what is really going on in the market and what can we expect with rates in clearwater, largo , palm harbor, tarpon springs
Didier Malagies • March 20, 2020
all you need to know what is going on with the current crisis
This is what really is going on in the market! read and learn
really need to share with my subscribers, so enjoy the read and know good times will come eventually
The MOST Volatile Day For Mortgages
Mar 19 2020, 5:42PM
By Matthew Graham
Today was the most volatile day in the history of the mortgage market in many regards. There were days in the early 80's that saw rates move by similar amounts, but none of them saw the underlying market for mortgage bonds move back and forth by such gigantic amounts. What does this mean for you and your ability to buy or refi at the rates you may have heard about recently?
That depends on the rates you've heard about recently! Many borrowers mistakenly believe the Fed's recent rate cuts mean that mortgage rates have fallen by an equal amount. In fact, many loan originators report getting calls about 0% rates. Unequivocally, there are no 0% mortgage rates! If you're not 100% sure about why that's the case, please read this article.
If you're participating in a more realistic reality, you may have heard about some exceptionally low rates nonetheless. You may have even discussed these rates with your mortgage professional of choice. For flawless scenarios and depending on the details, fixed rates in the low 3% range were a thing for a few hours of a few days recently. That's no longer the case--not even close.
Unless you make a habit of watching real-time bond trading it's hard to convey just how INSANE the past 2 weeks have been. I'll put it this way, by Friday of last week, after watching this stuff for nearly 2 decades, I was sure I'd just witnessed the craziest day for mortgage bonds (the stuff that dictates most of the movement in mortgage rates) that I'd ever seen or possibly would ever see. As of yesterday, this week was already crazier and today took it to another level. Today ALONE, as one individual DAY was more volatile than the entirety of last week! And by a wide margin at that.
Today alone, we saw a mortgage bond trading range that was as wide as last week's. Moreover there were 5 massive changes in the direction of movement. To oversimplify, the cost of any given mortgage changed massively, 5 times today. In more normal times, this would mean that your available rate went up or down massively, 5 times today. The reality is that most lenders began the day quoting significantly higher rates than we've seen recently, and the average change only made that rate much MUCH higher.
The Fed cut rates to zero. They announced massive bond buying. Stocks have been tanking (which is usually good for rates). And you're telling me, after all that, mortgage rates are significantly HIGHER?!
Yes... I'm absolutely telling you that. I track the rates of more lenders more closely than anyone you've talked to. These past 2 weeks and especially today have been the biggest, most counterintuitive messes I could have ever imagined. The mortgage market is in absolute CHAOS! Regular readers will know I'm not prone to all-caps diatribes and excessive exclamation points. To whatever extent I've actually been able to take the time to write articles this week, the ratios of all-caps and exclamation is through the roof.
Why is the mortgage market in chaos? There are complex reasons and simple reasons. First off, this isn't 2008. If any lenders end up struggling to survive this environment, it won't be for the same reasons as 2008 and the systemic risks are a non-issue. To be sure, there is tremendous stress in financial markets, but whereas the mortgage sector CAUSED the problem in 2008, it's more of an innocent bystander this time around.
Coronavirus has created an unprecedented situation for the entire rates market (not just mortgages, but US Treasuries and everything else). Relative to some classes of bonds, mortgage rates aren't seeing nearly as much drama, in fact. Liquidity is one major issue. That refers to the ability to buy or sell whatever you want to buy or sell at the price you'd expect. It also refers to the ability to liquidate whatever you need to sell in order to raise CASH.
AND GUESS WHAT HAPPENS WHEN EVERYONE AROUND THE WORLD SIMULTANEOUSLY DECIDES CORONAVIRUS IS A HUGE DEAL?
Everyone wants cash. Before you run out to the bank to try to beat your neighbor to the ATM, I'm not talking about green cash. That won't do you any good in the zombie apocalypse anyway. I'm talking about a cash position in financial markets--the most liquid, nimble place an investor in the US can be. Outside of situations where the value of the American dollar is rapidly deteriorating, there is no other asset that offers a better combination of immunity from risk and liquidity/flexibility. So when no one knows what in the world is going to happen next with the rapid-onset recession (something that's already begun, even if economic reports will take months to confirm it), cash reigns supreme.
Investors are selling mortgage bonds hand over fist for cash. They're selling lots of other stuff for cash too. Investors that would typically buy mortgage bonds are either not in a position to buy at all, or are simply not willing to buy for the prices being charged (i.e. no liquidity). Lower prices for mortgage bonds = higher rates.
