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Ryan Hills: Hi guys, welcome to theREsource nation. We have a special treat for you guys today. Barry Habib is on yet again. Thanks for coming on the show again buddy. We really appreciate you taking time out of your day to hang out with us.
Barry Habib: I love you guys and I love what you all do. I think it's so important. The messages that you have are critical and I'm excited about talking with you today. Yeah, so today we're just
Ryan Hills: conversation, podcast style. I'm just going to rap about a few things that actually we talked about the other day and I was just thinking, I was talking to you. I was like, man, I wish we had the cameras cause the conversation was so good. So we're going to bring a little bit of that up. I also want to give you Kudos man on the show. You were last on an April and you called the 10 year treasury back then. You called it right back in April. You said that rates were going to stay low two shows ago when the NBA and everybody else will say, we're saying they're going to go in the fives, you said they're going to go low, which was very controversial. Here we are, they're low again. You even said on the last show, hey, hold off. This was crazy. That even mean, and usually I'm kinda in step with you. You said, hey, hold off bellows on the roofies and that was contrarion rates are gonna go even lower. And I'm, Oh my God, here we are again, a 33 month low rates when even lower. So Kudos to you, man. You called all those on this show today. And I may ask you to make another one a little bit later on.
Barry Habib: We will, we will have some, some predictions and I'll give some rationale as to why, because the fact of it is, it's not, it's not something that, uh, that's a secret. I think there's good factual basis as to why we see these things unfolding. And based upon that, we'll share that with everybody. Perfect.
Ryan Hills: And I'm putting handcuffs, handcuffs on you today. So we have obviously lender's watched the show, realtors watched the show and we have a big consumer base now that's watching the show. So you can't use big terms like Philip Fibonacci levels. Maybe even the acronyms that we typically throw around. I want you to like speak on a consumer level today. Really distill it down. Okay. Is that okay? Of course we always do. Okay. Okay, perfect. So my first kind of question that I know, and people knew that you were coming on the show, they're like ask very about what the hell is happening right now? And I'm like, and so I'd ask, what do you mean? What do you mean? And they, they brought up, well feds raised rates and then they lowered them. What the heck? And then the Dow is at record highs, but there's a recession coming and then China's manipulating currency. And now Amazon's in our space. What the Hell is going on? Barry?
Barry Habib: Distill it all down for us. Okay, so let's take it a step at a time. So let's talk first about the obvious one is rates. So what's happening with rates? Well, there's a lot of different parts of this puzzle. Okay. So first of all, what are some of the reasons why rates are low? So the main driver of interest rates is inflation. Inflation is very, very low. So just ask yourself why would rates go up significantly premiere, is there a lot of inflation? No. Are we looking at an economy that has pricing pressure, pricing power, no. One, one of the big things that people don't recognize is debt levels in a country. So whenever debt levels go up, it is almost a mirror image that you see interest rates decline. It's like a family that is strapped and does not have any discretionary income because they Bladen themselves with debt.
Barry Habib: Yup. It happened in Japan, in China, in the UK, in the eurozone. And yes, certainly in the United States. And if you look at the charts as debt levels go up, interest rates go down. So if you think that debt levels are going to continue to be probably on the rise, I certainly do with a lot of accomplishing everybody does. That is going to be an anchor on interest rates. It will keep interest rates. No level. Let's remember now, interest rates move in a straight line up or down, right? They're going to vacillate. But if you would have this, this image in your mind of a child with a Yo-yo on an escalator, the escalators heading lower, so while the child is Yo-yo may go up and down and you may have some intermittent roofs, higher. The overall direction is going to be lower. And this is very important for us to understand because if you look over the longer term, I see interest rates lower.
Barry Habib: I see interest rates the lowest they've ever been. We'll talk more about that, but what I also see is that we have to understand this not in a straight line. So there's strategies that we can employ here in the strategy. If you're a consumer, the strategy if you're in a loan officer, is that what you'd like to do here is see if it makes sense to refinance. Now just as of this morning, the data came out that 9.7 million households can not just benefit by a refinance, but the real big number here is if they can benefit by refinance of three quarters of a percent, which is very significant. So you know, roughly speaking. Okay. Roughly speaking for every hundred thousand dollars it's $50,000 a month at three quarter percent so what I would say to you is, is if you think rates are going to go lower like I do rather than completely hold off, well maybe do a refinance now and do it with as little closing costs as possible.
