.

We believe in always presenting you with all your options. So you get the loan you want the way you want it. We believe in continually monitoring the rules, rates and market trends. So you don't have to we believe in working hard to meet your closing date so that your entire plan isn't upended. We believe in offering the same quick online process that the bookstore mortgage companies brag about whether you're refinancing or buying your first home, we believe

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welcome back and thank you for joining us. I'm Rick Ripma, your hard work and mortgage guy

and I'm Ian Arnold with advisors Mortgage Group. And if you did miss our first 15 minutes, you definitely need to go to our podcasts and listen to Indys Real Estate Gurus

or any of our old shows yes, they're all one just look at Indys Real Estate Gurus you can listen to all our shows. Or if you want to contact us have any questions for us just go to HardWorkingMortgageGuy.com. That's HardWorkingMortgageGuy.com and all of our information is there people can call us from there people can email us from there, people can actually just fill out the contact information and ask us questions from there. If you have any any questions on mortgages, the you know even on real estate we have we have a group of real estate agents we work with top agents in the area. So if there's you know any questions like that we can always get you with somebody who can help insurance title companies just a we have a tremendous amount of people, you know, a very good network of

people. Hey, they're not call our network. They're caught our gurus.

Yeah, they are our gurus, that we only do gurus and we don't you know we don't bring in people that are gurus. But with that I've given you the website information, all the contact information. And now we're going to the question of the week. Now it's time for questions with the gurus.

The question of the week is brought to you by our reducer mortgage. It's our inflation fighter and people need it today more than ever, with a price of everything going up, call us today to see what we can do to help you reduce your payment to help you help out your own bank account. And we do this. And mainly because we, it depends on your situation, sometimes your rate can go down. Sometimes it's just about reducing your payment, or get rid of PMI, we just want to help people because with prices going up and doesn't look like they're gonna go down too much anytime soon. So definitely contact us for your for your quote, and how we can reduce your mortgage.

Yeah, it's really your total payment. Yeah, we're talking about paying off debt, helping you to reduce that total debt payment. It makes a lot of sense, right now when we're going yeah, we're in a recession. Okay, we're not officially in a recession. So I shouldn't say we're in a recession. But I believe we're in a recession, and I believe will be considered in a recession very soon. Now they have one more revision to the, to the second quarter number. If that's comes in negative, which, you know, it's remarkable. It started out pretty negative and got a little less negative and a little net lesson. Now we have one more revision. Once that's out, that'll tell us whether we're officially in a race well, because they have to, they have to declare it it has to be declared. But declaring it or not declaring it to me doesn't make any difference. We there are and what with food up 14 or 11? No. 14%. Now it makes up for 11.4% foods up 11.4%. Some of them were in a recession. No. Yeah. You know, just because gas happened to go down from a ridiculous the highest levels we've ever seen. Doesn't mean we aren't you know that we're all Oh, this is all better. That's not Yep.

All right. So the question last week was what kind of room has no doors or windows? A mushroom?

Okay, that's a good one.

All right. So this week's is, where would you take a sick boat? Tune in next week? For the answer that

I thought the last one was a basement? Let's, uh, mushroom.

All right. So we briefly talked about this. And we know that the feds are probably going to they most likely are raising the rates here next week. So do you think in November November 2, I believe is the date? Do you think they're going to raise them again?

I believe they will definitely raise them again. I believe they'll raise them. Most likely 75 basis points. The reason 75 basis points is because if they don't raise them enough, it scares the market. If they raise them too much, it scares the market. So if they, if they say well, you know what, instead of 75 We're gonna do 100 Well, that that means they really think we're in trouble. Okay, so that scares the market. So you

think they're just gonna stay Pat? Because the last few times has been 75?

Yes, they do. 50 in the market. Thanks. That's not enough. That's gonna hurt the market too. Because the market right now, most of the people I listened to who follow the market, who are the movers and shakers in the market? There, they believe they need to do 75 Some of them believe they need to do 100 basis points on a raising to the federal funds rate. But 75 seems like the the best thing to do. The other thing is you don't want to over do it. You This takes time. It takes time to filter in. So if you if they go too far, they'll hurt us just as bad as they hurt us by not doing it soon enough. Okay, my vote is they'll go too far. Most likely, because that's what they do. They they don't seem to understand what's really happening. They don't look at you know, they don't react. They can't, it may be just the nature of being in politics. You have to do something so you do something even if it's even if it's going to actually cause a problem. They need to let this soak in. And it's okay Do 75 Do 75 Yes, none of us like it. But you got to let it soak in you got to let it work. Its magic. If you don't let it work. Its magic. What difference does it make that is true?

