Come To Find Out

Navigating Economic Waves: Brendon Bland’s Insights on Inflation, Interest Rates, and Smart Homeownership Strategies

• Sarah Thress • Season 2 • Episode 28

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Unlock the secrets to navigating our fluctuating economy with insights from Brendon Bland of Neighborhood Loans! This week on Come to Find Out, Brendon uncovers the intricate ties between inflation, interest rates, and the broader economic landscape. He explains how high inflation hampers the possibility of low mortgage interest rates and delves into the Federal Reserve's pivotal role in managing inflation through adjustments to the federal funds rate. We also tackle the often-misunderstood term "recession," clarifying that not all recessions equate to economic doom. Brendon expertly breaks down these complex concepts, giving you a clearer understanding of how the Fed's strategies impact your daily expenses.

Looking ahead, Brendon shares his predictions on how falling interest rates could shape the housing market. With potential rate reductions looming in September and December, and further cuts expected next year, it's crucial to plan strategically. Brendon emphasizes the importance of forming a strong team and consulting with experienced professionals early on to stay competitive. For homeowners considering refinancing, timing is everything. Tune in for Brendon's invaluable advice on how to navigate these changes and make the most of decreasing rates in a competitive market.

To connect with Brendon:
Brendon Bland
614-747-3530
bbland@neighborhoodloans.com
https://www.instagram.com/mortgagemademodern/
https://www.facebook.com/brendon.blan

Sarah Thress
614-893-5885

First Time Home Buyer course: https://sarahthress.graphy.com/
Instagram https://www.instagram.com/sarah_thress_realtor/
Facebook https://www.facebook.com/SarahThressRealtor/
https://www.youtube.com/@LIFEINCOLUMBUS

Sarah :

Hi and welcome to this week's episode of Come to Find Out. This week we have Brendon Bland with Neighborhood Loans, and if you have listened at all before, you know that he is a returning guest of mine because I love all of the content that he shares and all of the knowledge that he drops. And if you haven't taken my suggestion to follow him on social media yet, please do, um, because he dropped a really good like gem the other day and it really, um, you know, kind of caught my eye because he was talking about, um, you know, with interest rates and McDonald's and the economy and like how does this all like work together? So, um, of course I had to reach out and be like hey, could you come on and like talk about this? Um, and if you have paid any attention at all to the news, which I'm sure you have, you saw that interest rates have been going down, yay.

Sarah :

Which we're all very, very excited about. So, of course, um you know, later on I'll ask you for your, your predictions. Brendan, thank you so much for joining today, yeah.

Brendon:

Thanks for having me again. I appreciate it.

Sarah :

Yeah, of course. So, um, I'd love for you just to you know, kind of dive in and tell us about um you know, because obviously we're hearing all of these things in the news. We're hearing all about, um you know, interest rates and we're hearing about inflation and we're hearing about recession and we're hearing about recession and we're hearing about all of that stuff. So I think you do a really good job of kind of breaking it down and explaining how these things all go, so I'd love for you to do that for us.

Brendon:

Well, yeah, thank you. I try to make sense of the unsensible sometimes because, yeah, there's a lot of information that's flying around and I think it's hard to kind of put it all together and figure out what actually is happening or what to do. So, um, but yeah, as we're thinking about rates and what's going to be happening here over the next three, six, nine months, maybe the next year, um and I think we've talked about it a couple times, um on previous episodes the biggest thing that's driving rates and it's been driving rates the last couple of years is inflation. So when things are more expensive, it makes it challenging in the rate market, because high levels of inflation are the enemies of low mortgage interest rates. So when we see high inflation, we expect rates to also be higher, and basically the reason that is is because rates are getting raised to fight the inflation.

Brendon:

Anytime we see high inflation, that means there's overspending and the cost of goods are too high. So we need to bring the cost of goods down by lowering demand, and the way you lower demand is by getting less people out to buy those things. And so one of the prevailing beliefs is that if you raise rates, people will spend less money. So that's what's been going on the last couple of years. And the Fed. They have a couple different responsibilities in this, one of which is to keep inflation under control. Their target is always to keep inflation at, or ideally below, 2%, meaning that the cost of the things we buy every year shouldn't get more expensive than 2%, more than what they were the previous year. The past few years that's not been the case, which we can all see and feel.

Brendon:

Yeah, whether it's your insurance, it's the cost of eggs, it's the cost of cars, it's the cost of everything's been more expensive, so it's it's definitely a worthwhile battle.

Brendon:

They've been fighting to try and get the things that we buy every day to be more expensive, but you know the cost of that is, you know, on on the rate front, you know rates are higher, and so if you're trying to buy a house where houses are more expensive, well, the financing is going to be more expensive too, and that's what's been going on.

