What the FED Interest Rate Drop Means For You - Dave Galloway, Heartland Home Mortgage 12-11-25
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Transcript
28 segmentsOur good friend Dave Galloway and I talked earlier this week, and we talked about this story with the Fed and what they were going to do when it comes to rate cuts. And now we've got the headline. We know what the rate cuts look like, Dave. But the question is, what's the story behind this story? Dave said, yeah, you know, I think there's more... There's more happening here than meets the eye. You can read headlines, and that's great. And I've read a couple of things, but let's see if we can dig in and pull the curtain back a little bit. So we got this. They've taken the rate down to cut another quarter. Some I'm hearing inside the split here, 9-3. Some wanted to cut more. Some didn't want to cut at all. There are a couple of factors there. But what are you hearing behind the scenes? Dave, welcome in today. We appreciate you being here with us. Thanks for having me and uh Yeah, it's actually pretty interesting because we hear a nine to three split on the voting, and we think that's rather, you know, pretty heavy, like in favor of it. And nine to three is actually a very controversial vote when it comes to the Fed. It's actually the most closest vote they've had since 2019. So there's certainly some dissension among the ranks, which is going to play heavily come April, you know, May when Jerome Powell's term is done if he makes it through the whole thing, which he seems pretty steadfast. he's going to. But yeah, I guess, you know, when we, I wish I had a dollar for every time somebody called me after they cut rates and asked, oh, what's the rate now? And the truth behind that is usually that rate has already come into our lending rates at least three weeks in advance of the Fed's decision because there's so much speculation already knowing what the Fed's going to do. what affects rates after that meeting are the comments that come out of that you know the things Jerome Powell says as far as going forward so there's been many times when the fed announces a quarter rate cut and because of the comments of Jerome Powell our rates actually went up as a result of it so it's it's a pretty interesting system they have and so there's several factors going in now as we look to the future, what are they going to do? And they say they're on a holding pattern. And I believe it's because they have no idea how the tariffs and the economy are going to work together because they said they're still watching the inflation numbers. And they want to see inflation come down, but they still think that there's some heavy tariff things that are going to have a one-time hit that are going to cause some, maybe some inflation in the next quarter, four months or so. Yeah, I heard that conversation yesterday, too, and it's interesting. So when Dave was talking about the comments,
Wait, what happens after they did this? He's literally standing there at the lectern, Jerome Powell, and then you get all these reporters that are asking lots of different questions. And one of those questions I did hear was about tariffs. And one of them happened to be, and boy, you talk about, what a question from a reporter. And I guess you'd have to get the crystal ball out for this one. But she said, well, what if the Supreme Court rules against the tariffs? What would happen then? He goes, you know, you just kind of hear him saying, well, I don't know. There's a number of things that we'd have to look at, and who knows. But as you mentioned, these are the comments that are coming after the fact. Anything else stand out? Obviously, tariffs is a piece of this. Now, the tariffs have been working to put some deals together for trade in one way. It's good, but it also... does throw a monkey wrench into the economy in some places, and businesses have to try and figure out. They've got to get fluid to try and figure some of this out as President tries to get things back on track. We have seen things, inflation, cooling a little bit. Those are good signals. But what else are you seeing, and what did you hear yesterday when it comes to some of those comments that were made, and what should people take away from it? The big one that jumped out at me, I think they were projecting over $40 billion that they're going to purchase in short-term T-bills. Yes. That does have an effect on our lending rates. So if that comes, it looks like that's going to start happening. Powering through any technical issues, we got it right here. A good friend, they've got away Hartland Home Mortgage back with the Fed talk and what it means for you interest rates and more. We've got them on the phone now, so we should be good. As far as we know, the phone is still working. Working good. Yeah, good deal. So, Dave, you were just talking about some of the most important things about what comes out on the Fed. And it's not just what they do with the numbers. That's part of it. When it comes to mortgage rates, a lot of that's baked in ahead of time because of the talk about what they might do or where things might go. You said what's even more important to pay attention to a lot of times is the comments. So the comments that come after the big announcement. And that's where he's asked questions. Fed Chair Jerome Powell has asked questions yesterday again. And, of course, what he might say. That determines where things might go in the near future. So we've heard a couple of different pieces of this. And I think in the middle of it, we stopped at the part where the Fed is going to be buying $40 billion in U.S. treasuries. What does that indicate? What's that a signal of right now? Yeah, that's a true measure in what interest rates, as far as we know, the mortgage rates, lending rates will do in the short term. And that, when they pump that money into that, it actually drives those rates down. And so that was a positive comment. And that tells me they're still open to... cheaper money going for, which obviously benefits us as normal people, right? You know, we're the ones that are using those loans. So, yeah, there were some positive comments there, and, you know, the market's coming out, and we're seeing some decent movement on that 10-year treasury note that gives us some hope and having some lower rates. That's fantastic. Anything else, thumbnail sketch of what we learned yesterday, that might be helpful for folks moving forward looking at where things are headed.