Barry Habib: You remember on our, on our talks in the past, I said, you're not pay up front, am I? That's a stupid thing to do. Do not pay points. That's a stupid thing to do because you will not hold this mortgage for a long period of time. And what will, what I see happening is the mortgage that you're doing for customers today, and same thing I said to you, the mortgage that you do today will be refinanced in the future. Do not think of loans at one at a time. Always think of them as the mortgage you're doing today and when is the next one we're going to be doing. That's how you should be talking to your customers. When I started doing that, it escalated my production dramatically because it tied them in but also gave me much, much more of a advisor role with that customer because not only was I bringing in the life events that that customer would have, getting married, getting divorced, having kids, your empty nest, all those things that occur life-wise but I'm now bringing in my expertise from the economy and able to show them that we're contemplating this to make the right decision for you today.
Barry Habib: So rate is a secondary issue. Rates important, but it is secondary to strategy. Can you note that in cotton textile you said
Ryan Hills: rates are going to go lower and everybody's like, you know, happy. They're at 33 months long. I mean, they're great right now. Can you, what does that mean? Does that mean three and a quarter? I mean, can you make that prediction here? Like, what do you think that looks like? Let's just,
Barry Habib: let's just jump right into it. So, uh, the, you know, a few years back, I called 1.37, a 1.3900000000000001 on the 10 year treasury and everybody thought it was really like psycho. Okay, what's 1.37? So I was pretty darn close. So it's two basis points off, but I see us going lower than that. So if you take a look at today's 10 year Treasury at one 70, um, could we hit the one 20th can we hit one 10 could we hit one? Yeah, it's all really, really possible. But I will promise you that we're going to go beneath that one 39 or one 37 level that we had just talked about. Uh, we're gonna test that level where we may not break it the first time, but we're eventually going to break it because there's too many factors dragging us down. We are going to see recession.
Barry Habib: I know people say, Oh, well wow, how could there be recession? The stock market side, the stock market always goes up prior to recessions. You know, what you really want to focus on and look for is when the unemployment rate starts to take higher. So 3.7% now don't panic it, but it's 3.8 3.9 but if it hits four 4.1 this is a really reliable recession indicator. And then look at the, look at the yield spread. There were inversions. What does an inversion mean? It means that the shorter term maturity is actually giving you a higher rate than the longer term commitments. So it's kind of like you're walking into your bank and you say, I could see a three months CD, a one year or two year, five year, 10 year, and Oh my goodness, that five year or 10 year is not giving me as much interest as the three months.
Barry Habib: So I'm going to put my money into three months. Unnatural. And you're right to think about on the analogy, correct. It's called an inversion. So why do these inversions occur? Well, the inversion is telling you that something is sick. Okay? It's kind of like when you see somebody walk into your office, they got the red eyes, the runny nose, you know, not going to give you a big hug because there's stuff that stick here. Okay? So what the deal here is that longer term maturities care about inflation, because that's going to be around for a short term. You don't care about inflation. Inflation is not going to take its toll, but inflation will erode the fixed payment that you get because it means things will cost more. So if you're getting a fixed payment return, you can't buy as much over time. So when you take a look at your longer term maturities, they care about inflation.
Barry Habib: So what's gonna drive inflation? Well, look, if all of us want to buy, if we all wanted to, to sleep out at the iPhone store at the apple store, because we wanted the latest thing out there, Apple's not gonna put it on sale. Okay? So they're going to charge as much as they can. A strong economy means prices. You're going to be going higher. Softness in the economy means inflation will be weak. We don't have pricing power so because of that it's telling us that the economy is not as robust or as strong as you might think. The shorter term cares about things like the Fed and the Fed at it's present levels. Even with the most recent rate cut is still at least what the bond market's telling us. It's still too high and I'm telling you the Fed is going to cut at least twice more, probably three times more.
Barry Habib: Maybe four or five times is what you get from the Fed and I know nobody's forecasting this that as many times, but you're going to get a series of rate cuts from the Fed. They love doing it. They don't want to do it, but we have to do it because we want to stay competitive currency wise. We want our exports to be okay, we have to do this. The bond market is forcing us to do it. I was going to ask you a question and you kind of already hit it about, you know, the economy being sick with the inversion is a, is that also indicated by the feds wanting to raise rates but not being able to do so and so quickly happening to come off of that, is that our Reese, are we sick as an economy? So, so here's the thing, if you look the, the world is so interconnected today, okay?
