Amelis Long: Hi, and welcome back to another episode of The Vault, where we unlock stories that matter here at FNBO. I'm Amelis Long, and I'm excited to be your host again this week. If you're thinking about buying a home, refinancing, or just interested in home buying, and mortgage industry trends, or you happen to like a really great channel that has a lot of shows about home buying and redesigning your home like I do, then this episode is for you. I'm so excited to welcome my friend Patty Gong, Managing Director of Mortgage, to The Vault today. Patty, welcome to the show.

Patty Gong: Thank you so much for having me.

Amelis Long: Yeah, well, thank you for making my dreams come true and be able to talk about things that I love to watch on TV. Why don't we start by just, tell us a little bit about yourself?

Patty Gong: My entire career is in mortgage. I've been in the mortgage industry for a little bit over, let's just call it 25 plus years, and yeah most of my career has been in capital markets.

Amelis Long: Home buying is something that's such a milestone in folks' lives. And so, to be able to have someone who can walk us through things that are important for first-time homebuyers as well as folks that are looking to refinance or just folks that want to hear the trends that are happening in 2026. We're real excited to dive in today.

Patty Gong: Thank you.

Amelis Long: Should we get started?

Patty Gong: Sure!

Amelis Long: Well, Patty, I know over the last four years you've seen mortgage change quite a bit, but it's also an industry that's constantly changing. So, as we dive into the episode, can you give us maybe an outlook of what to expect in 2026?

Patty Gong: Overall, homebuyers are still facing some stiff headwinds with affordability and availability. But we're seeing some signs of stability in the industry. And with mortgage rates, we're seeing some signs of stability there as well. As we step into 2026, rates have stabilized. So that's good news for our homebuyers.

Amelis Long: Yeah, that is great news. I know that that's one of the key things that folks really need to be paying attention to as they kind of start the home buying process or the refinancing process. Can you talk to us a little bit about the importance of interest rates and what that does mean for a potential homeowner?

Patty Gong: Yeah, interest rates make a big difference in the home buying process. Um, sometimes changes in interest rates seems small, right? Like a quarter percent in interest rates on a $300,000 mortgage, for example, might only be like a $50 difference month to month, but over the entire 30 years of that mortgage, it's tens of thousands of dollars. But more importantly, I think the factor of interest rates changing is it impacts how much house a buyer can afford.

Amelis Long: On the topic of interest rates, I know something that I hear a lot about, I'm sure our listeners do too, are about the Federal Reserve. You talk to us about what that means and what that means for our homebuyers.

Patty Gong: Yeah, if we think about what the Federal Reserve does and how they impact rates, we kind of need to go back a few years.

Amelis Long: Okay.

Patty Gong: So, in the pandemic years, you know, the economy was facing some, some troubles. And so, the Federal Reserve, in reaction, was really trying to help bolster the economy. And what they did is they started lowering the interest rate, so that what we're talking about is the Fed Funds rate. And the other thing that the federal reserve did is they started doing something called quantitative easing. That's when they start buying mortgage-backed securities and treasuries. So, um, in doing that, when they buy mortgage-backed securities, it actually does this thing where it causes demand for mortgage-backed securities, and mortgage-backed security prices end up going up, which makes rates go down. And so, in reaction, mortgage rates during COVID years dropped to, you know, 3% and even sub 3% rate range. Subsequently to that, right? After kind of the true COVID years, the thing that the Federal Reserve was fighting wasn't so much the economy and the health of the economy, but really inflation. And I mean, I think all of us kind of felt the factors of inflation and how it really affected us. And so, when the Federal Reserve was trying to fight inflation, they had to do the opposite of what they did during the COVID years. And they, in turn, raised the Fed Funds rate, and then stopped buying mortgage backed securities. That actually had the opposite effect and made interest rates have a, you know, steep increase and quick, a quick and steep increase. And so, rates in those years shot up to over 7%, right? So we went from sub 3% to over 7% in a very short period of time. And so, that really caused a great kind of disturbance in the mortgage industry. So, as we kind of step into 2026, what we're seeing now is that we're never going to see the 3% sub 3% rates again. And we're, but we are now well below that 7% and over 7% rate, and we're kind of stabilized, and we've stabilized in that 6%, kind of up and down, like right around 6%, right? And so that stabilization is really good for our industry.

Amelis Long: Thanks for giving such a thorough explanation. I'm not sure I've ever had the opportunity to hear the whole story like that. I'm sure that'll be really helpful for our listeners. Uh, I think. Another key factor is availability. And I think that's something that's kind of had its up and down since the pandemic years too. Can you talk to us a little bit about that?

