Always striving to stay on top of my market and my clients informed, I thought I would share with you what I am experiencing as a mortgage lender.
For the last three weeks, rates have been slowly increasing and especially since Monday. It is not uncommon for rates to float up and down with stock market and political news; however this recent movement seems to be a true trend in the upward direction.
I have had three borrowers in the last two weeks that wanted to hold out for a better rate, “confident that they (rates) would return to the low 4s/high 3s” who with the rate increases, have out priced themselves and can no longer qualify for the homes they have under contract. I had to move one of them to an ARM and the other two decided understandably not to buy at this time.
Certainly not the wizard of OZ nor do I have a crystal ball, but my personal opinion is that rates are heading for the mid 5s to 6s where they will settle after the first of the year and float around there. All of the indicators we lenders previously counted on to predict rate direction are no longer applicable and we have no where to turn but trends, and the trend is consistently heading higher.
It could be due to the TARP funds being paid back, news of tax credit extensions, inflation, or just plain ol consumer confidence, but whatever the reason rates appear to be on their way back up.
Good news, historically, we are still experiencing extremely low mortgage rates, so home ownership is still obtainable and better then renting. But in the mean time, 1% increase in rate of a $200,000 mortgage means a payment increase of about $100, which can make a big difference in someones comfort level in monthly budget. To give a visual, the national average of mortgage rates for a 30 year fixed over the last five years has been:
- 2005 5.625%
- 2006 – 6.125%
- 2007 – 6.25%
- 2008 – 5.5%
- 2009 – 5.125%
- 2010 – 4.25%
- Now – 4.75%
This is nothing to panic about; but something to be very aware of.
In 18 years of real estate, I rarely have heard someone wish they had waited. However, I have often heard “wish I had purchased ______________”. By the time you realize its too late, well it usually is. One can easily recuperate from what was done, but one never relives what was missed opportunity.
Hope this helps you in making wise choices through this strange time we are living in, never dull though, right?
C. Dan Boyett is a leading mortgage broker serving the Charlotte and Ballantyne housing market!
