Video
February 23, 2024
Airs live on YouTube
February 23, 2024
A Silver Lining for Homebuyers
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Mortgage rates have been over 7% for more than a week, and they will likely hover in this area for a while. However, there is some good news for qualified buyers that we will discuss later in this video!
Why are mortgage rates remaining elevated? It might boil down to uncertainty, as there are so many things that are uncertain right now. Can anyone really predict what all these variables will do to the economy? No way! There are just too many things to predict, so rates are likely going to remain status quo for a while until we see what really happens.
Typically, when there is uncertainty, there is a flight to safety, and that safety is usually the United States Treasury bonds or interest rate markets, such as the mortgage market. That is where investors park their money - including from the overseas countries - for a guaranteed return.
However, there has been so much spent by the US government over the past few years to fund everything from the COVID area to Ukraine to other initiatives that there just aren't enough purchasers to buy all those bonds to lower interest rates.
They have to keep raising the interest rates and the bond yields to make it more attractive. This has also kept interest rates high, so inflation - while it's definitely getting under control - is not going to be the full driver of interest rates going down.
What's the silver lining for homebuyers? It is likely a pause in the increase of home values for the moment.
There is pent-up demand from homebuyers. We are already seeing multiple offers come back on attractive properties. People want to buy, and many can't buy what they really want because of the elevated rates. There are those who are actually qualified and can absolutely buy that home, but they are nervous that they're going to blow up their monthly budget by taking on a higher mortgage payment than they feel comfortable with.
The other big driver of real estate right now is inventory. Over time, there is simply not enough homes on the market to drive home values down significantly.
According to HousingWire, Nevada has 25.7% less inventory now in 2024 than in 2023. This is by far the biggest drop in the country. New York is second at 7.8% less inventory, followed by California at 7.2% less.
Home builders are filling this gap right now and making it attractive for the homebuyer by paying closing costs and offering low interest rates. Homebuilders have the ability to price these costs into the home and pass it on to the consumer.
At the end of the day, a homebuyer is most interested in having a house to live in and a reasonable mortgage payment. Secondarily, do they have enough money to close on the home? Builders paying closing costs helps tremendously.
For those purchasing existing homes, the seller has their property on the market for a reason. They want to sell it. With less buyers able or willing to buy right now, those that go in now will likely pay less for the home.
Existing homes also benefit from typically lower real estate taxes and HOA fees than new homes. Also, seller-paid closing costs could be a key in that transaction.
Real estate is long term. While the homebuyer may pay more now for the interest rate and mortgage payment, it is highly likely their payment will go down in the future because of lower rates.
It's important for buyers to stay educated and watch mortgage rates so they know when to fire back up their homebuying journey.
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The information contained is the viewpoint of the presenter(s). Individuals should consult their own financial representative.
Estimated Mortgage Payment is for exemplary purposes only. Contact a licensed loan officer for exact numbers and APR. Additional rates and terms may apply and are subject to change without notice. Loan scenario assumes a purchase price of Zillow's list price and a 10% down payment. Points and fees not included. Property tax, homeowners insurance, mortgage insurance, and HOA fees are approximate and may vary. Other fees may apply. Product displayed is a conventional 30-year fixed rate mortgage using the current average rate as shown on Mortgage News Daily (mortgagenewsdaily.com).
Estimated Qualifying Income assumes a homebuyer has a FICO score above 740, no other credit debt, and a debt-to-income (DTI) ratio of 43%.
For exact numbers and APR or to run a loan scenario based on your own credit and income, contact our office at (858) 259-8700.
Rate Source: Mortgage News Daily. Rates displayed are approximate, subject to change, and do not necessarily reflect rates available to you. MND’s methods involve an objective component based on lenders' raw prices as well as a subjective impression from their network of originators. For more information about how these rates are calculated, visit www.mortgagenewsdaily.com/mortgage-rates/about.
Mortgage News Daily (MND) is a trademark of Brown House Media, Inc. Zillow is a trademark of Zillow, Inc. CrossCountry Mortgage has not been authorized, sponsored, or otherwise approved by Brown House Media, Inc. or Zillow, Inc.
Equal Housing Opportunity. All loans subject to underwriting approval. Certain restrictions apply. Call (858) 259-8700 for details. All borrowers must meet minimum credit score, loan-to-value, debt-to-income, and other requirements to qualify for any mortgage program. CrossCountry Mortgage, LLC is an FHA Approved Lending Institution and is not acting on behalf of or at the direction of HUD/FHA or the federal government. CrossCountry Mortgage, LLC is not affiliated with or acting on behalf of or at the direction of the Veteran Affairs Office or any government agency. Certificate of Eligibility required for VA loans. By refinancing, the existing loan total finance charges may be higher over the life of the loan.