Barry Habib: If you look at the numbers in much of Europe, if you look at the most recent numbers that came in Germany, I mean, yes, there is that economy is hurting right now. Same thing in Japan for a long time. China's numbers are appalling. Okay? China is a geriatric ward, okay? Our age is 41 years old. In China, they have the male to female population totally distorted because of bad policies that they had and they are in trouble. Now when we take a look at the United States, we're in better shape, you know, however, we have some weaknesses and when the world gets sick, it's very difficult for us not to catch that cold. Okay. It's women easing and sniffling. Yeah, we are going to pick up some of that. Okay. So what's going to happen is we will see this slow down and we're going to see it from levels that we're actually quite vulnerable.
Barry Habib: We're in the longest expansion we've ever been and it doesn't get longer, but it's unnatural for us to go this long. There's going to be a recession. It's, that's not the call. The call is when. So I've been saying for a long time, the 2020 looks like the date, could it be 2020 could be 2021 could it be 2019 it could be. I'm saying that seems like a reasonable target for one and stock prices can go up leading into recession but then dropped very precipitously between 36 and 50% is what you can typically see during a recessionary period. So just these, you'd be smart. Be careful. When you brought up a great point about the expansion, you snuck it in. I want to slay down there. I think it's 122 months. Is that what like tell him? Yeah. And so guys, we learned this lesson already.
Barry Habib: Oh six oh seven oh eight things don't always go up to various point. Like I think ever. This is the longest recovery ever, right? So at some point too, to your point, like things have to come back down, right? We're cyclical economy and it's only natural for these forces to occur. So as I mentioned before, the yield curve, we started talking about this as a very good indicator. The unemployment rate is the number one indicator. Number two is the yield curve and the yield curve. When you start to see these inversions, it's telling you that you're probably likely to see a recession. It's very accurate. Now, the one that many people look at were already inverted. The three month is higher than the one year, two year, five year and 10 years. So it's a very inverted everywhere. The one year is inverted against the two year, five year and 10 year.
Barry Habib: The two year is inverted against the five year, but not yet against the 10 years. It's only nine basis points difference. You know that was 300 basis points just a couple of years back for you. If I was going to ask you that, it was three. So that meant about that picking round numbers, 10 years for two year at one, that's a 300 basis 0.3% or 300 basis point spread. That's coming down to 200 100 to 50 to 25 now we're nine basis points. Crazy high basis points. So whether we go inverted or not, but here's the thing, if you think about it, and nobody figures this stuff out, we're already inverted and I'll tell you why because nobody is contemplating the uniqueness of what has occurred. We had the Fed unwinding their balance sheet that was known by many as quantitative tightening or QT. If you take in contemplate the effect of quantitative tightening, we're already inverted because that accounts for about 20 basis points.
Barry Habib: So we're already like 10 basis points inverted if configured and nobody's thinking that far down. But you have to think about these things. So we're already inverted there. And when you start to look at these inversions, it is telling you that we are at a point that is a very reliable indicator that probably within the next year you will see at least some sort of recession. Now, recessions tend to mirror the expansion and because the expansion was relatively shallow, the recession will be probably relatively shallow, but still in a recessionary period, the reaction of the Fed is to cut rates. The reaction of interest rates is to drop and mortgage rates historically and and you can rely on this will drop. So you asked me a question, where do we see the 10 year? Uh, what I see in mortgage rates is you more than likely have a very good chance of seeing about a half a percent, maybe a little bit more drop in your 30 year fixed rate wilds than you are today.
Barry Habib: Now remember a lot of people ask this question. They say, well, I see the 10 year having big days. Sometimes with the 10 year really does well and goes down a lot, but mortgage rates aren't following in lock step. Well, congratulations. You finally got it. Mortgage rates do not fall in lock step with the [inaudible]. I've been saying this for, yeah, 25 years. Yeah. The 10 year is a great barometer and it can give you direction. It will give you sentiment. It's great for forecasting direction. You know, if we see the 10 year going lower, one mortgage rates will go lower over time. How much can vary? And there are specific reasons, not just that diaper and locks that, but think about this. When the Fed said we're going to stop quantitative tightening and we're going to now start to reinvest those maturing treasuries and mortgage backed securities.
Barry Habib: The one difference that they made, which they snuck in there, that unless you're really paying attention, is that their re-investment will no longer be in mortgage bonds. The reinvestment will solely be in treasuries. Therefore treasuries get a little extra turbo boost that mortgage bonds don't. So on good days, treasuries will respond better than mortgage bonds too. On bad days, treasuries will be hit softer than mortgage. Bonds are again, right explanation if you have the Fed buying in there. Okay, so we have to understand these things. And then there's the other thing I'm going to try make this simple. It's kind of funny. Crazy name. It's called convexity buy. Yeah. Okay, so here we go. You're ready. I'm a fund manager. You're a fund manager. And if as a fund manager, I have to declare to my investors, if you want to invest money with me, you're not going to say, hey Barry, go and go invested in anything you want.
