What Goes Up… Must Come Down

What Goes Up… Must Come Down

You may or may not have been alive when these opening lyrics from the song “Spinning Wheel” by Blood, Sweat and Tears was released. It was December of 1968, and the average mortgage rate for a home in the United States averaged roughly 7.5%. Over a decade later in 1981, average home mortgages peaked at an all-time high of 16.63%!

Fast forward to today, on the heels of an aggressive series of rate hikes to counter inflation, the fed, last month, hiked the benchmark interest rate again by .75% points.

But then a curious thing happened.

The following day, mortgage rates turned sharply lower.

The most popular mortgage—the 30-year fixed rate—fell from 5.54% to 5.22%. By Friday, it had dropped to 5.13%. In the days leading up to the Fed announcement, volatility was relatively muted, with rates receding from their mid-June high of 6%.

While this was happening, the Gross Domestic Product report (GDP) was released by the Bureau of Economic Analysis highlighting that the U.S. economy contracted for the second straight quarter, a hallmark of a recession.

The average mortgage rate for a home in the United States is roughly 7.5%

As expected, investors flocked to the bond market for protection, which caused a drop in yields. With mortgage rates fairly tied to 10-year treasury bonds, mortgage rates also dropped—faster than the yield on the risk-free bonds.

While it may seem contradictory, if the markets continue to see a steady stream of economic gloom and doom data, mortgage rates may continue to plunge.

What does this mean for home buyers? Are we entering a “new normal,” which includes levels of volatility within the mortgage space not seen in a prolonged period?

The unpredictability in the mortgage markets has coincided with a cooling off period for home prices. Much talk has been made about the “air coming out of the housing bubble,” but we’re not in a position to be sounding the alarm bells just yet. Even with the average 30-year fixed-rate mortgage finishing around 5.30% in July, down from the June highs of almost 6.10%, new purchases are still tapering off. By the end of June, Morningstar has confirmed that home pricing growth has declined for three straight months.

Mortgage originations are still adjusting from the recent market volatility. For the fourth straight month, rate-lock volume and cash-out refinancings dropped from the prior month and year over year. The decrease in the purchase lock count has dropped to pre-pandemic levels.

The biggest concern is the overall fears of buying a home in a recessionary environment.

The issue of new home buyers isn’t inventory, location, or interest rates. Its affordability.

Affordability is the real issue. With the average purchase price among homes dropping in July by approximately $10,000, this follows a normal trend of loss of buying power, which often occurs in a rising rate environment. Affordability is a real issue, as buyer’s credit scores have also fallen during this time frame.

The song’s name “Spinning Wheel,” sums up this environment in its entirety. Home buyers and those looking to refinance may indeed feel like they’re spinning their wheels trying to wait out the unprecedented series of rate hikes.

It could be worse. They could be playing The Doors’ “The End,” but then again, I’m dating myself. Maybe REM’s “End of the World As We Know It” might resonate better, but it doesn’t inspire a tremendous amount of confidence in the market environment!

 


EARNINGS DISCLAIMER

Earning and Income statements made by our company and its customers are supplied directly from the company or customer. Any and all claims or representations as to income earnings made on our web sites or in our materials or information are not to be considered as average earnings. There is no guarantee that you will make these levels of income — in fact, most people do not — and you accept the risk that the earnings and income statements differ by individual. Individual performance depends upon each customer’s unique skills, time commitment and effort. Our programs are not designed or intended to qualify individuals for employment. Our programs are avocational in nature and are intended for the purpose of the personal enrichment, development, and enjoyment of individuals.

Past performance is not an indicator of any future results. All investments contain risk and may lose value. Any historical returns, target returns, expected returns or probability projections may not reflect actual future performance. Investors should not rely on forward-looking statements because such statements are inherently uncertain and involve risks. While the data we use from third parties is believed to be reliable, we cannot ensure the accuracy or completeness of data provided by investors or other third parties. We do not make any representations as to the accuracy or completeness of the information contained on this website and undertake no obligation to update the information. Neither Secured Investment Corp. nor any of its affiliates are registered investment advisors or broker-dealers and do not provide investment advice. No communication from Secured Investment Corp. or its affiliates through this website or any other materials is intended to be or should be construed as investment, tax, financial, accounting or legal advice.

THERE IS NO ASSURANCE THAT ANY STRATEGY WILL SUCCEED OR THAT ANY PROGRAM WILL MEET ITS INVESTMENT OBJECTIVES.

Secured Investment High Yield Fund II, LLC is open to “accredited investors” only, through an offering made in accordance with Regulation D, Rule 506(c) of the Securities Act of 1933, as amended. In purchasing securities through a 506(c) offering, we are obligated to verify any participating investor’s status as an “accredited investor” in accordance with Rule 501 of Regulation D.