Brendon:

So for rates to go lower, we need to see that inflation is getting under control, because the Fed has a very real way that they impact a bunch of financial instruments. But one of the things that they can do is they can lower their what's called the federal funds rate, which in turn eventually has an impact on mortgage interest rates. They will do that when they feel like they're winning that battle to get inflation back down to 2%. They would also do that if they feel like the economy is starting to kind of slip backwards, meaning jobless claims are going up, there's more unemployment, things like that. If they feel like the economy is starting to slip backwards, we're not growing as fast. That's also an indicator to them that, hey, we need to lower rates again because we don't want the economy to slip. You know, when I say into a recession, I think recession is a hot button word. Um.

Sarah :

Oh, it's such a hot button word and I feel like when I heard that the other day, like someone was like oh, our unemployment is up and oh, you know um. You know interest rates are coming down and you know inflation's coming down and all of that stuff. You know, it just uh, you know I'm I'm thinking. Haven't we been in a recession?

Brendon:

Yeah, there's a technical definition of a recession that I'm not going to quote it now because I don't want to misquote it, but there's a technical definition of what a recession looks like. No-transcript. But um, we remember that recession and we and I think there's some fear that, like, every recession is like that and that's just not the case.

Sarah :

It's not.

Brendon:

Yeah, there's in, listen in, in our economy there's going to be natural times where there's a lot of growth and there's going to be natural times where there's not as much growth and during those recessionary periods that doesn't mean that the sky is falling, it just means we're not growing as fast, but kind of getting back on track. The Fed their job is to make sure that if we do get into a recession, it's limited in terms of the impact and ultimately, that we get back into a position where our economy continues to grow. So, um, all that to say, how does you know to your point mcdonald's playing, yeah, so, uh, basically, I made a video just kind of explaining. So mcdonald's recently, uh, at their most recent like earnings report meeting with their shareholders, reported that they actually saw sales decline um year over year and quarter over quarter for the first time in a very long time. Um, obviously mcdonald's is not in the business of losing money or not in the business of not growing. I mean, that's just not how they want to operate. And the reason that they cited is that, yeah, the costs to consumers have gone up and their core demographic of buyers have stepped away because they didn't see the value in McDonald's. They didn't see the value in what McDonald's is providing, because you know, I don't know about you when I think about going to McDonald's and I want it to be, of course, good service and good food, but I want something that's hopefully going to be relatively inexpensive. Yes, for a lot of people it wasn't inexpensive anymore until they saw those sales decline. So their plan and what they announced is basically hey, we're going to extend more value, more deals, we're going to potentially cut prices, and that is good news for consumers.

Brendon:

But I think, on a more macro level is when we see some of the biggest companies in the world reacting to hey, we're not getting as much market share, so we need to do something, and that something has to do with the cost to our consumers and improving that in some way, shape or form. That is good news that you know. One, that the work that is being done to get inflation under control is working, and two, that the market is trying to correct itself. So the combination of what the Fed's doing and consumers basically saying, hey, I can't do that anymore, is working to bring inflation down. So when we see McDonald's is making those moves, that's a good indicator that inflation, hopefully, is going to be starting to get under control and then ultimately, rates in turn will get under control as well. So I just think that's kind of like a cheeky example of what's happening and what we're seeing right now, which is we've had some reports recently that show that inflation is cooling and we've also had some reports that unfortunately show certain sectors of our economy aren't performing as well and jobless claims are higher. So all of that kind of coalesces into the Fed saying, hey, we need to change our position on how we're doing things.

Brendon:

Which kind of getting ahead of myself, and maybe the prediction is hey, in September the Fed is very likely going to cut the Fed funds rate, it's going to reduce it, which there were several meetings in a row where they were increasing rates, increasing rates, increasing rates, and that's why we saw mortgage rates go up.

Brendon:

So this would be the first time in quite a few years where we'd actually see a rate reduction from the Fed, which, once again, we would expect over time will have an impact on mortgage rates.

Brendon:

And I think the big thing you know is that it's not really going to stop there, right?

Brendon:

Because you know, as once again the Fed continues to try and regulate inflation softly, make sure that we are doing okay if we do go into a recession, or maybe avoid a recession.

Brendon:

That's going to continue on through this year into next year, and so we would expect that, as you continue to hear more about inflation getting under control or potentially you hear certain sectors of the economy not doing as hot, we would expect rates to continue to go down, which obviously presents some opportunities. Um, you know, in our world where hopefully we can get some, you know we get some people into a better spot they're financing and maybe make things a little more affordable, and then you know it also once again we've talked about this could also drive some competition up. So kind of a double-edged sword there. But I think that's really the big thing that's happening right now is we've seen some rate reduction, because some of those things I was talking about earlier have kind of come to a head and we've seen rates pull back and we expect that to continue to happen over time here over the next several months, into the next year.