Barry Habib: You got all that. No, it has to be specific. I give you a perspective that says, here's what I'm going, what you invested in. So I'm going to invest in bonds. I also have to specify the duration because shorter duration bonds give you lower yield, but there's a lot less risk because they pay off more quickly. Longer term bonds. If it's a 20 year or 30 or 10 year, a lot can happen in 10 or 23 right? Much greater risk and you should get a greater return under normal circumstances. Not happening today, but normally. Okay, so if I say my duration is, let's just say 10 years or so, okay. Now, if I say it's between seven and 12 years, my targets ten seven you have to give a little leeway there, right? Yep. So mortgage bonds would normally fall into that category because a lot of times people would have a mortgage for seven years or so.
Barry Habib: Even though it's a 30 year mortgage, you'll, you'll move, right? Pay it off. This is not your refinance. But today with interest rates, not just low today, but expect it to be even lower. It's creating duration to shrink. So if I'm that fund manager, guess what? I can't hold mortgage bonds now because the duration expectation is too short. So I have to actually unwind some positions. But more importantly, what I'm buying with my new funds constantly coming in, can't be mortgage bonds. How do I match the duration? I'm not going to outright sell them. So I have to increase the duration. So what I buy is on the longer end of the curve, I buy 10 years, I might even buy 30 years. So what that means is that money is going into this and it causes a spiral convexity, which means that the more rates go down, the more that rates go down because all these fund managers now have to match duration now start buying longer maturities, pulling longer maturities down foresting.
Barry Habib: That's an interesting, when those longer term maturities go down on the 10 year, invariably gravitate mortgage bonds down too. So we're in a situation of convexity buying. The opposite can happen with convexity selling. When rates go up, you notice that all of a sudden you start getting away from you, right? And you do that. So it's called convexity buying and that's where we're in now. And look, it's a good place to be if you're in the mortgage and real estate business. We haven't talked about real estate, but I hear all these idiots talking about the end of the house and I've heard it forever. I've heard it for the last seven years with all these people. All housing's terrible. I mean, I see it on TV, I see it even in our interest. Please stop it already. Okay. Housing market is really strong. Is a really good levels. Affordability in certain areas is a little bit tougher, but you know, affordability today is better than it was. Rates are helping out of course, but the housing market, there's just too much demand, not enough supply. Do you know the single family market sale family market is underserved by 25% that means there's 25% more demand than builders are putting up. It is simply a supply and demand story. I'm not saying
Speaker 4: we see 25% appreciation. I don't want 25% appreciation, but three four or 5% appreciation. If you understand the amazing, amazing magic of leverage can create tremendous amounts of wealth, so least stop part, and I'm glad you've read my mind because I wanted to say, hey, consumers and realtors, lenders, you just heard a lot and it may scare some of you, but we already spoke about this last time where we pointed out a real estate does well typically through a recession and I'm glad you just said that. So it's not all doom and gloom guys, but I'm going to explain that to you. Okay? What's the bad thing about recession? The biggest bad thing about recession is unemployment goes up. That's the biggest bad thing. So round numbers, we're trying to make it simple. So unemployment rate goes from 4% to 8% okay, that's pretty bad, right?
Speaker 4: So 160 million people in the labor force. So let's just say it's 80 80 million families. Okay, so just to use some numbers. So 4% 80 million in round numbers, 3 million more family. When I said 4% it's because the unemployment rate from going from four to eight so now 4 million families are not working. The last thing I'm going to look at is buying a home. You took them out of the marketplace, right? But do you realize that for every half of a percent drop in interest rates, you're going to get 6 million families that can now qualify for a home that didn't. So it gets overwhelmed by sheer numbers, sheer volume of people now able to buy homes overwhelms the people who no longer want to go can buy all point because now don't have a job, unfortunately. You know? So this is what people don't get. It's so rare that people look at the entire spectrum.
Speaker 4: You have to be, you have to be able to look at the whole picture when you talk about these things, because it is not a simple connect the dots. There is a lot of moving parts here. And the reason why housing does wells because rates drop assiduously, it makes it a much better option than renting it. It makes it much more affordable and it also allows an overwhelming amount of people to come into the market who couldn't qualify for a home, which is great, greater number than the people now who are unemployed and won't buy a home. Love it. Let's switch gears a good Lord. That's a lot of information. I hope you guys, he might have to pause it and go back guys. I'm sometimes I even have to talk in a very, but let's switch gears. Realtors. Consumers take that shock and break it down though.