So let's get into when you're shopping for a house now Indiana is a different type of market especially when you're listening to Federal News and everything where they're looking at California and New York, Florida, Texas. Indiana is a different beast all of us own we both know this and if you lived in Indiana, you understand this so for houses are we're gonna see all these houses start having a huge price drops and everything.

Oh, I don't believe so at all. I think that I think that's one of the big pieces of it. Even even nationally, they're not. Most people are not expecting that there's a few people who for the last two years have told people not to buy houses and run around saying don't buy houses as they went up, you know, 20% a year? Oh, no, don't do it. Don't do it. If you didn't do it, you lost 20% a year for two years. So you lost 40% back on your, you know what, you better not if you bought a house, because you don't put the whole thing down, right? Yep. So it's huge return on investment, and they're running around telling you not to do that. Now they're running around saying, Oh, my gosh, we're gonna see a downturn, it's gonna go. I don't see that. In the reason I don't know, part of the basics of the market of change, interest rates have changed. That was that was a help to the market. So the interest rate piece has changed. The lack of inventory has not changed. The first time buyers hitting 33 years old has not changed, that, that doesn't change because rates go up. So you still have a huge number of buyers. first time homebuyers wanting to buy that bodes really well, for your lower priced homes. People what I have noticed over all of my years of being in this business and being a new home sales, is that people outgrow their homes, or they need to downsize. Life still happens, no matter what's happening in the economy, we can put things off for a little bit. But at some point, you can't put them off. Correct. I have a customer right now. And that's what he's he bought a house and he ended up buying one that now is it's too small, right? He knows he's going to have to go up in interest rate, he knows he's going to have to go up. He understands all that. But he's willing to do it because he's outgrown his house, he needs to do something. And he's not going to be the only person there's you can put it off for a little bit. But you can't put it off forever. At some point. People are going to make the move, if they can afford to. And I think most people still will and can afford to and they will they'll just make the they'll make that change. So I'm not worried about the price dropping. I think that with our with, with the volume I was you know, we talked about it last week. Average time on market on a home in Marion County is 10 days.

Yeah, that's still nuts. That's ridiculous. 60 to

90 days is normal. 910 days, nine days in Hamilton County, Hank Hendrix and Johnson were eight days. I mean, that's read Dick Aeolus. So there's, that's telling you the market is still there. We are still in great shape in our actual market. And it's not our prices are not going to go down. Now. Not every place in the country is the same. But I think all in all, we're going to see a decrease in the increase. But we're not going to see a decrease in the actual number.

Yep. So do you think I know. Especially not this summer, but mainly whole entire last year? There was when people listed a house, there was 30, 40 offers coming in. It was crazy. I mean, do you think that the offers are going to over the amount of offers are going to completely dwindle? And you won't have as many people to bid on the next because we got winter coming up we got the higher rates?

Well, you know, that's a that's a I don't believe so. Again, partly because of what I said, we still have the first time homebuyers in volume. We still have we still have people outgrowing their houses, we still have people who want to downsize. We still have I mean, the market turn is unbelievable. I was looking because I ride my bike, right. And I like to go ride through neighborhoods. So I go and ride through one of the neighborhoods I ride through because it's not too far from my house, but it's a decent decent ride is the villages of West clay. And I liked that area to talk about because it's a self contained community. And you can go through there. And there are hundreds and hundreds and hundreds of homes. I don't know how big it is. But I'm guessing it's five to 700 homes. It may be it's hard to tell because it's spread out. So it's on different crosses major roads and everything else but it's a really nice community. It's completed or nearly complete. There are a couple of lots in there for sale. I don't think there's any major development still going on, as far as you know, putting the new streets and all of that so it's mostly completed. And it's a it's a nice community has a wide range of product and it has a wide range of pricing. So it has condos. It has it has ranch homes. It has you know nice sized homes and it has million, you know, $2 million homes so it's got a very wide range. I looked at that last night. Do you know how many homes online? I looked at it? And I looked up homes for sale in the villages of West clay. Do you know how many homes are for sale in the villages of West? Clint weren't pending? They were not pending. I don't look up pending. I want to know what's available today. Probably one, three homes. Yeah, three, there were two lots, three homes. Two of them. Were over a one and a half million dollars.

