According to a new report from red finreal estate brokerage powered by technology.
It was the most volatile three-month period since 1987, when mortgage rates swung wildly from a record high of nearly 19% earlier in the decade as the Fed struggled to rein in a severe inflation.
“Interest rate volatility will be the norm for some time,” says Nobu Hata, CEO of Denver Metro Association of Realtors. ” It’s important to [let] consumers [know] that Fed interest rate changes are unrelated to mortgage rates and will fluctuate independently.
For a house hunter looking to buy a $500,000 home, the Redfin study found that:
- When they started looking in early July, they expected their monthly payment to be $3,051. This equates to a total of $1.098 million over 30 years, assuming a 20% down payment and the prevailing mortgage interest rate of 5.7%. Of this total payment, $435,777 represents interest.
- When they found their dream home in early August, they expected their monthly payment to be $2,874. This equates to a total of $1.035 million over 30 years, assuming a 20% down payment and the prevailing mortgage rate of 4.99%. Of this total payment, $372,143 represents interest.
- When they locked in a mortgage rate for the home in late September, their final monthly payment turned out to be $3,202. This equates to a total of $1.153 million over 30 years, assuming a 20% down payment and the prevailing mortgage rate of 6.29%. Of this total payment, $490,382 represents interest.
In other words, the buyer’s total expected payment decreased by about $64,000 (5.8%) from July to August, then rose by about $118,000 (11.4%) from July to August. August to September.
Agents can’t control interest rates, so do it instead
However, according to Alexis Bolin, a 44-year real estate veteran and associate broker at Keller Williams Real Estate Gulf Coast in Pensacola, Florida, “We [agents] cannot control the market. We cannot control interest rates. But, you have control over yourself. Stop complaining about interest rates. As agents, our job is to find a buyer who can qualify, then find a seller who is willing to sell, and then bring those two people together. She adds, “I tell them, ‘You marry the house and date the rate. “”
Interest rates will go up and down, she notes. So, right now, “agents need to work on their relationships.”
Arthur Napolitano, who has worked in real estate since the 1970s, says that “when rates were 17%, we focused on monthly housing budget discussions with buyers, not price.” The agent with Better Homes and Gardens Maturo Real Estate in New Jersey, says, “People forget how much a role taxes play in a monthly payment, so finding suitable properties should also include tax rates in different areas. So, talk about “eligible budget” and install the house in this window. »
Brett Weinstein, founder of Real Estate Guide in Colorado, agrees with this approach. “Things can change quickly whether rates go up or down, so don’t judge a month too much. Although we have 27% more inventory nationally, we are still well below pre-pandemic levels. It is estimated that one in four buyers will be buyers with school-aged children in the coming months. This makes sense because the market is being pushed by people selling for non-financial reasons – upsizing, downsizing, marriage, divorce, etc.
The future of mortgage rates
Mortgage rates are on the upswing because the Federal Reserve has raised interest rates as it strives to curb sky-high inflation. Last week, the Fed raised interest rates by three-quarters of a percentage point to a range of 3% to 3.25% – its third big hike in a row – and predicted they would hit 4.4% d end of the year. While the widely watched weekly data from Freddie Mac now has mortgage rates at 6.29% – the highest since 2008 – a separate daily gauge has them as high as 7.08%.
According to Justin Dimler of Bay EquityRedfin’s mortgage company.
“The good news for people who can still afford a home and are ready to buy now is that they should be able to refinance at a lower rate in a year or two,” Dimler said, regional sales manager at Bay. Equity in the Seattle area.
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