Speaker 4: They gotta try a lot of information. I love it. I love it. This is why I'm like, we're leveraging you as much as we can today. So, and by the way, I mean, I, you know, and I talked to people who are just some of the smartest minds in the world. You know, I spoke the other day with one of my, you know, like idols is, is, is, is a lacy hunt who is just one of the most brilliant guys in the world, guys turning 77. I was just talking to him. Um, lacy is, he's genius. Okay. And, uh, he feels very, very comfortable with exactly what we're laying out here is, he's big on the debt levels. He's big on the blossoms of money is slowing. He sees a recession, he sees rates going to the levels.
Barry Habib: David Rosenberg, who's a dear friend of mine, I just spoke to him a couple of days ago. He also kind of said, Barry, I completely agree with you. His call is, is for under 1% 10 year treasury. So, you know, that may very well be David's Peter Book far same philosophy on housing, one of the smartest ladies in the world, and housing, uh, Ivy's element. I had lunch with her the other day in New York and Ivy really feels really good about the housing market and what IB setting is that? What we are have been saying too is the housing market is a couple of things. You have to understand. The media screws this up because they don't realize that the housing market is, they look at housing as, okay, the driver of GDP, the amount of sales, you know, okay, maybe that's slows down a little bit, but then we all look at housing the investment, what will prices do?
Barry Habib: So that's how we look at it. But they're looking at something else and what they're say no, it's Poopoo that doesn't affect appreciation. Okay. In fact, when you look at things like I buyers think about this, I buy or populate. Popularity actually can help housing in a very unusual way. It's because they are pulling inventory out of available sales and for a period of time putting on a temporary shelf and making those homes and available until they transfer them. So they're actually actually decreasing and sucking out inventory, which makes you have to bid for the other inventory that's available. It's an amazing phenomenon, but nobody's considering it. The other thing is, is that what I want you to also think about is when, when you have home price appreciation, the way that, the way that we're looking at it here at modest levels, you know, affordability is also something where you don't have to be dollar for dollar.
Barry Habib: So if homes go up at 3%, you don't need an income at 3% because you use 100% of your income right there. There is another point that I wanted to make on, on housing. I just gotta remember where I was. I'm trying to, I'm trying to recall it because there's a lot of stuff I'm trying to think of here, but, but the other point with um, that I had just made with, you know, pulling inventory off the shelf. It is, it is something that we're seeing a decrease in the amount of available homes for people. Yeah. Yup. I mean that's a whole thing. Oh, here's the point I was going to make. I'm sorry, just came back to me. Apologize. And there really is more than one housing market. It depending on where you want, where your price points are. So if you have a housing market where you know, like kind of your entry level home is like $400,000 okay.
Barry Habib: Or or less. That market's on fire, it's view go, good luck. Talk to anybody who's looking for a home in that area. I keep getting out bed, I can't like, you know, they can't even find a home or buy a home. It's really, really tough. Then it's that next level. So let's just say if it was, you know, four or 500 then it's like 500 to 800 or 500 to a million. That's an okay market. It's that upper echelon, that slow. Yeah. That's though, so when you're talking about the housing market, something's hot. Some stuff where you're talking about the top
Speaker 4: third. Yeah, it's slow. Got It. No problem. You talked about that middle third, that next bump up. It's okay. You Press Your House, right? It's going to sell it. You're talking about that bottom third where most of the action is, it's on fire, San Francisco in Seattle. So
Ryan Hills: again, I wanted to switch gears. Thanks for all that Intel. It's, it's almost overloaded. You're like, man, Duh, like you just dumped a ton of information. So I'm switching gears though to loan officers. We had a funny conversation and for consumers and realtors, uh, we sometimes reference a refi versus purchase percentage. And so, uh, let me just explain this to consumers. So typically loan officers will, will serve the purchase community but also help, uh, their, their uh, consumers, their friends, their clients with refinancing, right? And so a healthy percentage is, is a mixture of both. And sometimes the industry will say, well, the person that is purchased, driven and will have a 95, five purchase to refi percentage. And most people would say, that's amazing. Great job. You're helping the purchase community, but very kind of had a different contrarian mindset that we talked about the other day. Can you explain that? Because actually again, you got fired up and this is good. This is really good. We need to hear it.