Yeah, that's I mean, even in this market, that's still crazy. I mean, because let's be honest, not everybody can afford, let's say, a million dollar home. I mean, if you break that out down to payments, that's well over the what most of you will make in a year on the average. So that's just crazy to look at it. And that's that scheme. But I do agree with you, I don't I don't see the bidding wars that are not going to be as much as they were, we saw a year ago, even when we had January page on it, he goes, it has dropped, but they're still there. I mean, you're still getting 10 offers within a couple of days easily. So you do have to keep that in mind. I don't think that's going to change anytime soon. Until housing catches up with people or population, you're not going to see the difference,

right? We're still we're still low on inventory. We still don't have enough housing. We didn't build enough houses over the last 10 years. So we're still all of that tells us where we're going to have the same issue. I just had a customer who was it's been out they'd been out looking for houses for quite some time. Probably four months. They make several bids. So they're pretty aggressive now. And and they don't and they found a house. Now this is a house. A couple $100,000 range. Okay. They bid 14,000 over list price. $14,000 over list price. They lost that to somebody now this is a 200. Little less than $200,000. Home. They lost it to somebody who bid $21,000 over list price.

Yep. I mean, we're I mean, you still still Yeah, though. I mean, it is crazy. I mean, I jump for a house. I don't think I could ever do that. Just like mentally my mind does not work that way. And just be like, hold up. But that's just me. Everybody's different. But I mean, that's just, that's crazy. Because it is the year basically on a let's say it was 200 You're basically 10% over. You're asking

now there were there were seven 7%. They ended up over 10%. Yeah, absolutely. That is just crazy. Absolutely nuts. That's what happened. That's like looking

at a car and going you know what? That car is priced at? 20 grand? Oh, now how about all put in 24 games? I mean, that's just that's just unheard of. Yeah, but if you had two people or three, it's like an auction. That's what I

was gonna say. I see that a car auction all the time. That's exactly what happens with a car auction. You sit there and you start bidding at a friend of mine. He stopped we started he started bidding on a car because it was cheap. Okay. Then he got caught up in the auction. And there were two people. Finally there were two people bidding on the car. He ended up winning the bid, right? But he overpaid. He paid more than he then he wanted to I won't say you overpaid for the car because he was able to sell it and get out of it. But he did over he felt like he overpaid. But you it becomes winning the bid. And that's what's happened with housing. It's become winning the bid. I know we're out of time. This is Indy's real estate gurus. I'm Rick Ripma, your hard work and mortgage guy

and I'm Ian Arnold with advisors Mortgage Group and tune in next week. I know Simon was sick the other week and he'll be back next week.

Yes, I'm in soften, soften and he as a insurance expert. One of the things that I see pushed a lot is is flood insurance, even if you aren't in a flood zone, and there are great reasons that you need it. Not necessarily for a river overflowing but there are other reasons you need it. So we're going to talk to him about the basics of insurance but also some of these unique things that are out. Thanks for joining us have a great day.

Branch NMLS number 33041 Recruitment NMLS number 664589. Ian Arnold's NMLS number is 1995469 equal housing opportunity, some restrictions apply.

Well, first off, thank you for joining us, Danielle. I appreciate it. And I just was curious, how did you come to find out about Rick Ripma and advisors mortgage? Well, I was looking for a mortgage for myself for a brand new home that I was building and I wasn't sure the direction to go. I didn't have anybody in mind. So I kind of just spoke to whoever I could speak to. I got their number and everything seemed to be exactly what I was looking for. So I went with it. The thing I liked the most about Rick and his advisors mortgage is that I could go and upload things online. And I didn't have to always be on the phone with them or sending them documents or trying to look for certain things that I needed to get the process going, which was really great for me, I had a processor named Mark Coleman, who really helped me out in making sure I had everything I needed. Because I, I didn't know the first thing about having a mortgage. So it was awesome to have so much help. I think probably what I've benefited from the most is really just the understanding that sometimes I would get busy. And maybe I forgot to upload a document or I forgot to do a certain part of the process in a timely manner. And they would get right back with me and it wasn't like a, hey, we really need this right now. It was always Hey, just wanted to make sure you still remember that we need this. Well, you don't get that too much. In this day and age, it seems like most people are either, you know, very demanding of something they need from you and they need it right now. And, and I agree. I've seen that in Rick's attitude with us over over the last 10 years that he's very patient but also helpful to get the right things he needs. So, exactly. In conclusion is Rick Ripma and advisors mortgage, somebody that you would use in the future and or tell your friends and family about. Absolutely. And I just want to thank them for all the effort they put in to help me find my dream home.

Ranch NMLS number 33041 Rick Ripma is NMLS number 664589 equal housing opportunity. Some restrictions apply.

I'm Rick Ripma You can go to hard work your mortgage guys.com