This is a discussion about mortgage rates and their Volatility - and it’s basic effects on the current housing market. Everybody’s talking about Rates today as they cool or /fuel the market. Let me say this is going to be a good year! It just depends upon what kind of buyer you are. I can reassure you that down the road we will see interest rates and homes overall be more affordable when we hit the 5% range. The big question is WHEN?
Hi! I’m Lisa Marie Contaldi and my family has called Austin Texas home since the late 80’s. I’ve celebrated hundreds of success stories and memorable housing experiences helping buyers and sellers achieve their personal financial goals. We’ve all witnessed the astounding changes from a rapidly evolving housing market in Austin through many real estate cycles. Is it time for you and your family to cash out and make the change you’ve been planning for months; or dreaming about for years?
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RATES RATES RATES - UNCERTAINTY OR CERTAINTY?
Hi Friends!
This is a discussion about mortgage rates and their Volatility - and it’s basic effects on the current housing market.
You know the weather has been hot cold hot cold at home here in Austin and this Reminds me of our interest rate scenarios up down up down! Everybody’s talking about Rates today as they cool or /fuel the market. Let me say this is going to be a good year! Buyers and sellers who have been on the fence -They’re going to come into the market. But the market is interest rate SENSITIVE AND VERY dependent, YES it is! HOMES ARE LESS AFFORDABLE THAN THEY USED TO BE but home prices are more affordable but the purchasing power is low, if you’re not totally cashing out on investments or home equity. It just depends upon what kind of buyer you are. I can reassure you that down the road we will see interest rates and homes overall be more affordable when we hit the 5% range. The big question is WHEN?
What are rates doing? Well, compared to 2 weeks or so ago they’re up, compared to last October they’re down by a percentage point. It’s all about perspective. Today’s 30 year Fixed rate from Mortgage Bankers Association is about 6.78% . So even the slightest uptick or downtick in rates will help or hurt our market as it is very volatile.
The first thing I would ask you if you are a buyer at any stage of life who needs to finance a home is can you afford the payment? Meaning does it give you the lifestyle you’re comfortable with? Enough Said. Let’s talk more about bond prices specifically the US - 10 year treasury note rate.
Mortgage Bond Prices determine home Loan Rates
” according to the North American Journal of Economics and Finance in Sept 2023, an article titled Uncertainty about Interest Rates and the Real Economy. The US treasury market is an indicator of where the economy is heading. It is very influential.
Here’s what you need to know - If the amount of US debt is high over 34 Trillion dollars….
How much debt does the Treasury have to sell to fund the government for the first quarter?
The Treasury Department sells bonds to fund the government. -I WANT TO CLARIFY = THE FED DOES NOT SET MORTGAGE RATES. INFLATION, and US TREASURIES influence rates.
The 10 year US treasury bond yield serves as a baseline for fixed mortgage rates which provides financing to the housing industry. So, to encourage investors to buy US Treasury bonds to fund our debt, it has to issue HIGHER rates - and currently it is over 4%.
Until the rate on the 10 year Treasury Note rate goes below 4% - most housing experts do not predict lower interest rates, lower mortgage rates. Please note it is an election year although historically during interest rates have not been affected by election years, economic uncertainty most certainly has. Again Quoting the North American Journal of Economics article Interest rate uncertainty can be indicative of the future evolution of the real economy’s activity because “this type of uncertainty can prompt changes in the cost of hedging one’s risk regarding interest rates.” In other words if you are looking at the overall economy and you don’t feel comfortable you’re not willing to make big moves.
What do other economists see about interest rates?
Dean Baker, the senior economist at the Center for Economic Research,
said it's also appears that mortgage rates are now falling again (a few weeks ago) but we will son see rates below 6% again. If you are a buyer and you see uncertainty in the economy does that make you want to buy or sell if you have a home and you need to sell in order to get another?
Here’s my take on it. It depends upon which buyer Archetype you are. Do you want to be ahead of or behind the curve. Be poised to take action. Get pre-approved TODAY …fully and start shopping.
In our next podcast we will talk about the 10 Buyer Archetypes in Today’s Market
Have a great week!