Speaker 4: So, so listen, if you have that Badge, Oh, I'm 95% purchased, please rethink that. Okay, look, I admire the fact that you want to say, look, I want to serve my realtors. I want to do, but by the same token, don't you want to serve the previous customer? Don't you sat down with that customer, you look them in the eye and you said, hey, maybe I want to be your lender for life. I'm going to take care of it. I'm going to be your advisor. I mean, you don't want to be a one night stand, right you, I mean you want to serve that customer and the only way for you to do that is go back and help that family save a ton of money. Because let me tell you something. If you don't guess what's going to happen, somebody else is going to take that customer because that customer is smart.
Speaker 4: They hear it all over. They know that rates have come down. They know that the Fed's cutting, and even if that doesn't affect interest rates on a mortgage, they're still going to get their curiosity peak. They're going to start making calls, and they're going to do that refinance. They're going to save money, probably not give them the good advice that you would, but guess what? Not only do you get penalized for losing that deal, you kind of deserve to get penalized, but you get an extra penalty because now the next time that they do a mortgage, they are not coming to you, right? They've the best friend on the block. Okay? And you are making yourself so easy to be overtaken by the Fintech companies by not serving your customers. So people get this mistake and they say, well, how do I have to do my realtors and server? Yeah, you do. Yeah. Swat. Guess what? You've got to do both and you've got to do, okay. There's no excuse here. It is no longer acceptable to just know how to fill out a mortgage up and consider yourself a mortgage professional. I know how to read a tax return. Good for you. So I'm just gonna get her [inaudible] computer. You have to decide to take that next step up and guess what? You're going to have to work hard. Okay.
Ryan Hills: I loved it. You called it out lender for life guys, we, we've used this as long as I've been in the business and you made a great point. I like punch me in the face even though I had the same conversation, oddly enough, two days earlier with my entire team. Kind of having a similar conversation. But yeah, lender for life
Speaker 4: guys, mains exactly what you said, lender for life and various said, we gotta be looking out for their best interest. Do that doesn't mean we ignore the, you know, the purchase business at all. You gotta do both and that, and that's what preserves you from the Amazon's and the quickens of the world. You gotta work hard. Look, it's a beautiful day. Want to go play golf? Sorry. Sorry. No, stop it. No. Nine months ago when you're, when you're playing solitaire at your desk. Was that really, that was the time. Play a lot of golf. Yeah. You don't want to miss the opportunities. When they're in front of you. Okay. Have to have him balance. Don't be balanced work-wise. When it's slow, take more time off, goof off more. Have a great time. But when you have an opportunity like this, look, if you said to the, to the financial gods and the mortgage, God said, oh my goodness, I just wish I had.
Speaker 4: I just wish I had a good housing market and low interest rates. And then one more that nobody thinks up. I wish that my clients on my refinances had a ton of equity, strictly refinance amount in bed. My, I could do amazing debt consolidation. It would be easy to qualify them. Please give will you got it? Yeah. You got all three. You would hit the trifecta and you're telling me you want to go play golf or take a beach day or take or whatever. Are you kidding me? You don't have that. Prayers have been answered. Yeah, you do not. Your prayers have been answered and now what are you gonna say? Sorry, I'm not interested. Yeah, not enough. Oh. Also purchased demands higher than than supply. So there is of course exactly that. You're right. So you know what you're going to do. There's going to come a time when it's not like this and you say, well, I wish it was like, I wish I would've done more.
Speaker 4: Don't do that to yourself. That's when the universe backhands you and says, I already gave you that. Exactly right. You have it. You have it. You can create so much wealth for your family right now. You could do so much good for your customers right now. You can build your reach and your business into the future so that you know what, when it gets slow, your customer database and your reputation will be so strong that you can withstand the slow markets and you'll have an enormous nest egg to help you. This is the time to work like an animal right now. I am so glad you said that. I I, I would chop down the show to that last two minutes if I could because that's amazing and it's, it's what we need to hear. Another controversial topic that I've actually stayed out of. I've had people try to pull me in a few times.
Speaker 4: I kind of want you to talk about it, banker versus broker and before you answer all I've heard today it was opportunity, opportunity to realtors, consumers and loan officers. Nothing but opportunity, which is really kind of my thought on banker versus broker. There's a bigger thing happening there and there's opportunity for all of us. I've stayed out of it. How do you feel about stayed out of it as well? Because I don't really want to get in the midst of it, but I will say this. I love brokers and I love Vegas. They both do a great job. They, they're both awesome. Okay, amazing. You don't fashion, you think about the growth of the broker. You got to give Anthony costs so much credit. I mean he's such a great champion and he has rally brokers and done so much for them. I mean, I know Anthony, I think the world of him, he is such an incredible guy.