Circle of Wealth Fund III LLC has filed offering circulars and may make additional filings with the Securities and Exchange Commission covering its current offering of membership interests. Each investor should carefully consider the risk factors and other information discussed in the qualified offering circulars (including any amendments) before purchasing membership interests. The Offering Circular and other supporting documentation may be found at: https://www.sec.gov/cgi-bin/browse-edgar?CIK=1762825

 


NMLS #160709 • Please click here for the Secured Investment Corp NMLS Consumer Access Page

Secured Investment Corp and its members, officers, directors, owners,  employees, agents, representatives, suppliers and service providers provides this website for informational purposes only. By using this site, you are subject to our Terms of Use and our Privacy PolicyPlease read these carefully before proceeding. In exchange for using the site, you agree not to hold Secured Investment Corp, our affiliates or any third party service provider liable for any possible claim for damages arising from any decision you make based on information or other content made available to you through this site.

Neither Secured Investment Corp. nor any of its affiliates are registered investment advisors or broker-dealers, nor do they provide tax or financial advice and do not represent in any manner that the outcomes described herein will result in any particular tax or financial consequence.

The information on this website does not constitute an offer to sell the membership interests identified herein in any state or jurisdiction in which the issuer is not qualified to do so.

THERE IS NO ASSURANCE THAT ANY STRATEGY WILL SUCCEED OR THAT ANY PROGRAM WILL MEET ITS INVESTMENT OBJECTIVES.

All investments contain risk and may lose value, and any investment with Secured Investment Corp is considered speculative. There are no guarantees of distributions or returns, and an investor may lose all or a part of their investment. Past performance is no guarantee of results, and any historical returns, target returns, expected returns, disclosed rates of return, disclosed earnings statements, or probability projections may not reflect actual future performance. Investors should not rely on forward-looking statements because such statements are inherently uncertain and involve risks. Any reliance on figures presented is done so at the investor’s own risk. Secured Investment Corp cannot guarantee that investors will achieve similar returns as prior investors.

Secured Investment Corp encourages investors to invest carefully. All investors are advised to fully understand all risk associated with any investment the investor may choose to make. Accordingly, you should consult with your own attorneys, accountants, and other professional advisors prior to making an investment. The Fund files audited annual and unaudited semiannual financial reports which are available for review here.

Circle of Wealth Fund III LLC has filed offering circulars and may additionally post-qualification amendments (including supplements to such filings) with the Securities and Exchange Commission (the “SEC”) covering the current offering of membership interests. An investment in membership interests entails risk of loss, and you may lose all or part of your investment. Each investor should carefully consider the risk factors and other information discussed in the qualified offering circulars/PQAs (and current supplements, if any) before purchasing membership interests. For more information on the Risk Factors and Cautionary Notes of investing with Circle of Wealth Fund III LLC, please click here: http://las.cogo.membership.site.s3.amazonaws.com/COW/COWIII-RISK-FACTORS.pdf

Offerings by Circle of Wealth Fund III LLC: The Offering Circular is available here: https://www.sec.gov/Archives/edgar/data/1762825/000173112220000349/e1852partiiandiii.htm

Generally, no sale may be made to you in this Offering if the aggregate purchase price you pay is more than Ten Percent (10%) of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, Investors are encouraged to review rule 251(d)(2)(i)(c) of Regulation A. For general information on investing, Investors are encouraged to refer to www.investor.gov.

A copy of these materials may also be obtained for free on the SEC’s website at: https://www.sec.gov

The information above presents a general summary of the business and the purpose and principal business terms of an investment in the Company. This summary does not purport to be complete and is qualified in its entirety by reference to the more detailed discussion contained in the Offering Circular.

Photos of real estate assets depicted are not part of this offering. These are representations of past transactions conducted and underwritten by the Secured Investment Corp. management team. These transactions are representative of the types of transactions and assets that the Fund will be participating in.

Articles or information from third-party sources outside of this domain may discuss Manager and/or Company (or its affiliates) or relate to information contained herein, but Manager and/or Company and its affiliates do not approve and are not responsible for such content, nor does Company make any representations as to the accuracy or completeness of the information contained on third-party websites. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by Manager and/or Company or any of its affiliates of the linked or reproduced content.

Neither the SEC nor any state securities commission or regulatory authority approved, disapproved, endorsed, or recommended the merits of the offering described in the Offering Circular or reflected on this website.

Manager’s and/or Company’s services do not constitute “crowdfunding” as described in Title III of the Footer 3e Jumpstart Our Business Startups Act (“JOBS Act”).

Subscribe to the Lee Arnold YouTube channel