Listing Courtesy of VICKIE YORK AT THE BEACH REALTY
Delaware house buyers and sellers were not surprised in the least at last week’s Federal Reserve decision to notch up the Fed Funds short-term rates. For once, anticipating the move had been easy. The surrounding factors—the economy, employment, and consumer confidence measures—were all in unison, pointing to a meaningful improvement now underway.
Already, a day before Wednesday’s announcement, Delaware readers could confirm what was coming: “Mortgage applications rise 3.1% as borrowers rush to lock in rates,” per CNBC on Tuesday; “Mortgage rates jump as economy revs up,” echoed MarketWatch.
The editors at CNNMoney, well aware that the “news” was not likely to gather much attention, wisely chose a more direct appeal by promising to explain “What a Fed rate hike means for you.” The listed major impacts:
Since Delaware house buyers belong to that Big ticket group, the last point was relevant. Although it was pointed out that a rate hike “does NOT guarantee that mortgage rates are going up,” a number of outside factors pointed in that direction. So Delaware house hunters might or might not expect that the immediate future could bring higher home loan rates, but the current climate was still favorable—a caption read, “rates are rising but still low.”
So far, so good. But then, to illustrate, CNNMoney offered a cartoon sketch picturing a balance scale with coins in one pan and a house in the other. The drawing was shown under a headline exhorting, “Homebuyers: Decision-making time!”
That graphic was the only obtuse message in an otherwise straightforward commentary. The puzzling part was that the scale showed the cartoon coins weighing heavier than the cartoon house. The visual metaphor for decision-making time would seem to illustrate that the money was more important than the house, which seemed to mean that prudent Delaware house buyers should hold onto their coins. But the article argued for the opposite. The message for Big ticket buyers was right there in the “rates are rising but still low” headline.
I think it’s fair to guess that CNNMoney’s Art Department is at odds with the Financial Prognostication Department about “What a Fed rate hike means for you.” For Delaware house hunters, my takeaway would be to side more with the Finance Department. Certainly, if you are preparing to take advantage of the current crop of great real estate buys, the scales should be weighted toward nabbing the house.
For a head start—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.
If you’ve ever had the kind of neighbor who is apt to borrow something (like your hedge trimmer), only to later complain about how it performed, you know how much patience it takes to hold your tongue. The Mortgage Bankers Association would be justified if they felt that way about me: I read their website, and sometimes quote it in posts about current Sussex County mortgage rates—but it sure makes for dull reading!
Anyway, with apologies to their (undoubtedly hard-working) writing staff, last week’s blog about national mortgage rates was as numbers-heavy as usual, yet still held a contradiction…but one that actually makes perfect sense. It also flags what could be seen as a bellwether that Sussex County home buyers and sellers would be hard-pressed to ignore.
The apparent contradiction was that mortgage rates were on the increase: national mortgage rates for 30-year fixed loans rose to 4.17%, which is the highest they’ve been since November. This is for conforming loans; the jumbos (greater than $417,000) went north as well, up to 4.15%.
As everyone knows, low mortgage interest rates are terrific for our Sussex County residential home sales. The low monthly payments that they create make homeownership more affordable for a greater number of buyers. So when rates increase and monthly payments go up, it should create a drag on the market. The apparent contradiction in the MBA release was that the increase in rates was accompanied by an increase in mortgage applications. And it was a big one: up 8.4% from the week before.
Most commentators were united about the phenomenon, and it’s hard to disagree. In addition to the natural surge that comes with the season (spring and summer are always expected to be quite active), consumers are seeing the uptick in mortgage rates and suspecting that rates will head higher. That’s nudging them to action, causing them to jump in now, while rates are still attractive—especially compared with historical averages.
CNBC’s Diana Olick agreed that such sharp increases actually help the home-buying market. She quotes one lender’s take about the buyers: “They understand that ‘wait a minute, rates are at an all-time low, let’s react now, let’s react before they go higher.’”
It’s far from a certainty that rates will continue to take off. Lots of us remember last year, when almost all the experts predicted a rise, yet mortgage interest rates headed in the opposite direction…and stayed there! But you can hardly blame area buyers if they go with the national trend and decide that locking in today’s rates is a prudent move: it’s a bird in the hand.
If you have been thinking along the same lines, I hope you will 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.