By Douglas Katz – 11/04/2022
From Freddie Mac
Mortgage rates continue to hover around seven percent, as the dynamics of a once-hot housing market have faded considerably. Unsure buyers navigating an unpredictable landscape keeps demand declining while other potential buyers remain sidelined from an affordability standpoint. Yesterday’s interest rate hike by the Federal Reserve will certainly inject additional lead into the heels of the housing market.
Commentary
- As I have previously written, rates will rise and fall as part of the fluidity of the market. This can be major or minor moves with the latter much more common. This is what we are seeing. There will no doubt be opportunities to leverage these moves, but that will be luck so do not use this as a strategy. If you’re tight, you’re better off finding a program suited to strengthen your file and finances and not gambling on the ups and downs. There are more and more hitting the market on a regular basis.
- Regarding programs, lenders are not only launching new ones but also tweaking existing ones to help borrowers. There was an announcement this week, for example, that many lenders are dropping many price adjustments for affordable programs. This is when you need to be on top of your deal to take advantage of these.
- Make sure you evaluate rates in the context of the impact to you. Psychologically, breaking the 7% barrier feels like a big deal but rates were just below that for a goof amount of time and, because it was still in the 6%’s, people were less panicked. The payment difference is not even too much from 6.875% to 7% for example. I am not saying the higher rate is not worst, but it is not the apocalypse.
- Housing is still very tight, but getting better. There are still buyers, but far less and sellers are beginning to get more deliberate in their strategies. The old strategy of list home, sell home and count profit just does not cut it and buyers are more discerning.
- Values and rates continue to plague divorcing couples. I have had several sobering conversations with people who waited to address a refinance and ended up with sticker shock when they saw the payment and/or the drop in their equity. Many have already committed to a dollar amount and not a percentage so they are taking the loss. DO NOT WAIT IF THIS DESCRIBES YOUR SITUATION!
- Lender selection is now of paramount priority. The refinance boom brought a lot of people into the market chasing easy money from refinances. With that source of revenue gone, we are back in a purchase market. Not just any purchase market but one marked by tougher deals associated with the end of a cycle. You need to work with a lender who has seen one or more of these cycles to help navigate the way.
I always end with a reminder that we have discounts available for veterans, first responders and law enforcement. Make sure that you check out the section of the page covering our commitment to those who served with discounted mediation services. My lending partner also offers a discount as well, so if your buying or refinancing check it out