Listing Courtesy of KELLER WILLIAMS REALTY
When you are close to buying a new home in Bethany Beach, one news item that definitely becomes more interesting than usual is the status of current mortgage interest rates. All those little ads on the side of the screen that blink at you with Mortgage Interest Rate Alert! and Lock Lowest Home Interest Rate NOW! that you are accustomed to ignoring may also suddenly rate a second look—although you quickly learn that the promised Bethany Beachmortgage interest rate won’t be revealed unless you surrender a lot of personal info to the advertiser.
If you decide to avoid blabbing your email address to the internet (certain to put you onto yet another advertiser’s database), you probably do what I do—which is to check the legitimate news sources for their mortgage interest rate commentaries. When you do that, it’s reassuring when you find words and phrases like widely expected and as predicted (or even minor correction or following recent trends). When you are not quite ready to apply for your own mortgage, sudden interest rate lurches make budget projections less reliable.
So you would have expected it to have been reassuring when last week, as predicted, the Fed raised its Fed funds rate—the basic interest rate banks pay—by just a teense: a quarter of a point. Pretty much as had been widely expected. That may be an understatement; such a move had been thought imminent by many experts for years.
But last week’s Fed action didn’t quite follow through on the as predicted and widely expected fronts. Instead, we got words like ‘paradoxical’ (Mortgage News Daily); ‘fear mongering’ (CNN Money); ‘volatile’ (themortgagereports).
The good news for potential mortgage applicants was that the disarray the commentaries were describing had nothing to do with what homebuyers were likely to encounter. Instead, it described the problem the commentators were having explaining what the initial fed funds hike had caused: a slight fall in mortgage interest rates!
“Lenders easing up on home loans” and “Fed hike no biggie for mortgages” were stories from CNBC—and they were typical. “Mortgage Rates Slightly Lower Ahead of Holiday Week” was what Mortgage News Daily had found to be the paradoxical descent—eventually deciding it could be explained at the bond market level (traders had erred on the side of caution before the Fed’s announcement).
By Friday, loan originators were unanimous in suggesting that ‘today may be a good day to lock’ (but then again, to loan originators ‘today’ is always a good day to give them business). There was an underlying theme to most of the commentaries: expect a bounce in mortgage loan rates before too long. Probably, but not certainly—especially if you kept in mind Motley Fool’s “3 Predictions That Were Totally Wrong in 2015.” In addition to the Fed Funds rate and Treasury Note miscues, there was one we all would have shared: a barrel of crude oil ended the week priced at $40…about half of what the experts projected last January.
One fact that doesn’t involve any guesswork: by historical standards, today’s Bethany Beachmortgage interest rates remain in the ‘very low’ range. That means it’s still a good time for buyers and seller to give me a call! Call/Text me Russell Stucki at (302) 228-7871, email me at email@example.com, visit more listings at www.beachrealestatemarket.com.
Delaware first-time home buyers in 2014 are faced with a question that hasn’t changed for generations: is it more practical to buy right now, or to continue to rent?
Over the past few years, buying has been the easy choice. Nationally, in 2013 it cost 35% less to own a home than to rent according to that year’s study by real estate website Trulia. That despite rising house prices and mortgage rates. But that was last year, and the experts have been pretty unanimous in predicting that interest rates will continue to rise—ending up somewhere near 5.5% by 2014’s end (per the National Association of REALTORS®).
In the face of higher interest rates and house price tags, will 2014 be the year when renting becomes more affordable than buying?
While first-time home buyers in Delaware are faced with increasing house prices and mortgage rates, renters also find another national trend: higher rents. Rents have been on the rise for the past few years, with continued increases expected throughout 2014. According to Axiometrics, the folks with the latest data, apartment rents are on course to rise by 3.04% in 2014. Research firm Reis puts the expected rise at 3.15%— and both say the causes are the potent combination of tight supply and rising demand. Whenever the economy improves, each incremental gain puts even more pressure on rents—which acts as an offset to any financial benefits of renting versus owning.
Where does that leave our typical Delaware first-time home buyers? Most recently, national averages show it is still about 21% cheaper to own rather than rent. According to the Trulia study, by fall of last year, the earliest tipping point at which it would have become more expensive to own rather than rent would have been expected to occur if interest rates hit 5.2%—but only in San Jose, California—and only if rents had remained fixed (which didn’t happen, even in San Jose). Nationally, out here in the real world, Tulia admitted “mortgage rates will not tip the housing market in favor of renting over buying until rates hit 10.5%...”
Delaware first-time home buyers can be a bit more confident as they take in one more piece of information from the real world of April 2014 (no matter what the experts predicted): over the past few weeks, national mortgage interest rates have been edging down instead of rising! That may well change direction again (probably will), but for now at least, I have to say that it’s a pretty clear call in the spring of 2014: time to get pre-qualified!
That’s the first-time home buyers’ Step One…it also happens to be an ideal time to give me a call!