Listing Courtesy of RE/MAX REALTY GROUP REHOBOTH
In case you set your alarm clock to go off when it was time to buy a home, that clang you may be hearing from somewhere in the distance could be it (figuratively speaking, of course). The reason has to do with the direction of Lewes mortgage rates (among others).
Now, I realize this could come across a little bit like Aesop’s boy who cried ‘Wolf’ since a year and a half ago the experts were unanimous in predicting that mortgage rates would rise throughout 2014 (to at least 5%, if I remember correctly). And not only did they not jump—after a short rise, they actually fell!
The experts were wrong. To the extent I agreed with their call, I was, too—but at least I wasn’t lonely. And I also try to be clear that predicting the future of any financial movement is never a sure thing. The same is true today…but…
Last week, less than a week after the Federal Reserve monetary policymakers emerged from their meeting, Bankrate web commentator Janna Herron published a view that sent alarm bells ringing in my head. It makes so much sense, I feel compelled to share it. Already publicized in the rest of the media was the announcement that 15 of the 17 Fed officials now agree that they expect to raise the federal funds rate at some point within the next 6 months (and one expert was quoted as expecting that as early as September or October). Fifteen out of 17 is a 88% majority, so it couldn’t get much clearer. The funds rate has been cemented to the ground at precisely zero for almost seven years. Since 2008.
Lewes mortgage rates are based upon that Fed funds rate. When it rises, mortgage rates have to rise, or lenders would have to be reclassified as charitable enterprises (not likely). The reasons given for the Fed governors’ near-unanimous prediction are both the rise in the pace of job gains and, as was reported, “The Fed also noted improvement in housing.”
Now, that news may have prompted Lewes mortgage-rate watchers to sit up and take notice—but not necessarily have them hearing alarm bells going off. But there were two other pieces of information:
· First, the current national mortgage rates reported last week rose. They were pegged at just over the 52-week average for 30-year fixed loans, but at 4.13% it remained below the 4.33% of a year before. In other words, still (perhaps momentarily) in the historically basement-level range.
· Second, new mortgage activity began to rise, moving 1.6% up from a week before. Applications had been dropping, but now they were on the move. This while home builder confidence levels soared, with expectations hitting the highest levels in nearly a decade.
As with any batch of economic numbers, the signs can be interpreted in multiple ways, but one way sure does seem to stand out: mortgage rates are attractive now, housing activity is almost certainly on the rise, and mortgage rates and monthly payments are very likely to become more expensive. The same thought may be occurring to more and more people as we enter the summer home-buying season: “What if I could pay less every month for the same home…for the next 30 years…”
Note to Lewes home-buyers. Listen carefully: that could be the sound of your own alarm bell going off! If you think you hear it, now would be a great time to give me a Call/Text me Russell Stucki at (302) 228-7871, email me at email@example.com, visit more listings at www.beachrealestatemarket.com
Last week there was another interest rate development—though it was a slightly whipsawed kind of development. Since mortgage interest rates are so important to the bottom line in all but all-cash Delaware residential home sales, the direction rates are headed is something worth watching closely.
Last Wednesday was one of those days that come about twice a year. It was the occasion when the Federal Reserve Chairman is called upon to testify before Congress. The date is set as a biannual marker for revealing what’s likely to lie ahead for interest rates. If the Fed is going to decide to raise the Fed Funds rate, it’s usually the single strongest pointer to higher mortgage interest rates. All things being equal, that would eventually slow Delaware’s real estate market activity by making mortgage payments more expensive.
As the appointed hour for the testimony neared, Reuters weighed in early. At about 8:30 in the morning, they reacted to the advance copy of Chairman Yellen’s prepared remarks. Reuters reported on some key paragraphs citing the continued gathering strength of the economy—which would, therefore, “warrant gradual increases in the federal funds rate over time.”
Not great news for Delaware mortgage rate watchers—or was it? Reading more closely, there were those “gradual” and “over time” phrases. Wouldn’t that lead one to think the raises would be slow and gradual? Possibly more slow and gradual than previous Fed hints had led us to believe?
Ninety minutes later came the actual testimony, followed by questioning from the congressional committee. CNBC saw good news for Delaware mortgage applicants: “Fed stands ready to slow down rate hikes” was their takeaway. Sooooo, the Fed was going to raise the Fed funds rate (bad), but more slowly than expected (good).
But by the end of the week, the picture was a little clearer. Summing up last Friday, the Mortgage News Daily pointed to newly released retail sales and consumer inflation reports as “economic data that coincides with rates moving lower.” And despite anything the public hearing had produced, in MND’s opinion, “the Fed is less likely to flip the switch on those plans.”
Sure enough, by the close of business, they were able to headline “Mortgage Rates End Week at Best Levels.” So Delaware buyers and sellers could head into the weekend with few worries about interest rates, which remain at appetizingly low levels. If you are thinking of taking a look at some of the terrifically affordable Delaware home buys they make possible, today would be a good time give me a call! Call/Text me Russell Stucki at (302) 228-7871, email me at firstname.lastname@example.org, visit more listings at www.beachrealestatemarket.com.