Speaker 4: He's so giving, like he, he works so hard on behalf of the brokers. Like they are so lucky to have an amazing leader like him. So he is just doing an incredible job. The big picture that I want everybody to just think about though is that yes, we all compete. Of course everybody's competitive, right? So you can be broker, verse bank, or even in the broker community, you compete for a loan, right? Or The bank, if you compete, everybody's competing for that. Look, there's only one person that gets along. There's no second prox right now. You can't second Greg got gotta know more. You know, it's gonna take off. So, but here's what I want everybody to please understand is that, you know, your brothers and sisters, brokers or bankers, these are all good people, number one. Okay. And the real enemy that I'm worried about is the fintech companies.
Speaker 4: Cause they look 100% of Richard Barton pretty much a said wants to eliminate you. Okay? And he did it to travel agents. Yeah. So, you know, Richard Bart, if you don't have a CEO of Zillow and he's a genius, he's brilliant. I mean, these are really smart people with no shortage of funds to back them up that are better trying to take your business away from you. So how do we do it? You know, we've gotta be smarter, we've gotta be better and serve our customers and our real estate agents, you know, to the best of our ability. Yeah, yeah, I do. I love both sides. I look at, uh, independent mortgage bankers and brokers as it, as you said, brothers and sisters competing from business friendly. But d I agree, man. We have a bigger competitor that has way more money than any of us combined, so they leverage that.
Speaker 4: It's going to be a different world. And so I think we should, you know, work together to fight against those fintechs. I'm glad you called that out as well. Yeah. Yeah. I mean, that's an, that's an important thing. You know, like I said, brokers, bankers, they're all such good people. You know what I mean? There are good people out there. Um, I do think that it's very important for us to understand that the way that we're going to protect ourselves from this onslaught of Fintech is to truly be an advisor and not the bs of putting it on your name tag and calling yourself on. You can't give what you don't have. And if you want to give advice, you really have to have it. The other thing that drives me nuts is I hear it all the time. Rates come down, down, down, down, down, down, and you get one day when rates go up and I see it all over social media.
Speaker 4: That's why I lock everyone I'd ever think, are you freaking nuts? Okay, very unfiltered today. I love it. We will you please stop it. Okay, cause how does that strategy, how many pissed off customers do you have right now? How many pricing exceptions have you had to put your company through and how many transactions that you lose because you locked your customer out at a horrible rate and rates have come down dramatically and now they're smart and they're seeing it and they want either out or lower rate. How are you handling that? Wouldn't it be a lot smarter to instead of being a robot that can be replaced by Fintech by the way, be an advisor. Just remember this by definition, the less advice you give, the less of an advisor you are. Yeah, and I will tell you need to be more of an advisor today.
Speaker 4: Not less of one. You need to up your level of education. I'm not saying you need to be an MBS. Why we subscribe just up your level of education so that you can advise that customer. You need to understand the financial markets. You need to understand them. How do they say that again? Cause that was great. The less of the advisor, the less of the advice you give, the less of an advice you, I mean that's, that's factual. That's by definition and everybody, I mean I've, I'm traveling next month to speak in Idaho about what we can do against the fintechs. There you go. I mean that's going to be one of the top answers, right? Like if you, if you want to set apart yourself, you know that's, you have to be an advisor and you've had even on the show several times explaining that exact point.
Speaker 4: So I love how you wrap it up. Find up of whom they're going to choose. Right. And they pick their mind up of whom they are going to choose in the first five minutes. Okay. You know, one of the, one of the many, many reasons you are so, so successful is because when people talk to you right away, you get, they get a great feeling and they know you're super smart, okay. And they know you can help them because you, you've put in the time and the knowledge and the education to be able to give you, you have so you can give. Okay. But you have to put in that work. You have to put in that knowledge and education because in the first five minutes when that person makes the decision whether they want to do business with you or not, what knowledge have you imparted to them?
Speaker 4: W if you have, you just talked about qualifying because they get that anywhere or you talking about the financial markets. Where do you think rates are going? What about the recession? What about the yield curve? Why is the wants so important? We haven't talked about that, but you know what can, what can we do to understand that and explain all of these events that they're dizzy by, that they don't really get, and then they hear you on the phone explaining it. It's like, oh my goodness, what am I going to miss if I don't do business with you? Yup. And, and look, even if your rate is not the best rate, there'll be more forgiving and root for you to try and win them over. And even if your rate is the best rate, if they don't get that good vibe from you and they're not learning from you, they'll try and pick you apart.
