As we march towards December, I feel like I’m 10 years old again. Fresh powder falling from the sky, anticipation for the holiday season, and closing out the year surrounded by loving family… I’m overcome with joy and appreciation. Entering the final month of the year gives us a great opportunity to reflect on the challenges we’ve overcome and analyze why we fell short when we did. My favorite part though is that it’s a great time to practice gratitude. It’s easy to get caught up in the minutia of life and lose sight of what is important to you, and I’ve always found December provides the perfect opportunity to refocus on your values and what motivates you.
With all that being said, I’m grateful for having the opportunity to aid individuals in homeownership. Having a hand in what generally is the most important and often most expensive transaction in an average person’s life is a responsibility that I’m honored to have. 2018 was a brutal year for the mortgage industry, whether you’re a lender, broker, LO or borrower. Rising rates and home prices paired with fewer homes for sale have decreased volumes and have made margins even thinner. The unemployment rate is at 3.7%, which is the lowest it’s been in nearly 50 years, which has driven inflation, which is bad for rates.
Internationally, Germany and Japan (the 3rd and 4th largest economies) reported shrinking GDP in the third quarter, and there is concern that the global economy is starting to develop small cracks. The US is on bad terms with China, and our stock market has been a wild roller coaster, dropping 500 points or more TEN DIFFERENT TIMES in 2018.
Falling interest rates in December and into 2019 is starting to look like a real possibility. If this economic erosion stays consistent, be prepared to pounce on rates if they fall. One of the global goods to keep an eye on is oil. If oil prices rise, inflation follows suit. For example, a gallon of milk becomes more expensive when the truck that got it to the store had to spend more on fuel. Where are oil prices today? They’re down 30% since this past October. That is a MASSIVE drop in price for the global resource that so many industries and economies rely on. Whether prices have dropped because of increased supply or lower demand… I don’t know… I’m not an expert in that field. The bottom line is that if oil prices continue to slide, be ready to lock those loans.
Look, we’re almost there. We’ve almost survived 2018. This year has tested patience and determination… if you’ve made it this far, lower rates may be right around the corner. Don’t pat yourself on the back just yet – there are still goals to hit and there’s business to be done! The hard work done in December will pay off in January, and a solid January could start you on a path for success in 2019.
Until next week,
Peter
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.