[Music]

welcome to the dearwood realy YouTube channel I'm John shank from dearwood realy the founder managing broker look the FED is in a bad spot right the FED is in a bad spot the more expensive it is to borrow the more it hurts the economy in different ways right so we have a situation where if we keep raising rates mortgages become difficult right now we're over 8% on a 30-year fix as of today um but it's it also affects other things it affects credit cards it affects auto loans Bank savings what banks have to pay it's it's really it's really a mess this has been a problem that's been going on for a long time some argue that it's that this this is still the same problem from back in the housing crisis of of 2008 2009 and that's where you get this um you know it's just like 2008 it's just like 2008 which I don't really I don't really see it being the same but I I do understand where people are coming from when they say that this that the the debt problem was never fixed um back then and it's just continue to get out of control so I wanted to go over just an article that I saw and just kind of see how it see how it all sets up in the in the fed and see what goes on so here we go let me put it here this was on CNBC there's a link to the article in the uh description and we're just going to go through it it said the Federal Reserve may not hike interest rates next week but consumers are unlikely to feel any relief and that's just right look if you want to buy a house this week it doesn't matter if the Fed changes the rates it's still going to be over eight I mean it's it's really not a good situation if you want to see a bunch of new construction come to Market new new homes coming to Market 8% rates isn't going to do it for you I mean those houses are going to be very very expensive if they do get built um so I'll just go through the this little part here and it starts off it's here's a breakdown how the central bank's rate height cycle has affected household expenses and savings so credit cards can can you believe your credit card is over 20% on the APR it says after the previous rate hikes the average credit card rate is now more than 20% in all-time high further with the most with most people feeling strained by higher prices balances are higher and more card holders are carrying debt from month to month even without a rate hike aprs may continue to rise according to Matt Schulz who's the chief credit analysis an analyst at Lending Tree the truth is that today's credit card rates are the highest they've been in decades and they're almost certainly going to keep creeping higher in the next few months and so this all pins this all pinned back to affordability right if you're trying to save up for a house and you have to if you have to pay more for your credit card that's less money that you can use to save for that house it's goes in mortgage rates are at 8% so although 15 and 30-year mortgage rates are fixed and tied to treasury yields in the economy anyone shopping for a new home has lost considerable purchasing power partly because of inflation and the fed's policy moves and that's good at least they're starting to admit the inflation of house prices is ridiculous right I mean at least you see it now I I did a a video a couple weeks back about people are not talking about inflation of the house prices they're talking about affordability but we're not talking about just the the massive inflation in the in the cost of the house um it says the average rate for a 30-year fixed rate mortgage is up to 8% the highest in 23 years and you know it should lock things up pretty good and and it kind of has rates have risen to full percentage points since 2023 alone uh said Sam ker who's a Freddy Mack's Chief Economist purchase activity at slow to a virtual standstill affordability remains a significant hurdle for many and the only way to address is lower rates and a greater inventory well lower rates will help with affordability but I don't think that this in in I don't think inventory is coming online just a massive amounts of inventory as far as new construction now you can argue the the shortterm rental Market's going to eat it but we haven't really seen a tremendous amount of um foreclosures and things like that um auto loan rates up to 7% look I don't know if you've noticed but auto loans are just ridiculous my my lender and I have been talking about it and the amount of people that have um loans for Autos over $1,000 a month is just it will make you sick um it says even though auto loans are fixed payments are getting bigger because car prices are rising along with the interest rates on new loans pushing up cost for motorists the average rate on a 5-year new car loan is 7.62% the highest in 16 years so that's not great and then we have finally federal student loans are now at 5.5% and I did want to go over this because the student loan repayment thing is is a is definitely an issue but then you have what's what people are getting on their new loans it says Federal loan rates are also fixed so most borrowers aren't immediately affected by the fed's move but undergraduate students who take out new direct federal student loans are now paying 5.5% up from 4.99% in the 2022 2023 Academic Year and 3.73% in 2021

2022 that's not great right I mean it's you're just I I've I've never figured out how it's okay to saddle an 18-year-old with a tremendous amount of debt um for college and then it's it's quite possible that the the degree they get doesn't even pay for the doesn't even the starting salary doesn't even help doesn't even isn't even enough to pay for uh a repayment of the of the loan so I I just it makes me sick but it seems like anything that the FED anything that the government touches right just gets more expensive um and I I think definitely in education you see and then finally deposit rates at some banks are up to 5% now this is something that's always been a little bit sneaky to me I don't understand how if the fed's raising the rates how come our um how come the savings accounts aren't following suit and I don't understand why that's not the case um it says however High yielding online savings account rates are now paying over 5% according to bank rate which is the most Savers have been able to earn in nearly two decades moving your money to a high yield savings account is the easiest money you could ever or you're ever going to make and so so that's something that I thought should have happened long ago and that's something that um when people say like you know when you talk about stock valuations you say well if I can just earn six or 7% in treasuries why would I why would I want to um put my money in the stock market I don't I I don't I don't have all the answers but I'm just saying man people are looking at the fed and they're saying the FED is the problem and it's it's not it's that that isn't being helped by the fact that the National Association of Realtors National Association of homeb Builders and the mortgage B Bankers Association wrote that letter to the FED that says please give us some clarity on what you plan on to do with rates and um that just makes it look like uh it makes it look like the FED is not being responsive to trade organizations but at the same time the fed's Mandate is to look for or to keep the well to avoid booms and busts in the economy but when have they ever done

that so anyway I just think it's a very fascinating issue here we we've got people are looking to the fed and saying cut rates cut rates but if they cut rates inflation continues to get out of hand it's they they unleashed the uh inflation monster and it it's it's not going to go back in the bottle like it's just not it's not not without severe treatment and so that's what we're getting I don't know what's going to happen I I know I know people that were um buying houses this past summer were saying you know what I don't mind if we pay extra for a couple months uh as soon as the rates as soon as the FED Cuts rates will be fine uh as a real estate agent I was a little bit uncomfortable with that because we never know when the fed's going to make changes and when the FED does have have to lower rates it's usually because they've jacked up the economy right so that's not something you should like when you buy a house at the very top of the market you should not be counting on the FED to come in and fix the problem um because you're already in it like you've got a problem um so yeah it'll be interesting to see what the FED does my own look my own just a guy with a brokerage in the middle of the suburbs of St Louis Missouri I don't think the fed's going to do anything I think the FED will say you know hey the employment looks strong which we could argue that it wasn't so strong because people are having to get two jobs just to make ends meet but you know they could say hey very easily we're not going to do anything with theate we're just going to see how our rates how our rate increases have done over the past two years and we're just going to hold and even then that's not going to solve the problem in housing right now the the rate lock in effect which if you've never seen one of my videos it's basically look people that like 80% of the country has rates at like between two and 3% on their mortgage okay they don't want to sell their house they're they're fine um so the only people selling their house are death divorce which is horrible inventory no offense like if you've lived in a house for 40 years and never done anything to it it's kind of dated and these are the things we get so then because there's no other real good inventory people bid up these big houses and so it's it's just a bad bad situation right now and the the theory is is that if we can control inflation it'll keep from being a worse situation in the future who knows what's going to happen that's all I have for you today thank you for watching thank you for listening and I'll catch you in the next one