Zillow is rapidly catching up with where the rest of the mortgage providers offer 30 Year Fixed Rates Mortgages, and as it reported moments ago, the 30 Year Fixed in the Zillow Mortgage Rate Monitor rose from 3.94% to 4.1% in the week ended today.
As we reported previously, the latest Wells 30Year Fixed refi rate is now 4.625%, with the overall complex about 100 bps higher from where it was just a few months ago. The move prompted none other than Frddie Mac to issue a warning about the future of the housing market.
Is that a big move? The answer, conveniently, comes from a just released note by housing expert Mark Hanson who explains why a "1% rate surge changes everything"
Redfin.com did a purchase market survey of 2400 ready-buyer users between Nov 7 and 11 - right when rates first started surging and were much lower than today - on how a 1% jump in interest rates would impact their purchase decision, if at all.
Note, today rates are 50 bps higher than when the survey was done and up greater than the 1% referred to in the questioning.
Bottom line: A 1% rate surge changes everything. Especially, considering the macro housing market - demand and prices - is controlled by the incremental buy or sell pressure.
68% weigh rates heavily into their purchase decision; only 11% don't care.
72% of buyers would have to change strategy on a 1% rate-surge; 29% wouldn't.
46% OF BUYERS WOULD HAVE TO BUY A LESS EXPENSIVE HOUSE.
The metric I highlighted red is what I find the most important. It is exactly why I always assume most people buy as much as they can afford using contemporary mortgage rates and guidelines.
DelMarVa's Premier Source for News, Opinion, Analysis, and Human Interest Contact Publisher Joe Albero at alberobutzo@wmconnect.com or 410-430-5349
I have had mortgages on 7 different properties in my life. I have excellent credit. I have never had a rate less than 5%.
ReplyDeleteWhy are people crying over rates that are still less than 5%?
No offense, but if you've never had a mortgage of less than 5% on 7 properties, I've got a bridge in Brooklyn I'd like you to take a look at.
DeleteHome prices are out of reach for most people. A interest rate won't make a difference for those who can't afford a home anyway. When I bought my home in 1989 it was at 9 3/4 % I refinance in 2005 at around 5 percent. It's still a good rate, but the prices due to inflation are just not affordable anymore. Just like most new cars.
ReplyDeleteIf a 1/2 percent in interest rate increase takes people out of the housing market, they shouldn't be looking to buy in the first place.
ReplyDeleteRates have been kept down for at least the past 8 years. One, because the economy needed the help to get back on it's feet after the real estate crash. Two, because the MSM and the DEM's wanted Obama to have as much assistance in pushing the recovery. The future of the new administration will no doubt be subjected to several rate increases for these same reason, just for the opposite reasons. But in context, rates are still very affordable when looking at mortgage rates history.
ReplyDeleteI disagree 1:25. There are plenty of homes taht are affordable in the area. The problem is that due to a sense of entitlement and the house hunting reality shows, everyone expects/demands granite counter tops/ all SS appliances, his/her baths/closets, etc. There are very livable homes for sale in the $45-60k range. Mortgage/ins.taxes would be under $800/mo. Find a 2-3 bedroom apt for that not located in a war zone. But I don't have money to put down...well then stop paying $200-250 a month for cable/internet and cellphone. Stop smoking a pack a day ($2,500/yr) and stop drinking for a year.
ReplyDeleteThere may be plenty of homes that are affordable, they're just not in neighborhoods decent people want to live in.
DeleteSome are in the city and plenty others in the county/country. Either way, it's a starter home. Not where you will live the rest of your life.
ReplyDeletemy 2nd home is at 3.25...love my rate. there are many homes in this area that are clean, attractive and ready to buy. problem today is many of the younger buyers want what their parents worked for all their lives. only the best for them and it cost money for that. many aren't willing to purchase a 'starter' home.
ReplyDelete