Sarah :

So, yeah, I love that Well, and I for one. I'm really really hopeful that inflation helps grocery prices come down. Feeding a family of four teenagers, two of those being boys, uh makes for a very, very expensive weekly grocery trip.

Brendon:

So I can. I can only imagine I can. I spent a lot of money at the grocery just myself. I like to eat, so if there were four of me, that that there would be trouble right.

Sarah :

But, um, you know, obviously, like I personally would love to see that, but I also I love seeing that interest rates are going down again, because I think it gives more confidence to especially our first time home buyers, which you and I are so passionate about helping. Um, but it also is going to help those sellers that have been like hey, I want to sell, I want to, you know, move on or whatever, but I don't want to give up my 3% interest rate for an 8% interest rate, so it's making it a little bit easier for them. So then we're going to have, you know, I think it's going to help us with a lot of things because we haven't had enough inventory for a long time.

Sarah :

So it's going to be again a double-edged sword, like we've talked about. So, yes, we're going to have more inventory, but we're also going to have more competition, because those buyers that have been waiting for, you know, the sky to fall and rates to drop and all of that they're going to jump back into the game. Or maybe they were priced out with those interest rates the way that they. You know that they have been in the sevens and eights and whatever that.

Sarah :

You know that affects the buying power. So now, with them coming down, their buying power is going to get better. But again, like we've said, you know a hundred times, if you've listened to this podcast, um, you know it's great when rates come down, but, uh, that means more competition. So, um, you know it may mean having to go, you know, to do more than likely.

Sarah :

You're going to have to make an offer over asking You're going to have to bring something else to the table to be chosen for it because, you're going to be up against, like multiple people.

Brendon:

Yeah, and I think that's why having a good team around you is so important and not trying to go it alone and not trying to not waiting to start the conversation, cause even if you know you're, you're listening to this right now and you're like, hey, um, for various reasons, I'm not ready, but maybe I will be in six months, maybe I will be in a year, um, I, I just think having people in your corner who, like this, is what we do all day and we see it every day and we kind of see the trends, um, just having someone who can kind of let you know where you sit now and what's coming, you'll just feel a lot better and more prepared for whatever the market holds right, because every market is going to be a little bit different, every season is going to be defined by different opportunities, different challenges, but certainly, once again, I think, with rate improvement in general, I think that there's obviously a net benefit to everyone.

Brendon:

It's just yeah to your point. There's going to be some new challenges potentially to address at the time, but, like I said, if you have a good team around you, you'll be able to set up a plan to be successful.

Sarah :

So, yeah, yeah, I like that. Okay, so I know we've done this on past podcasts where we disclaimer do not have a crystal ball, so do not.

Sarah :

You know, come back to us and you know a couple of weeks or a couple of months or even a year from now, and say you said, cause, we're just predicting what, based off of the information that we have at this moment of recording what we are predicting. We have at this moment of recording what we are predicting. So what are you I know you mentioned you kind of predict that, um, you know the fed will lower the rates in, um, you know, in September, what do you think? Uh, like the election and you know, like all of that, do you think that's going to impact it? Do you think it's going to continue to go down, or do you think we're only going to get you know, potentially, that one rate drop in September?

Brendon:

Yeah, I mean, I think we're almost certainly going to get this rate cut in September. At this point, it's most people who talk about this for a living, like you know, at the at the federal level, national level, it's, it's basically done. It's it's you know. In fact, the reason that rates have gone down now is because the basically lenders and the market, the rate market have built in the expectation that that that the Fed will cut their rates in September.

Brendon:

So if they didn't, um, that would be a shock kind of to the system. So so all all all that to say is certain, it's almost a certainty that they're going to do this in September. I am of the belief that they will do it again in December as well, because they'll meet again in December. Because if we continue to see the trends that we've seen once again with inflation, with some of the economic factors that we talked about growth and jobless claims and things like that they're going to be compelled to do it again, which, once again, what that would probably mean is that before December, we'll see rates drop a little bit more ahead of that. If that's the belief, and then, as we head into next year, I don't think the job will be done.

Brendon:

I'm of the belief, and a lot of folks who I talk to who are in similar seats as mine, and people who want to be smarter and talk about this more than I do there's a belief that, once again, this will continue into next year too. So I would expect rate cuts now through the end of the year and for that to continue into next year to a point. How long, how much, hard to say, but I think we are at the beginning of it, not at the end, but not in the middle. So that's good news. There's a lot of runway here, lot of runway here. So, um, you know I I would expect you know this if we're looking back on this this time next year, we're going to be in a in a much better position from a rate perspective than we are right now. So that's that, that's what I predict, um, and I think that's really good news for a lot of people.

