8% Mortgage Rates?? Are You Ready???

**Michael Zuber** (0:01)
Alrighty, folks, two weeks ago, we did a breakout video talking about what would happen if mortgage rates hit 4.99.
Now, a lot of this was based on Scott Besson's call for 3.7 10-year treasuries, which would make 4.99% mortgage rates possible. What we are gonna do today, given the hot read on inflation, given a Jackson Hole meeting on Friday, is we are gonna take the opposite side of that trade, and we are gonna talk about what happens if mortgage rates hit 8%.
Now, let's be very clear. We are talking about 8% mortgage rates for home buyers, not investors. We are talking 30-year fixed, you know, 720 credit score. So, again, if the average is 8%, some of you will be paying nine or nine and a half. We're gonna have this conversation with Matt, the mortgage guy. Matt, I assume talking about 4.99 is a lot more fun than talking about 8% mortgage rates. But hey, I think we gotta do it. We gotta show the other side of the coin. What say you?

**Matt** (1:03)
Right, for sure. Because I think any of us, you know, who are in this game can admit, I can't tell you with absolute certainty which way we go, when we go there, whatnot. And so, you know, the crazy scenario in which, you know, the 10-year comes down, that spread comes down, and we're at 4.99, and just as easily, probably, we can go the other way. And like you said, you know, inflation's up, if the economy keeps roaring, if worse, you know, the small little pellet guns he's using right now aren't having an effect.

**Michael Zuber** (1:38)
No, not a chance.

**Matt** (1:39)
If he doesn't have any grenades or bazookas, you know, behind him, like, yeah.
Whatever 30 bits we got two days ago, 15 of them, you know, we lost today. So, you know, we're treading water, we're staying, you know, in mid-six territory. But for real estate investors, especially, you probably want to root for 8% interest rates.

**Michael Zuber** (2:05)
And, you know, that is so good that you said. I loved how you preface that. If you are a real estate investor, you should root for 8% mortgage rates.
I agree with you. I 100% agree with you. So keep going.

**Matt** (2:19)
Yeah. Right now, we've got, you know, four years of mid-sixes, and buyers are on the sidelines. I talked on Tuesday morning to a group of real estate agents, and I heard them talking before. Last week, they had pitched some listings where they had some price reductions. So I just walked up to them and asked them the simple question, how are your listings? And all of them had the same answer. It's tough, not selling, still on. Probably have to do another price reduction. And so, for an investor, what sweet music those terms are.
What I want to do, Mike, because I think this is important. I love putting real numbers to things. And so, I just happened to have pulled up here, and we don't have to share it, but I'll speak it to folks. You know, an average first-time homebuyer. You know, they just got out of law school, they're doing law for the state, mom and dad are willing to give 20%, which, you know, is necessary in a lot of these cases for first-time homebuyer.
But 570,000, 20% down, 6.624 interest rate.

**Michael Zuber** (3:33)
Okay. What's the payment?

**Matt** (3:35)
Payment, all-in, taxes, insurance, principal and interest, 36.56.

**Michael Zuber** (3:42)
All right. Could you change that to 8% and see what the payment goes to?

**Matt** (3:45)
That's exactly what I wanted to do, because this is what, you know, is going to decide, you know, how much pullback we have in the fire demand that's already not so great. So again, too, not an offer to lend, guys. I've got to disclose that, you know, this isn't a rate that I'm offering. And another thing to consider, property taxes, homeowners insurance, all these things will change. So your payment might be different if you're in Texas with 1.8% property taxes. But nonetheless, I'm going to slap an 8% in here.
$4,082. All right.

**Michael Zuber** (4:26)
And what was the purchase price? Sorry, $5 what?

**Matt** (4:28)
$570.

**Michael Zuber** (4:29)
So I want to just play some math here. So now leave it at 8%, and I want to know how low that price has to go to get us back to roughly $3,656.

**Matt** (4:39)
Okay.

**Michael Zuber** (4:40)
I'm going to guess. So that's about $400. That's over $400. So I'm going to guess you got to go to $5.25. Can you plug in $5.25 purchase, assuming everything else is the same, 20% down, all of that? Yeah.