Slavik Lund is an American mortgage lender based out of Anchorage, Alaska. With years of experience in real estate & lending, Lund’s insight on current market conditions can certainly be of help to many. With recent rate hikes, a whole segment of future borrowers have been pushed out of the market. The Federal Reserve has raised rates to combat inflation, which has become a critical issue for the US Economy’s health. Part of the Federal Reserve’s current monetary policy goal is to put a halt to the US housing market boom. Rate hikes throughout 2022 have certainly pumped the brakes on the housing market with rising mortgage rates & a decrease in buying demand across the country. Lund believes that although rates may continue to rise in the near future, the worst has already happened. To learn more about Slavik’s insight, we sat down with him to dive deeper.
Macro Standpoint
Lund mentioned that there has yet to be a CPI report that shows that inflation has begun to cool down for the US Economy. Until that happens, the Federal Reserve will continue to raise interest rates to limit the amount of dollars circulating in the economy & the rate at which consumers can borrow money. Lund went on to say: “The US Economy is sick, the Federal Reserve is in a way giving the economy a dose of medicine when raising rates at each FOMC meeting. 2% rates & stimulus was certainly overstimulating to the economy and led to increase in inflation. Raising rates helps get the US economy back on track with a more healthy and stable market where inflation can get back down to the Fed’s goal of sub 2% inflation.” Lund believes that by Q1 of 2023 adjustable rate mortgages will begin to stabilize in price & the housing market will begin to brush itself off.
Marry The House, Date The Rate, & Dump The Rent
Lund wants future homeowners to know that now is actually not a bad time to look into purchasing a home. With rates up 2.5-3% across the country, demand for homes and asking prices have lowered. Securing a higher rate in the short term may feel uncomfortable but securing the home that you want with less competition in your local marketplace is not a bad option at all. When buying a home, Slavik believes you enter a “Marriage” with the home, the rate on the other hand is “Dated” & can always be dumped for a better one AKA — Refinanced. Dumping the idea of renting is important to note for future homeowners as well, especially for those that qualify to buy a home right now. Homeowners should feel empowered to put their cash toward equity in their own asset, not someone else’s. Even if the mortgage rate is a bit higher, Slavik recommends that if you can bite the bullet in the short term you can always refinance in the future at a cheaper rate.
Why Lenders Are Excited
As the US Economy & housing market inevitably cools down, Lenders will be prepared to get clients locked in at higher interest rates to refinance at a lower rate. Lund believes that rates should start to cool down over the next 12 to 18 months with notable changes as soon as Q1 of 2023. For homeowners who do lock in higher rates in the next 3-6 months, the option to refinance will be in their house of cards when rates do eventually come down. Lund wants homeowners to know that lenders get paid for having the loan, when refinancing homeowners have the opportunity to save thousands of dollars — making refinancing a benefit to homeowners not just the lender. Slavik mentioned that non-traditional home loans such as — non-QM loans allow lenders to help buyers secure funding through alternative qualification methods.
This post is based on the opinion of writers at Real Estate Today.