Patty Gong: Sure. I mean, if you think about housing availability, one of the things that plays a big factor in that is that interest rate thing that we were just talking about. Our industry has something that we've called the lock-in effect, and it is really where, um, you know, kind of in the natural course of events. Um, homeowners typically, you know, maybe they grow their family or, you know, their family size decreases even. And they normally would switch their home, right? Buy a bigger home for more kids or maybe empty nesters buy a smaller home. What has happened, though, is with a lock-in effect, if they had bought their house in, you know, the COVID years or refinanced during the COVID years, now they have like a 3% rate or a 2.5% rate. And then if they were going to go back out to market, now the rates are 6% or, you know, in the past even higher than that. Instead of switching their home, they're just going to stay put and stay in the home that they're in now and just make do or expand or, you know, whatever, stay in that house. And so, because of that, there's fewer homes in the market. And homes aren't turning over, right? So, we have seen, um, kind of less homes available in the market. And, um, the other thing that has been interesting in this time period is because of the lack of inventory, we're actually seeing builders step up. They're seeing an opportunity with less existing homes going up for sale to step into the market. And we're seeing, in our communities, some home builders taking advantage of the opportunity and building more homes.

Amelis Long: So, with these homebuilders taking an opportunity and adding inventory into the market, what does that mean for homebuyers now that there could be more houses in their community to consider?

Patty Gong: Yeah, so as inventory increases - so we're seeing some more stability, but it's still a little bit of a challenge. But as inventory improves, what we're seeing is that kind of there's a power shift between sellers and buyers. When inventory was super tight, all of the power lived with the sellers, right? And buyers were faced with overbidding and not having the ability to negotiate. And so now as kind of the balance of power is more stable and balanced. Um, we're seeing houses sit on the market, maybe, even a little bit longer, and not some of those overbidding situations, and less competition for the few homes on the market. This gives buyers a little bit more opportunity to be careful and take their time to really balance the house that they buy, to make sure it fits their home situation and their budget.

Amelis Long: It's funny you say that as you were describing it, Patty, I was thinking of my own neighborhood and watching it over the last few years. There was a period of time where a house - we wouldn't even get a sign put out in the front yard before it was just went from, no sign to sold, and things were going so quickly. And now we have houses that have been on the market for quite some time. So, yeah, that I guess I can really see that now that you've..

Patty Gong: It's intuitive when you, when you kind of see the bigger picture.

Amelis Long: Yeah, for sure. So, what does that mean? It sounds like folks need to really be mindful of timing. Talk to us a little bit about the timing of purchasing a home now that these dynamics are switching.

Patty Gong: Yeah, when I talk to potential homebuyers, I really tell them to be patient but not too patient, and to be flexible, but not too flexible, right? So what I mean by that is, you know, you really have to be patient as, especially as a first-time home buyer, because, you know, they face, you know, getting overbid and then getting overbid again and they just kind of get so, you know, so down on themselves and they think I'm just never going to be able to buy a house. But I just tell them to be patient and keep, you know, keep making sure that they improve their situation and keep, you know, putting the good offers out and eventually their time will come. But I also tell them not to be too patient because, you know, there's some homebuyers that have said, "oh, I'm just going to sit on the sideline and I'm just going to wait it out now." Home prices are just going crazy or the inventory is never going to swing my way and they just stay on the sideline. And then, you know, they're missing out on a chance to build wealth generational wealth or build their home ownership dream. And so I don't want them to be too patient either, right? And then in terms of flexibility, I want them to be flexible, but not too flexible. They do need to make sure that they're using their brain and their heart to buy a home. Um, and so they can't let their heart just get away with them and like overbid and buy something that's outside of their price range, right? But they also need to be a little bit flexible. Like maybe their first house can't be their dream dream house, right? They can't just automatically buy the one that is like beautiful and pristine. You know nothing to be fixed. Maybe they need to do a little bit of improvements and, you know, watch some of those home shows you watch.

Amelis Long: I was going to say, this is sounding oddly familiar for my TV watching.

Patty Gong: That's right. So, they might need to buy a little bit of a fixer upper, or maybe buy a house that's a little bit smaller than they want for their ultimate dream home. Or maybe even a little bit farther out from their perfect neighborhood, in order to step into the market. What matters in one state is different than another state, and even within one state, city to city, it's different. And even in a city, neighborhood to neighborhood or street to street. There was a story that one of my loan officers told me about in the inventory situation in her city, and there was one property that was so popular, and three of her buyers, her own pre-approval candidates were going after that property. But meanwhile, two streets away, the other house had no interest at all. So, inventory and, you know, kind of what is available is so local.

Amelis Long: Yeah. Well, I mean, what I hear you saying, and I just like those TV shows and my own personal experience. It's such an emotional process.

Patty Gong: It really is.

Amelis Long: But it's also a really strategic process. You can really make a big difference, like you said, in building that generational wealth - right timing, being flexible, being patient, and just waiting for the right, the right house, but not waiting too long.

