If you’ve been looking to buy a home in Seattle or the Eastside recently, you’ve probably been overwhelmed with news of bidding wars, rising costs, and inventory shortages. I'm here to share good news that will keep you optimistic about jumping into the housing market.
According to The Seattle Times, long-term U.S. mortgage rates fell this week after three straight weeks of increases. The average 30-year fixed-rate mortgage slipped to 3.6 percent from 3.66 percent last week, which is well below its level a year ago. As for short-term mortgages, the report states that it is unlikely that the Federal Reserve will increase short-term interest rates at its upcoming meetings this summer.
What does this mean for you?
It means now is a great time for you to invest in your new home. You know as well as I do that mortgage rates fluctuate often, so securing a home is all about seizing the day (and house) when conditions are right – like they are now.
What does this mean for me?
It means I am ready to work with you to help you find your new home, and soon. Contact me today so I can help put the power of Windermere to work for you.
Read the full article on The Seattle Times.
When the Federal Reserve announces a change in interest rates, it makes headlines. Many are speculating what this kind of change will mean for our mortgage rates, and some are preparing for the worst.
But does the federal interest rate directly impact your mortgage rate? See what Windermere’s Chief Economist, Matthew Gardner has to say by watching the video on the Windermere.com blog.
Two weeks ago, Keeping Current Matters posted a blog which explained that current increases in home prices were the result of the well-known concept of supply & demand and should not lead to conversations of a new housing bubble. Today, we want to look at home prices as compared to current incomes.
Read the full original blog posted on the Keeping Current Matters blog for more information and a comparison graph showing those mortgage numbers!
Are You Ready?
If you're ready to take advantage of the strong housing market, contact me! I'm happy to help you with the sale or purchase of your home.
This article originally appeared on The Seattle Times.
Average long-term U.S. mortgage rates rose this week for the first time in two months as global economic anxiety and market turbulence eased.
Mortgage buyer Freddie Mac said Thursday the average rate on a 30-year, fixed-rate mortgage increased to 3.64 percent from 3.62 percent last week. The benchmark rate remains below the 3.75 percent level it marked a year ago.
The average rate on 15-year fixed-rate mortgages edged up to 2.94 percent from 2.93 percent last week
Economists saw some positive signs in new data. The U.S. stock market started recouping losses from a brutal start to the year and ended last Friday with a second straight weekly gain. That brought a break in the recent trend of U.S. government bond prices being catapulted higher as investors sought safety.
The decline in U.S. bond prices raised the yields on the bonds, which mortgage rates follow. Yields approached their highest levels in a month. The yield on the 10-year Treasury bond stood at 1.84 percent Wednesday, up sharply from 1.75 percent a week earlier. The yield ticked up to 1.85 percent Thursday morning.
Though markets have stabilized and some economic anxiety has eased, most experts don’t expect the Federal Reserve to raise the short-term interest rate it controls anytime soon, following its rate hike in December.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fees for a 30-year mortgage declined to 0.5 point from 0.6 point last week. The fee for a 15-year loan was unchanged at 0.5 point.
Rates on adjustable five-year mortgages averaged 2.84 percent this week, up from 2.79 percent last week. The fee remained at 0.5 point.
If you think you're ready to take advantage of these low mortgage rates, let me know! I'm happy to help you find and purchase your dream home!
This article originally appeared on Inman.com
After seven years of some of the lowest interest rates in recorded history, the Federal Reserve has decided to raise the key Fed Funds Rate by 0.25 percent, which is causing some to be concerned that it will lead to a jump in mortgage rates and negatively impact the US housing market.
So, the question everyone wants to know is, do we need to worry about interest rates leaping?
While I expect there to be some volatility in rates for a while, I don’t believe the real estate market will implode in a rapidly rising interest rate environment. So, yes, interest rates are going to rise modestly, but no, I don’t think we need to be overly worried about it.
To qualify this statement, we need to understand that mortgage rates do not run in “lock-step” with the Fed Funds Rate. Although the Fed Funds Rate is a bellwether for the greater economic environment, there have been times when these two rates have moved in opposite directions, such as we saw in 2004/2005.
It’s also important to understand that while interest rates for revolving credit, such as credit cards and home equity loans, are tied to the Fed Funds Rate, non-revolving loans – like mortgages – are not. Mortgage rates are tied to bond yields – specifically the 10-year treasury.
So what do I think will happen?
I believe interest rates will rise above 4 percent, but we will not see a sharp spike in rates. The Fed has stated that any upward movement in the Fed Funds Rate will be slow and steady, and will reflect the greater economy. And I believe that mortgage rates will follow suit. Additionally, mortgage rates have already moved higher in anticipation of an increase in the Fed Funds Rate.
That said, it is worth noting that any weakness in the global economy can actually have a downward effect on interest rates. This is referred to a “flight to quality”. In essence, investors seek safe haven during times of economic uncertainty. If markets outside the U.S. continue to underperform, there will likely be increasing demand for bonds which will drive up their price and drive down interest rates. Between China, the Eurozone, war in the Middle East, and a massive drop in oil prices, it's certainly possible that the price of mortgage backed securities could rise, leading U.S. mortgage rates lower.
Interest rates could not realistically stay at their current levels forever. But an increase should not be a great cause for concern. Yes, an increase makes mortgages more expensive, but not to a point where they will have a negative effect on home values. That said, the rate of home price growth will undoubtedly slow in the coming year, but that isn’t necessarily a bad thing.
A little perspective might help: the average rate for a 30-year loan in the 1970’s was nine percent. It was 13 percent in the 1980’s and eight percent in the 1990’s. And yet people still managed to buy and sell homes throughout those years. With that in mind, the rate increases we’re likely to see in 2016 are nothing to fret over.
The increase in the Fed Funds Rate should be taken as a sign that our economy is expanding and is a preemptive move to limit anticipated inflation. While interest rates have risen from their all-time low, they are still remarkably favorable. And will remain so through 2016.
Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.