Today's hot news - mortgage rates are soaring, oh boy!

Hi everybody, Joe Hillner with Your Home Sold Guaranteed Realty, where we will sell your home for just a 1% commission, guaranteed! 

Ok, so every week, I share market data to keep you informed with the local real estate market.  
Here is this week’s Boca Market Watch.

First, Single Family Homes:

43 new listings, pretty decent, and ranging in price from $309K to $7.9M.  
16 homes back on the market, while 9 homes listed took a price decrease, and 7 sellers raised their asking price.  And  another so so week with 36 different properties under contract, and 44 going pending.  Only 11 homes were unsuccessful in selling and were taken off the market or the listing expired outright.  And a poor week for sales with 44 homes closed in the past week,  ranging from $415K to $17.5M, just a few blocks down the street from me!

Next up, Condos and Townhomes:

51 new listings, not great, and ranging from $88 Grand to $2.8 Million.  
24 units came back on the market, 17 properties with a price decrease, and 11 sellers with an increase.  And a decent week with 42 different properties under contract, and another 48 going pending,  And just 14 condos or townhomes were unsuccessful in selling and were taken off the market or the listing expired. 69 closed sales this week, not bad, and ranging in price from $75 Grand to $6 Million!
 

Here's what's making news right now.

How the heck did mortgage rates soar past the 4 percent mark last week, when many forecasters weren’t expecting that to happen until later this year, or even next year? Many economists had expected that some factors driving inflation during the pandemic, such as supply chain disruptions, would be transitory. The prospect of more severe Fed tightening has spooked bond market investors, pushing rates for conforming 30-year fixed-rate mortgages above 4 percent for the first time since December 2019,

But bond market investors make decisions based on their expectations of what Federal Reserve policymakers will do in the future – and it’s looking like the Fed’s going to be more aggressive about short-term interest rate hikes and shrinking its balance sheet. But these moves will be data dependent, so if inflation numbers ease, mortgage rates and other long-term interest rates could plateau, or even come back down.

What's interesting is that even though conventional and FHA rates are just over 4%, jumbo loans are seeing rates in the 3.7% range - that's highly unusual, but good news for anyone looking for a larger loan amount.

Fed policymakers have been telegraphing their intention to raise the short-term federal funds rate six times this year, one quarter of a percentage point at a time.  That's double what we were forecasting late last year! But bond investors were startled Thursday by a U.S. Department of Labor report showing the consumer price index rose 7.5 percent in January, the largest annual increase since 1982.

After that report came out, St. Louis Fed Chair James Bullard fueled investor concerns, telling Bloomberg News that he would support raising the federal funds rate by a full percentage point during the first half of the year.  We haven't seen that kind of aggressive monetary policy in decades, and as I reported last week, there's a realistic chance that that could tip the economy over into a recession.

Fannie Mae’s latest National Housing Survey showed the percentage of Americans who think it’s a good time to buy a home fell to an all-time low in January, with rising home prices and interest rates making homes unaffordable for many would-be homebuyers.

In their most recent forecast, Fannie Mae economists predicted that many homebuyers will be priced out of the market this year, and that sales of existing homes will fall by 3.2 percent. But rising rates could also “supercharge” the housing market ahead of the spring homebuying season, as the fear of missing out on low rates could get buyers off the fence. To put it in perspective, with rates at 4 percent, homebuyers already have $52,000 less house buying power than they did in November.

Fannie Mae and Freddie Mac’s federal regulator is requiring them to implement new fees on second homes and investor loans. That means a growing number of homebuyers may find that it’s cheaper to do business with private lenders who fund loans without Fannie and Freddie’s backing.  For example, we now have a product for investors that requires almost no documentation, and the loan is quickly approved just on the basis of the rental income in relation to the debt service - very creative financing.

Since rates will vary by lender and the borrower’s credit score and loan-to-value (LTV) ratio, it’s smart to get quotes from multiple lenders.  If you're thinking about making a purchase, give us a call and we'll connect you with a great local mortgage bank right here in Boca.