Patty Gong: That's right.

Amelis Long: Okay, Patty, so we've talked a lot about the nitty-gritty details of the mortgage industry, why interest rates matter, why availability matters, and while what the potential homebuyer is doing, being flexible being patient, all comes into play here. One thing we haven't talked about is actual home prices, and they've gone up a lot in the last several years, tell us about that and also what you anticipate in 2026.

Patty Gong: One of the factors of lack of inventory, it really drives home prices up. So, kind of, we're going to go back to the COVID years again. Um, in those, in that time period, Availability was really low, and inventory was really low. And so home prices shot up in double digits year over year. I mean, I think we saw 19% year over year, one of the months. In 2026, we're still seeing home prices go up. But it's a much more moderate pace. It's, you know, somewhere in the 2.2% range. Um, it's not going up, you know, double digits year over year. So that means people can really take their time and pick the house that works for their family and their budget.

Amelis Long: One thing that isn't directly connected to the mortgage industry, but plays really closely to everything we're talking about, is also wage and wage increases over the years. So, tell us a little bit about why that plays into this whole homebuying and refinancing process.

Patty Gong: Yeah, wages are a big factor, right? When you talk about wages, it is a factor of affordability. Can that potential homebuyer afford that house? And so, wages have not been keeping up with inflation, um, over the past few years. But when we're looking into the forecasts, we are seeing that that's changing a little bit. In 2026, we're actually expecting wages to increase by 3.5% versus inflation increasing by 2.6%. So, as wages increase a little bit faster than inflation, it gives potential homebuyers a little bit more buying power.

Amelis Long: Why don't you tell us a little bit about maybe some thoughts you'd have for someone who already owns a home and maybe bought into those higher interest rates? What should they do now? Should they be considering refinancing?

Patty Gong: Yeah, now is a great time to consider refinancing, especially as we're, you know, hovering around 6% now. If someone bought a home in the last few years, when rates were 7% or even above 7%, take a peek at what the rates are now and talk to a loan officer to see if it might be a good time to refinance.

Amelis Long: Yeah, taking advantage of that stabilization that you mentioned for 2026.

Patty Gong: That's right.

Amelis Long: Well, what about those who are maybe wanting to be first-time home buyers and maybe that's on their vision board for the for 2026?

Patty Gong: Yeah, my advice to someone that is considering buying a home is to really take the first step of meeting with a loan officer. A good loan officer will be able to help them kind of plot their next steps, right? So, someone who is ready to buy a home for the first time, um, or even someone who's maybe even considering whether or not that might be something that they want to do in the future, a good loan officer can help them figure out what they need to do to fix their credit or maybe lower some of their debt. Or even what their maximum house uh, that they can afford to buy. So that's a good first step for someone who is considering buying a home. A lot of times when we were talking to first-time homebuyers or people that are renters, they have some, you know, maybe misconceptions in their heads about what they need to have saved as down payment. And we actually see some, you know, good products and some down payment assistance options in the industry that really can help some potential first-time homebuyers really make that step from becoming a renter into becoming a homebuyer. But they wouldn't know that until they really explore it with a loan officer.

Amelis Long: Yeah, yeah. Sounds like it's a great time to reach out to someone, have a good conversation and see if that home buying dream can be for them.

Patty Gong: So, one of my loan officers shared a story with me about a potential first-time home buyer they were working with, and they worked with that person for three years to get them to be ready to be able to buy a home, right? So, they worked with them on repairing their credit, on getting their down payment situations set up. And, you know, then their dream became true and they were able to buy their first home and it was so rewarding for our team to be able to celebrate that.

Amelis Long: Oh yeah, what a what a journey to go through and to have someone who could really walk alongside with them, to make that dream come true. Like, what an amazing story, Patty. Credit to your loan officers and all the work that your team does to be there along with our, with our customers. Well, as we close today's episode, what are the key takeaways for our listeners?

Patty Gong: If I could summarize it in three points, first be flexible, right? When you're looking for a home, be flexible about what you're looking for. Maybe go a little bit farther or think about buying a little bit of a fixer upper or maybe a slightly smaller house. Be patient, but not too patient, right? Be an active participant, but don't and don't sit on the sidelines and let the opportunity pass, but don't get discouraged by being outbid. And last, I would say, use your loan officer as a trusted expert and have them walk alongside you on this homeownership journey.

Amelis Long: Three great tips for our listeners and certainly, it's not as easy as we see on TV, but we have trusted people that can help you through the process of owning a home or refinancing. Patty thanks so much for joining us on The Vault today and sharing all your great information. Appreciate your time.

Patty Gong: Thanks for having me.

Amelis Long: Thank you all for watching another episode of The Vault, we so appreciate you joining us. If you enjoy these episodes, be sure to like and subscribe. We'll see you next time.