Speaker 4: I mean, that's just the way we are thinking about anything you bought with any salesperson you work with. Either you're rooting for them or you're not. How do you root for them? Trust through knowledge and trust through truth and realtors watching everything. Barry just setting that we talked about was kind of in that lending space, but it all is 100% true for you. You guys just had Amazon come into your space and so you have to answer this question as well about what sets me apart. Everything you just heard applies to you as well. So if you need to rewind and rewatch that, please do so because it's true for realtors and lenders and consumers watching. That's why you want to work with professional and in your local real estate or lending market. That's exactly why versus a computer. Uh, you know, that's Amazon or Zillow cause that's exactly what you get is just a computer versus an actual trusted advisor in your community that has the wellbeing of the community and yourself that you know right there, small as beautiful.
Speaker 4: They care about the town, they care about you. They got to see a face to face. They're not across the nation and you know it's an actual person. So to, by the way, this applies to both real estate prices as well as interest rates is what's going on in China. What's going with currency battles. Yeah. So I'm just gonna try and break it down very quick and make it simple. So it takes right now about seven Chinese yuan. That's what their currency is or written by, but let's call it the yuan. A two by one US dollar. And that's a lot weaker. It used to be just a little over six, it's gone to seven. So think about how smart China is. Okay. So China, it used to take like six and change to buy one USS. Here's a 10% terror. Why did the U s put a 10% tariff on?
Speaker 4: Because that would make Chinese goods more expensive to purchase for us, right? So that means instead of buying Chinese goods, I'll buy either from another country or maybe, hopefully domestically. That's the whole idea behind stop entire cycle. So China says, well, that's okay. We'll just devalue our currency 10% and negate the effects of the tap right now that has a lot of implications. So how do they negate that? Well, they put more you want into circulation and they fix a price point. Now they fixed the price point over 70 a little over 71 which means it takes a little bit more than seven. You want to buy $1. So what that means is, think about this, if you're from China, like 15% of the California market was purchased by Chinese, 15% of the upper end of the market, 15% one out of, that's crazy. Seven homes, that's a lot.
Speaker 4: Yep. It just costs you 10% more to buy that home. Think about that. And that's why you see a little bit of a slow down in that market from the Chinese buyers. Okay? Because to bring your money over, you're not getting as good as an exchange rate. So if it's real estate, if you're listening, now, why is that so important for us is because, so when, when you weaken your currency, it makes your exports able to be more affordable. And we'd like that in the United States. So how do you do that? One of the things you have to do is lower interest rates, and that's one of the reasons there's so much pressure on our central bank to cut rates. Surgical nail is relatively strong, so the Fed will will continue to cut rates because it's a war. Philippines just did it. Thailand just did it.
Speaker 4: India just did it. You have these countries and they're doing greater cuts, more aggressive cuts, and this is going to continue to happen. Interest rates in Germany just went to their lowest rates on the tenure in history, greater than 50 basis points. So think about this. You want to put your money away for 10 years, you've got to pay them a half of a percent. Here's my money and here's a half a percent presented. Take it. Okay, they're still losing mortgages out there with zero or even they will pay you, they will pay you interest on the mortgage. Now you stuff that pay principle, so you're still writing a check, but it's the principle less what they give you back to crazy. Crazy. Yeah. Well, could interest rates go to zero in the United States? I think it's a bit of a stretch still, but it's not an impossibility. But the key that I would look for is around that 1% 10 year level. I think that it is a very real possibility to see that because look at every place else in the world, you know, in the UK,
Barry Habib: where are they? 40 basis points. We've got $15 trillion of negative interest rates around the world. You look at where we are and you look at Switzerland, you look at Germany, you look at Japan, you look at, you know, there are so many places around the world where interest rates are interest rates look like, oh my gosh, 1.7 is tremendous compared to all these other countries. So what happens is money flows into the u s makes our dollar stronger. We've got to cut rates to stop that.
Ryan Hills: That's great interview man. This is Fox, CNN newsworthy for sure. Uh, I loved it. Thanks so much for your time, man. I gotta wrap you up there. MBS highway is money and it's always been good, but things are so crazy right now. It's even better than it has been. So if you're a loan officer or realtor, definitely check out MBSI if you don't have it already. I mean, if you are, if you work for a company that doesn't have, and I encourage an enterprise relationship.