This phenomenon really began last week, but the Fed threw a big wrench in the works last Sunday with its emergency announcement. For the first time in years, they jumped back into the business of buying mortgage bonds outright (something they'd previously said there were not interested in doing again). You can take the Fed at their word there. They would NOT be buying mortgages if there wasn't serious funding stress in the mortgage market. Again, this funding stress isn't resulting from mortgages being bad or "toxic" in some way. If you hear any mentions of that, it's nonsense.
The issue, again, stems from the supply and demand situation being completely unprecedented. Just like panicked masses suddenly buy toilet paper despite not planning on using the restroom any more than normal, the herd mentality in financial markets is to buy nothing and sell everything (except for the talking heads that attempt to convince people it's a good time to buy stocks amid a freefall--a broken clock strategy that is wrong again and again until it's finally right). Things were so intense at one point today that the Fed had to announce major additions to its previously announced schedule of MBS buying.
NOTABLY, the Fed is not doing anything it said it wouldn't do on Sunday afternoon. In fact, it purposely left open the possibility to add additional buying as needed to support the normal functioning of the mortgage market. And therein lies the heart of the matter. Mortgage markets progressively freak out (other markets too), and the Fed continually steps up to offer reassurance. Its will is strong and its tools are capable in this regard. When the reassurance is first announced, markets move in the opposite direction from "freaked out." In the case of mortgages, this would normally mean "lower rates," but in the current case, it's only allowing lenders to temporarily stop the bleeding.
EVENTUALLY, this song and dance of market panic and Fed reassurance will level-off. There is absolutely a limit here. But this is also absolutely a major adjustment for financial markets. We're suddenly faced with a totally unexpected need to radically revalue nearly every asset class faster than it's ever needed to be done, and with less certainty about how to do it. No one knows what the supply and demand for mortgage bonds, let alone anything else (except maybe toilet paper?) will look like in a few days, weeks, or months.
While we can logically conclude that a massive economic recession should coincide with very low rates, there's too much uncertainty and too great a need for short-term cash for rates to simply drop to the levels we may eventually see. As for how long it takes rates to get back to where they "should" be, it's impossible to know. Until last week, I would have said "days." Until today, I would have confidently said "weeks, at worst." I'm getting increasingly hesitant to pin a timeframe on it. After all, the sudden shift in reality versus expectations is at the heart of the issue for financial markets. The safest bet at this point is to conclude that we haven't seen the last of mortgage rates near the recent all-time lows. We don't know exactly when we'll see them again. The best case scenario is quite palatable and the worst case scenario is something we don't even want to consider--exactly like the range of outcomes when Coronavirus became a household name weeks ago.
Bottom line: rates are as high as they've been in NEARLY A YEAR. If you're seeing a news article that references Freddie Mac's weekly survey, it's based on data that stopped being relevant on Tuesday. A lot has changed since then.
Check out our other helpful videos to learn more about credit and residential mortgages.
A bridge loan is a short-term loan used to "bridge the gap" between buying a new home and selling your current one. It's typically used by homebuyers who need funds for a down paymenme before their existing home sells. Here's how it works: You own a current home and want to buy a new one. You haven't sold your current home yet, so your cash is tied up in its equity. A bridge loan gives you access to that equity—before the sale closes—so you can make a down payment or cover closing costs on the new home. The bridge loan is secured by your current home, and repayment typically comes from the proceeds once it sells. Key Features: Term: Usually 6–12 months. Interest Rates: Higher than a traditional mortgage. Repayment: Often interest-only during the term, with a balloon payment (full payoff) at the end. Loan Amount: Usually up to 80% of the combined value of both homes (existing + new). Example: Your current home is worth $400,000 with a $250,000 mortgage (so $150,000 equity). You want to buy a $500,000 home. A bridge loan lets you borrow against some of that $150,000 equity to cover the new home's down payment while waiting for the current home to sell. Is this conversation helpful so far? tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
