Scott Miller shares how interest rates might affect our market and more.

There’s a ton of chatter about the interest rates in our market right now. We wanted to ask an expert about all the recent changes, so today we’re pleased to welcome Scott Miller from the Bank of England. 

Scott, how do the federal rates affect mortgage rates?

This is one of the big questions for everyone. The Federal Reserve’s job is to monitor the monetary supply and keep inflation in check. During COVID, they mentioned that they would let inflation run a little high, but it got out of hand and grew to around 9%. Inflation is the worst thing for a 30-year bond, which is how mortgages are sold, so interest rates have gone up to help those bonds compete against the stock market.

When the Fed raises rates, they increase the rate at which banks borrow money. The banks then turn around and lend that money at the prime rate, which is 3.5% higher. Mortgages are different since they’re bought and sold on Wall Street. When the Fed raises rates, it actually helps stabilize mortgage rates. It looks like rates won’t drop soon, but they might not increase as quickly as they have. Right now, we want the Fed to raise rates. 

“It is still an excellent time to buy.”

Why is this market not going to be a bubble?

A lot of people are comparing today’s market to 2008, but that’s a bad comparison. There were a lot of loan types before 2008 that are now illegal. The 2008 meltdown was a direct result of fraud on Wall Street. Since then, everyone has to qualify for their mortgage, and people have to prove they can make their payments. Appraisals are also handled by a third party.

During COVID, we had 10 buyers to every home for sale nationally. Even if we lose 80% of buyers, it would still be a seller’s market. I don’t think our market is a bubble. Homes may not sell over their list price like they did before, but our market won’t crash like it did in 2008.

What opportunities do you see for buyers and sellers?

I think it’s an excellent time to buy. All the economic data I’ve read says we should expect 5% to 7% appreciation in our area. Interest rates are higher than they were, but our rates last year were artificially lowered. The 220-year average for mortgage rates is about 6.5%, and we’re still about 1% below that. 

With all the things happening in our economy, I believe we’ll see a recession in two years. You can buy now, enjoy the appreciation that will happen due to our low home supply, and refinance in a few years. 

We want to give a special thanks to Scott Miller for joining us today. If you have any questions, don’t hesitate to call or email us. We would love to help.

Here is Scott’s contact information:

Scott Miller

Mortgage Lender, Bank of England Mortgage

NMLS #90280

thescottmillerteam.com

scottmiller@boemortgage.com