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October 18, 2024
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October 18, 2024
The “Haves” vs. the “Have-Nots”
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The “Haves” vs. the “Have-Nots”! Mortgage rates inched up again this week based on solid retail sales figures. Is the economy good for everyone? No way!
The “Haves” are sitting comfortably in their homes as they watch their equity go up. Combine that with the 150%+ gain in the stock market (S&P 500) since the Covid low in March 2020, and some individuals are sitting fat and happy, willing to spend money as they feel wealthy.
The “Have-Nots,” on the other hand, may have missed out on purchasing a home for one reason or another and have since been fighting an uphill battle with inflation, rising rents, increased home prices, and lack of affordability because of higher mortgage rates. The “Have-Nots” are trying to stay above water by using credit.
Why, then, would anyone want to even consider buying a home? Home values will surely crash if a recession hits, right? Wrong!
Since 1970, home values INCREASED during each recession with the exception of the 2008 Great Recession, which was a financial crash. Why do home values go up when the economy is struggling or goes into recession? Simple... mortgage rates go down, and it becomes more affordable.
This isn’t to say a recession is imminent. However, the belief is that the economy may still be on thin ice, and hard-working people are struggling. High credit card debt will be painful, especially after the Christmas holiday season when some people just say “forget it” and spend anyway. The January hangover may not be fun.
All this said, it is unlikely that rates will decline quickly. Wall Street lives on data, and every report will be scrutinized until there is a clear pattern showing the economy is either going strong (higher rates) or slowing down (lower rates). This process will take months of data. The economy may be a bit fractured, living on credit, and not as strong as it appears to be. Stay tuned!
Home values are not likely to crash. They may go sideways for a bit and then take off as soon as interest rates drop close to 6% again. There is more inventory for buyers to look at, houses are sitting a little longer, sellers are giving concessions on price, and many are paying closing costs. This will change when rates drop and more buyers come into the market. The advice to buyers: buy now!
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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.