After years of identifying the housing market as unhealthy — culminating in a savagely unhealthy housing market in early 2022 — I can confidently assert that the housing market in 2024 and 2025 is on better footing. This transformation sets an extremely positive foundation for what’s to come. Some recent headlines about housing suggest that demand is crashing. However, that’s not the case, as the data below will show. Today on CNBC , I discussed this very point: what is happening now is not only in line with my price forecasts for 2024 and 2025, but it’s why I am so happy to see inventory grow and price growth data cool down. What we saw in late 2020, all of 2021 and early 2022 was not sustainable and we needed higher mortgage rates to cool things down — hence why I was team higher rates early in 2021. The last two years have ushered in a healthier market for the future of existing home sales. Existing home sales Before the existing home sales report was released Thursday, I confidently predicted a month-to-month decline, while estimating the existing home sales print to be just a tad above 4 million. That’s precisely what occurred — no surprises there, as every month in 2025 has consistently exceeded 4 million. However, it’s important to note that our weekly pending home sales data has only recently begun to show growth compared to last year. We have an advantage over the data from the National Association of Realtors since our weekly pending home sales data is updated weekly, making their report somewhat outdated. The notable surprise for me in 2025 is the year-over-year growth we observe in the data, despite elevated mortgage rates. If mortgage rates were ranging between 6%-6.64%, I wouldn’t have been surprised at all because we are working from the lowest bar in sales ever. Purchase application data If someone had said the purchase application data would show positive trends both year to date and year over year by late April, even with mortgage rates not falling significantly below 6.64%, I would have found that hard to believe. Yet, here we are witnessing consistent year-over-year growth . Even with the recent rate spike, which has clearly cooled demand week to week, we are still positive. If mortgage rates can just trend down toward 6% with duration, sales are growing. Housing inventory and price growth While my forecast for national price growth in 2024 at 2.33% was too low and in 2025 at 1.77% may be too low again, it’s encouraging to see a slowdown in price growth, which I believe is a positive sign for the future. The increase in inventory is also promising and supports long-term stability in the housing market. We can anticipate that millions of people will continue to buy homes each year, and projections suggest that we’re on track for another nearly 5 million total home sales in 2025. As wages rise and households are formed, such as through marriage and bringing in dual incomes, this influx of inventory returning to normal levels provides an optimistic outlook. This trend in inventory data is truly heartening. Conclusion With all the data lines I added above, you can see why I have a renewed optimism about the housing market. If price growth significantly outpaced inflation and wages, and inventory wasn’t increasing, I’d be discussing a much different and more concerning state of affairs. Thankfully, that’s not the case. Historically, we’ve observed that when home sales dip due to higher rates, they may remain subdued for a while but ultimately rise again. This is common during recessions, as I discussed in this recent HousingWire Daily podcast . As you can see in the existing home sales data below, we had an epic crash in sales in 2022 but found a base to work from around 4 million. This trend has shaped the landscape of housing economics since post-WWII, reminding us that resilience and recovery are always within reach. 
1. Cash-Out Refinance How it works: You replace your current mortgage with a new, larger loan and take the difference out in cash. Pros: Often lower interest rates compared to other methods. Longer repayment terms. Cons: Closing costs (typically 2–5% of the loan amount). Resets your loan term (could be 15, 20, or 30 years). Tougher underwriting for investment properties vs primary residences. 2. Home Equity Line of Credit (HELOC) How it works: You get a revolving line of credit based on your property’s equity. Pros: Flexibility — borrow what you need, when you need it. Pay interest only on what you draw. Cons: HELOCs for investment properties are harder to get and may have higher rates. Variable interest rates (payments can increase). 3. Home Equity Loan ("Second Mortgage") How it works: A lump-sum loan secured by your property's equity, separate from your existing mortgage. Pros: Fixed interest rates and predictable payments. Cons: Higher rates than primary mortgages. Separate loan payment on top of your existing mortgage. 4. Sell the Property How it works: You sell the investment property and realize your equity as cash. Pros: Immediate full access to equity. No debt obligation. Cons: Capital gains taxes may apply. You lose future appreciation and cash flow. 5. Portfolio Loan How it works: A loan based on a group (portfolio) of your properties' combined value and cash flow. Pros: Useful if you have multiple properties. Lenders may be more flexible on qualifications. Cons: Complex underwriting. Higher costs. 6. Private or Hard Money Loan How it works: Short-term, high-interest loan based on property value, not personal credit. Pros: Fast funding (days instead of weeks). Less strict underwriting. Cons: Very high interest rates (often 8%–15%+). Short loan terms (often 6–24 months). 7. Seller Financing (if you're buying another property) How it works: If you own a property free and clear, you could "sell" it and carry financing, creating cash flow and upfront cash through a down payment. Pros: Passive income from note payments. Cons: Risk if the buyer defaults. Key Factors to Think About: How quickly do you need the cash? How much do you want to borrow? How long do you want to be repaying it? How the new debt impacts your overall portfolio. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
