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Welcome to this weeks edition of "The Wealth Captain's Weekly Market Update." As the dynamic landscape of the mortgage market continues to evolve, staying informed and agile has never been more critical. This week, as always, we aim to provide you with a comprehensive overview of the current state of mortgage rates and trends. Our goal is to empower you, whether you're looking to buy, sell, refinance, or simply stay informed. With varying rate shifts, economic influences, and regional disparities, the mortgage market can feel quite overwhelming. Let us be your navigator, guiding you through the flows of the week's market activities. Join us on this voyage, and let's set sail together through the intricacies of today's mortgage market.
Current National Averages*
Conforming 30 Yr. Fixed : 7.48%
Conforming 15 Yr. Fixed : 6.88%
30 Yr. Jumbo : 7.40 %
30 Yr. FHA : 7.12%
30 Yr. VA : 7.11%
*Data is Sourced from Mortgage News Daily and is based on National Averages. Last updated 08/21/2023.
Week Over Week Comparison*
Conventional mortgage rates and government backed rates are up from last week.
Conforming 30 Yr. Fixed : +0.11%
Conforming 15 Yr. Fixed : +0.12%
30 Yr. Jumbo : +0.09%
30 Yr. FHA : +0.09%
30 Yr. VA : +0.06%
*Data is Sourced from Mortgage News Daily and is based on National Averages. Comparing this edition of "The Wealth Captain's Weekly Market Update" to the previously posted edition.
Loan Programs to Consider in This Market
As a buyer in a market where purchasing power is eroding due to multi-decade high interest rates, it's imperative to thoroughly compare all available programs. Equip yourself as an educated buyer, poised to make the most informed decisions for your unique situation. Here are a couple of programs I recommend exploring to help offset the impact of higher rates:
1) Temporary Buy Down
This program has gained traction in today's market, offering potential buyers the advantage of reduced payments for the initial years. It's crucial to distinguish that this isn't an Adjustable Rate Mortgage. Instead, it's a Fixed Rate mortgage with a lowered rate for a predetermined duration. This duration can span from 1-3 years, depending on what aligns best with your circumstances.
2) Down Payment Assistance
The upfront costs accompanying any mortgage often act as a deterrent, preventing many prospective buyers from entering the market. Coupled with higher interest rates, the dream of homeownership can seem out of reach. Nevertheless, many Down Payment Assistance programs exist for eligible buyers to aid with these initial expenses. Being aware of and understanding the DPA programs accessible to you might well be the pivot between transitioning into homeownership or prolonging your status as a renter.
Is This a Good Market to be a Buyer?
It's understandable for people to assume that higher interest rates automatically make it a bad time to buy a house. After all, we're all hardwired to believe that high interest is a bad thing. And while I agree with that sentiment, the reality is not that simple. The answer to whether or not now is a good time to buy varies; it depends on individual circumstances. What may be unfavorable for one person, could be perfect timing for another.
For instance, if you're considering moving to a house only because it is 10 min closer to your workplace and you currently have a 3% mortgage rate, this might not be the best time for such a transition. On the other hand, if you're renting a two-bedroom apartment and expecting a second child, now could be the best possible time to upgrade to a larger home.
In 2020 and 2021, interest rates hit record lows, leading to one of the hottest runs on the real estate market in history. While this was beneficial for many people, it also made life rather difficult for others. First time homebuyers, or anyone with just enough money for their minimum required down payment, often found themselves outbid, in multiple offer situations, by those with more substantial offers. If you lacked a significant down payment or sufficient bank reserves, making a competitive offer was tough.
Higher interest rates have slowed this run down quite a bit. Increasingly, we are seeing properties stay on market for extended periods with no offers. This shift offers opportunities for those who previously struggled to get their offers accepted. Yes, they may have to contend with temporarily higher interest rates now, but when rates drop again we will likely witness another real estate boom not unlike that of 2020 and 2021, causing prices to rise and reintroducing bidding wars.
Without knowing your specific circumstances, I cant advise on whether now is the right time for you to buy a house or not. However, I can offer insights into the current market so you can make an informed decision. Consider the following pros and cons and let me know if you think now is the right time for you.
Pro's
Far less multiple offer situations
The chance to lock in current home prices with the potential to refinance at a lower rate in the future.
Opportunities to leverage loan programs such as a Temporary Buy Down to help offset the temporarily higher rates
Slower market with less multiple offers means a greater likelihood of obtaining seller credits/concessions to be applied towards your closing costs. Reducing your upfront and out of pocket expenses.
Buying now puts you on the right path of building wealth through homeownership. Especially if your alternative is to continue paying rent.
Con's
Higher interest rates reduce buying power, potentially restricting you to a lower price range than you originally wanted.
If you're already a homeowner with a low interest rate, then selling to buy another at a higher interest rate may limit how much you can truly upgrade.
Choosing a Realtor and Mortgage Lender
In today's rapidly changing market, the phrase "it matters who you work with" has never been more true. Your choice of guide through this market can very well determine your success as a homeowner. Here are some compelling reasons why I believe that working with a local Realtor and lender places you in the most advantageous position:
1) Local Realtors and lenders possess an in-depth understanding of the local market, property values, and prevailing economic trends. Such expertise can guide you toward the right loan products and provide advice tailored to specific neighborhoods or types of property.
2) They are acutely aware of local regulations and county-specific documentation requirements, ensuring the process aligns with local standards. This attention to detail reduces the risk of last-minute complications in the homebuying journey, which could delay or even prevent a closing altogether.
3) Local lenders and Realtors typically adopt a more personalized approach, taking the time to understand their clients' distinct needs and circumstances. This leads to more customized mortgage solutions and efficient problem resolution.
4) Local Realtors and lenders are generally at your disposal seven days a week, at any hour. Whether you have a quick question late on a Sunday evening or require an in-depth, face-to-face discussion, their availability can transform a potentially stressful process into a streamlined experience.
In Conclusion
The real estate and mortgage markets are always in flux, shaped by many factors from economic indicators to policy changes. However, with the right knowledge and partners by your side, navigating this complex landscape can become a rewarding journey. If you have any further questions or are considering stepping into the property market, don't hesitate to reach out to The Wealth Captain. Remember, your success in this arena isn't just about rates and numbers; it's about making informed decisions that pave the way for a secure financial future.
MILAN KANGRGA
The Wealth Captain
Mortgage Advisor | NMLS#2428833
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