Brendon:

I also think, too, if you're listening to this and you're a home owner, and you've purchased a home in the last few years and you're like, yes, I cannot wait to refinance.

Brendon:

I hear you. I would suggest, if you had a good lender who helped you with your purchase, talk to them, get a plan. Doing your refinance at the very first possible moment, like right now, may not be the most beneficial thing for you because ultimately, rates will continue to go down very likely and if you do something too soon, you might be compelled to do it again, and there's always going to be a cost to doing a refinance. You just want to make sure that you're getting the most bang for your buck, I guess, is what I would say. So, if that's, you, have a conversation with the lender who helped you out, if they did a good job and took care of you on the purchase, let them know that, hey, you're interested and build a plan. If you don't know your lender, if they haven't called you at all or you're not sure who it even is then feel free to give me a call.

Brendon:

I'd be happy to help and kind of chat through that with you. Yeah, but, um, but definitely like yeah, you know. Once again, if you're excited to refinance, I get it. Um, let's make sure that you're you're getting a plan in place um to to to take advantage of what's coming the best way possible.

Sarah :

Yeah, absolutely, if you liked your lender. You know, obviously I think you're phenomenal andI want everyone to work with you but if somebody already has a relationship with their other lender, um, you know, definitely also check to see if they had any type of free refinancing within a certain amount of time. Because some lenders over the last few years, because interest rates were so high, they said, hey, if you buy now, you can refinance for free, you know, within the next, like three years, four years five years whatever.

Sarah :

So, you know, definitely look into that and just see if that is an opportunity. But if not, um, and also read all the fine print, because just because they tell you it's free, there may be some hidden things. So always do your homework, your due diligence, all of that stuff. But I truly believe that if we see this, we're going to have a much busier fall and winter than historically we have, Because we've had such a weird summer. You know, spring and summer are normally the crazy busy like balls to the wall time.

Brendon:

It hasn't been like that this year um, which hasn't been horrible but, um, you know, you got to spend more time with your family. I did Nice.

Sarah :

Yeah, they were super happy. Um, but, uh, you know, but I think that we're going to see a crazier fall and winter, whereas, like some of my um sellers that have been, you know, kind of trying to find another place, and they're, you know, they've been kind of trying to find the right time for them, cause they didn't necessarily have to move right this second. But they want to downsize, they want to, you know, capitalize with, you know rates or with the you know the market, the way it is all of that Normally, uh, you know, I would say, hey, let's do it in the spring or summer, and then like, if you don't need to, let's wait, you know, until the spring, let's, let's do that then.

Sarah :

I think we're going to see people getting top dollar again, but in the fall and the winter, and not having to wait until spring. So again, I don't have a crystal ball. I cannot tell you a hundred percent that that is correct.

Brendon:

It's what I tell all my clients every time they ask me what do you think is going to happen?

Sarah :

I'm like well, unfortunately, my crystal ball is broken today.

Brendon:

So, yeah, what's going on there?

Sarah :

It's unclear, but yeah, um, and it's about as clear as the magic eight ball, um, but yeah, so I mean, those are my predictions, but I think that's.

Brendon:

I think you're probably right, um, cause, just like there's a lot of pent up buyer demand to your point, there's a lot of pent up seller demand, that you know there's a lot of people who are just they've they've been waiting and waiting, and waiting and waiting, and when they feel like, hey, the numbers make sense, they're not necessarily going to wait until, um, it's six, 60 and, you know, sunny outside.

Brendon:

I mean they're going to do it when, when, the time's right for them. So I think that's a really good prediction, um, and so yeah, once again, if you're someone who's looking to buy um, you know, I think that's that's good news. That's good news that there's there's going to be opportunity, um coming later this year. So yeah.

Sarah :

I love it.

Brendon:

Yeah.

Sarah :

I love it. Well, thank you so much. I know you're super busy, so I love anytime that you take out some time to to come and talk with me. Yeah, no worries.

Brendon:

If you want any more weird analogies about how Arby's is connected to uh, it's connected to Brexit, or something I could try, I could probably come up with something like that.

Sarah :

Yeah, yeah, that should be the next one. Perfect, I love it. Well, thank you guys. So much for tuning in Um. Hopefully, you uh got some really good um nuggets from this. Um, as always, all of uh Brendan's information will be in the show notes, so definitely make sure that you go in and you know uh, feel free to email him, call him, text him, whatever um, ask him your questions. Um, but also definitely make sure that you're following him on socials, cause he does drop some really good nuggets. So, um, make sure that you are leaving a review, because that is the um feedback is the greatest gift you can give. Make sure you're sharing this with someone, because that is the greatest compliment that you can give um Brendan and myself, and then just make sure you're subscribed so you never miss another episode. So, thanks so much and we'll see you next time on come to find out.