I think, you know, it's hard because something's that, well, I don't want to refinance now. I think maybe in a year from now it'll be better. It's always worth just looking at those options. and knowing. And, you know, you are seeing a slight slow down in the housing market, too. So homes on the market, how long they're going to be there. Now, that's beneficial for the buyer, right? It's like, hey, there's less competition. Doesn't mean it's easy right now. It's certainly not a buyer's market. I'm not saying that, but it has slowed down a bit. Homes are sitting on the market a little bit longer. And if you're somebody that's looking at, well, if I refinance, I have a ton of equity. That equity can give you a better rate. It can give you some cash out to work with the payoff high interest bills. So now is a great time to do that because those values still are high. And so just a lot of options out there to save money. You're seeing a point in history when credit cards are at the highest interest rate of all time. They're also at the highest balance of all time of what Americans are holding in consumer debt. Yeah, so if I hear what you're saying, and we did talk the other day when it comes to these rights and particularly mortgage, et cetera. There may be a point with the available homes on the market, et cetera, that it actually is more advantageous that you got something done today. I mean, I guess that's why everybody is different. And you mentioned, hey, you should probably reach out if you have questions and get yourself ready for when it does, it does come our way. We got a couple of things on the horizon you're looking at that are going to impact home prices. Yeah, there's a lot. One thing people don't realize is we're, there's a little bit of a cliff if you look at it as far as values for where we could be looking at those going, and that's just a historical measure. So if you look at a graph, I shared that with you the other day. There's some interesting data coming out as far as what values could potentially do, and also the number of delinquencies we have in the market. You know, that's a lot of what will drive down, the values drive down interest rates as if, you know, unfortunately, when homes. I do go into foreclosure delinquency payments. And I believe the statistic is 10% of all FHA loans are in delinquency, not foreclosure, but late on payments. And so that's a pretty, pretty, you know, it's a number that jumps off the page that you don't really see that out there much, but it's a big one. What about auto loans? Yeah, that's another good one. Auto loans are performing terribly right now, and that industry is facing some pretty interesting challenges. I believe they are.
It's a huge number. I don't remember the percent of auto loans that are in delinquency. But when the auto loans start to go and people start to lose their cars, that's a huge deal because that's usually the last thing they'll go late on because they have to get from A to B. So when those auto loans go behind, that's a really telling sign. You know, one thing it tells you is if you have equity in your home, it can save you for going into some of these financial disasters because you're struggling with affordability. You can use that to your advantage. And we've seen many of your listeners do that and put themselves in a better situation. By refinance, home equity, line, and credit, they can help in any number of ways, which you might want to find out what's best for you if you reach out to Heartland Home Mortgage. H.HM.lending.com is the website. Dave Galloway and the team there. Really a heart of a teacher to walk you through those. I've heard of a number of stories about how they've helped people save thousands that listen to this program. But the other thing is also they'll tell you, you know, hey, you may want to try this or maybe it's not the right time for this. Let's do this. And they're open with those things. And not afraid to point you in the right direction. So we love that. And that's why we trust Dave in the crew. Thank you so much, Dave, for the latest update. We'll have to have you come back as things continue to shake up. Thanks for having me. If I don't talk to you guys sooner, have a Merry Christmas.