Higher Rates are GREAT NEWS for Investors

SPEAKER_1 (0:00)

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Michael Zuber (0:30)

All righty, folks, don't look now, but we got the rate increase that I expected, and we're getting a lower 10 year yield, which should mean mortgage rates go lower by end of day. We are recording this on September 17th, so let's see what happens by 1 or 2 PM Pacific. But that is what I expected. The Fed is now taking inflation seriously, and guess what? Mortgage rates are going lower. I cannot tell you how many people yelled at me, screamed at me, called me an idiot, said the Fed raising rates would send mortgage rates higher. No, folks, it was already happening. It was already priced in.

Now mortgage rates are getting better.

I also think what we are on the cusp of in the rest of 2026 is a housing gold rush. But before we get into all that, Dustin wants to ask me a few questions. So Dustin, thank you for being here, man. I bet it's fun times at Convoy Home Loans.

Dustin (1:22)

Yeah, we've had our work cut out for us a little bit more hours than usual since basically last week, right? A lot of fielding questions and locks and all of that, of course. But as you touched on, and I'm pretty sure everybody watching this knows that the feds raised rates yesterday for the first time since, what, 2023

And I just wanted to ask your opinion on a few, a few probably popular talking points to have the audience hear what your opinions are. So, you know, yesterday, I'll start, is this going to be a new, new hiking cycle or you think we're talking about, you know, one or two more like insurance hikes?

Michael Zuber (2:03)

Oh, I think, I certainly think at least one more is coming. And I think Kevin Warsh used the word dose, right? This is a dose of, you know, whatnot. And, you know, again, I think words matter with the Fed. And, you know, as somebody who has taken doses of medicine, there's always more than one, right? Otherwise, it's just a shot, right? It's like a dose means there's another one coming.

You know, I think, I think if the Fed had their choice, they would make it December.

But rumor has it the next CPI might have a four handle on it because of gas prices. And if that's true, I would say the next hike is in October right before the election. So, yes, I think we are in a rate hiking cycle. I could see two this year. We've already had one. I think it's reasonable to assume a third, call it Q1 of 27 But then that's about as far as I could see. I think there are people pricing in four or more hikes. I don't see that. I certainly see a total of two. And if I was a betting man, I would say three.

Dustin (3:11)

And I think, I mean, you'd be betting kind of with the heavy odds there, because I think on the, was it 16 of the 18 on the dot plot? I was right before this that said they're expecting that to align with you.

Michael Zuber (3:25)

16 of 18 expect at least one more this year.

Dustin (3:30)

Exactly.

Michael Zuber (3:31)

So I would call it a dose. Yes, this is a hiking cycle.

Dustin (3:34)

There you go.

Next one for you to kind of, I would say, elaborate on the conversations that I have with a lot of real estate investors that we speak to, right? And they're asking, well, look, I don't want to text and call you every day about where rates are. If they're going to watch one thing and it's usually, hey, do I watch the 10-year treasury? Or do I watch what the feds are doing with their comments on inflation and everything? What would you tell people to be watching for?

Michael Zuber (4:01)

Well, again, if you're going to look for a number, it's the 10-year note. It is always the 10-year note. But I think yesterday was important.

If you zoom out, and what I tried to get the audience to understand and correctly called, and was called a fool and an idiot for it, is the 10-year note and the 2-year note were screaming higher ever since Kevin Warsh took office. Really, ever since the Iran War. And it was getting kind of ridiculous. And basically, what the bond market was saying is, we don't think Kevin Warsh is serious. We think Kevin Warsh is a puppet. And that's not good for a Fed chair. If the Fed chair is not seen as independent and they are just a puppet for the president, you're going to see rates go a lot higher. So yesterday was important.