Well even if the housing market does dip, does house affordability still comes in line?
If mortgage rates continue to spike?
That's what we're gonna talk about today.
We can monitor the housing market and the trends and what prices are
doing, but the biggest unknown here is where mortgage rates are gonna be.
Even if house price goes down 50 grand, if rates go up one, 4%, you
probably still can't afford that house.
So let me give you my prediction.
Forecast on where rates are gonna be by the end of the year, going into 2023.
So the federal reserve gave us a bunch of information that a lot of
people aren't figuring this out.
Okay.
So let's go over to where the fed is today and where they expect to
push rates to by the end of the year.
And then we're gonna back load some of this data to figure out what
adjustments they're gonna make.
But then at the end of the video, I have one big surprise for you.
It's one piece of the economic puzzle, one piece of the inflation number
that's down 40% from the last reading.
So does that mean the federal reserve could start cooling off or taking their
foot off the pedal after the next meeting?
That's what I'm expecting.
So let's get over to the details.
This chart that you're seeing right here is this is what
the federal reserve controls.
They control the federal funds rate.
Okay.
What they want to do is they want to push that federal funds rate
by the end of the year to 3.75.
Currently, that rate now is 2.5%.
So that means they have to raise rates by 1.25% by the end of the year.
Okay.
So that data will change as the news or economic calendar news comes in.
But right here if you see, they have three more meanings to do it.
So if you see this here, they have meetings in September,
November, and December.
So they have three meetings left.
They're expected to raise rates by 1.25%.
In the next meeting, they're expected to raise
the rates by 75 basis points.
So they're more than halfway there after the next meeting.
But at that point, my analysis, my forecast, my prediction is
they're gonna start taking their foot off the pedal a little.
Why?
You're gonna start seeing the jobs market starting to ease.
And we have that data from a lot of companies out there reporting
that they don't plan on any hiring.
They don't plan on giving raises.
And actually, they're considering actually downsizing their employment staff,
but one big piece of the puzzle that a lot of people are missing right now.
It's involved in the inflation numbers.
Let me show you. This number right here.
And I'll get my head out of the screen.
This number right here.
If you go down through these numbers right here, like I always say in Sesame
Street. What batch and numbers just don't fit well, it's these in the orange.
And if you go over two of them, what are they?
Energy.
Okay.
So energy is playing a huge role in the inflation numbers and we all know it.
If in gas, you paint at the pump, and in Chicago, we were having gas at six bucks a gallon.
Now they're about 3.99, a dramatic change from where we were.
And again, remember what the Federal Reserve's goal is.
To crush inflation.
So as soon as they have inflation in check, they can actually take
their foot off the pedal and that's what I'm expecting them to do.
So let's get over to the real numbers right now, cuz these
numbers are even coming down even more based on just oil alone.
So here's the oil chart and I'll get my head outta the way once again.
And I'm gonna show you where we are.
The oil charts right here.
So back in May, we had oil training at about 1.23, a gallon or barrel,
and I'm having a hard time with that.
But trust me on that one.
Then in June, it was $120 a barrel thus causing the inflation numbers
to completely come outta whack.
Right now we're currently trading at $87, a barrel of 40% reduction in how
much a barrel of oil is 40% reduction.
So if the biggest component.
In the inflation numbers is down 40%.
Where's the inflation number gonna go?
So the Federal Reserve's goal is to get inflation in check.
Their goal is to get it back to two and a half percent.
Will they be there this year?
No.
Will we be there probably next year?
My anticipation is yes.
And again, the reason being is they're trying to crush inflation.
The biggest culprit and inflation is oil, as we see, and that is
down 40% from its last reading.
So going into the end of the year, I expect rates to stagnate
actually going into 2023.
I think the federal reserves gonna have to take their pedal
off of the inflate interest.
Increases, thus, it's gonna put us in a nice little sweet
spot in Q4 and Q1 of 2023.
If you're looking to buy at that time, that aim may be able to
give you a spot to refinance.
If you recently bought in the last six to eight months, when
rates were at five and a half.
6%.
So my projection is by the end of the year, we're gonna be flatlined
basically from here on, out through Q4 of 2022, and then Q4 and Q1 of 2023.
I'm actually predicting mortgage rates to stagnate here and maybe drop just a
little bit from where we are right now.
And the reasons being is I just explained it to you.
So if you like my content, you like what I do on a daily basis, all I
ask you to do is give us a thumbs.
Subscribe down below, hit the be every time we post a video, the reason why I did
this today is there was no economic news.
So I figured I'd at least prep you guys on what the federal
reserves expectations are.
So my name is Dan Frio.
I do this every day.
If you'd like to find out more about me and my team, please visit us at
TheRateUpdate.com.