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  • [inaudible]

  • 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.

  • 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

  • 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.

  • 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.

  • 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?

  • 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. 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.

  • 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. 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. So rate is a secondary issue. Rates important,

  • but it is secondary to strategy. Can you note that in cotton textile you said

  • 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,

  • 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. 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.

  • 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. 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.

  • 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?

  • 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.

  • 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.

  • 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.

  • 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.

  • 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. 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.

  • 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. 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.

  • 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. 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

  • 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?

  • 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. 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.

  • 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.

  • 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?

  • 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.

  • 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. 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

  • 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

  • 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.

  • 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.

  • 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.

  • 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

  • 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.

  • 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. 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.

  • 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. 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.

  • 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. 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.

  • 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. 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. 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? 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. 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.

  • 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?

  • 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. 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. 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,

  • 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.

  • 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.

[inaudible]

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