04/22/2022
Will the rising mortgage rate cool down the hot housing market? And should I buy now when the mortgage rate is so high?
It’s everywhere in the news that mortgage rates are rising fast. The average 30-year fixed mortgage rate has hit 5.11% as of yesterday. Last time it was this high was in 2009 & 2010, shortly after the US housing bubble; however, at the time, 5% mortgage was considered low because it has dropped from the highs of 6%+ the year before. So, we know this time around our situation is not like those in 2009 & 2010.
This time around, the rising interest rate is more due to the high inflation rate we are experiencing right now (8.5% from the March data). Last time, inflation was this high was during the Great Recessions of the 1970s & 80s. What happened during that time? The Fed jacked up the interest rate, and mortgage rates went all the way from the lows of 8%+ (1977) to the highs of 18%+ (1981) in a period of 4 years. Yes, 8% was considered the lows during that time. So you can see historically speaking, the mortgage rate we have right now (~5%) is still considered a low interest rate. If history repeats itself, then we can see mortgage rates rising from the lows of 2%+ (2021) to the highs of 12%+ by 2025. But of course, the situation we are in now is not the same as the situation we were in during the 70s and 80s, so I don’t think the Fed will increase interest rates by that much this time, but you can see the point is that they ARE and WILL keep increasing interest rate to keep inflation under control, so in the short-term interest rate is likely to climb higher, not down (unless inflation is in check).
So, if you are looking for a mortgage, it’d be better to lock your rate now rather than later. If the rate goes down in the future, you can always refinance to get the lower rate.
The second question is, maybe the high interest rate will cool down the housing market, so maybe I’ll get a better bang for the buck if I wait for house prices to come down. For this question, we have to look at what’s contributing to the high housing prices now. The most important factor is the low housing inventory we are experiencing now. In a balanced market, we'd need 4-6 months of housing supply, but currently we only have about 0.49 month supply in King county! Why?:
1) New constructions - there is a lack of new builds in the market because builders have struggled to build more houses due to high labor and material costs and difficulty in finding skilled labors. Plus, this industry relies heavily on borrowed money to fund new projects, and the rising interest rate is not making it any easier for the construction companies. So in the short term, it doesn’t look like we’ll have more inventory added from new constructions.
2) Existing inventory – homeowners are less willing to sell because most have refinanced and got a low interest rate recently, would you give up your 2%+ interest rate and buy a house with higher price and higher interest rate right now? If you don’t have to move, then most people would say no. Therefore, it contributes to the low inventory problem we are seeing now.
With inventory problem not looking brighter in the near future and with high demands in the Seattle areas - tech companies continue to hire more people to come in to the cities with relatively high pays, it’s not likely housing prices will drop even when interest rates are rising. What may happen is that house prices will continue to rise, but at a slower rate. In fact, housing prices, during the 4-year period (1977 – 1981) when the mortgage rate skyrocketed to 18%+, still appreciated on average 10.3% each year.
So, should you wait because maybe the rising interest rate may calm down the house price? Maybe not. Is now a good time to buy because interest rate is so high? If you need to buy now, it is still a good time and 5% interest rate is still considered low, historically speaking, and the trend in the near future is for the mortgage rate climb higher, not lower. So, it’d be better to lock in your rate as soon as possible and you can always refinance should the rate goes down in the near future.
房貸利率這麼高，我現在買房對嗎？利率這麼高, 等一等的話房價會不會跌？
有看新聞的都知道, 最近房貸利率上升的很快。美國平均 30 年固定房貸利率已達到5.11% (截至昨天)。上一次利率這麼高的時候是在 2009 和2010 年 (在08年美國房地產泡沫之後) 。不過，當時5% 的貸款利率其實被認為是低點，因為它已從一年前 6% 以上的高點下來。所以，這一次的情況與 2009 & 2010 年不大一樣。
這一次，利率上升更多是因為現在的高通膨（3 月份最新通膨為 8.5%）。上一次，通膨率如此高時是在 1970 和 80 年代時美國的停滯性通膨。那段時間發生了什麼？那是美國高通膨的年代, 通膨一度高到13.55%, 聯準會為了要控制通膨一口氣調高了利率, 貸款利率在 4 年內從 8%+（1977 年）一路飆升到 18%+（1981 年）。是的，8% 的利率在當時是低的。所以跟歷代的利率比起來，我們現在的房貸款利率（~5%）依然被認為是低利率。如果歷史重演，那麼我們可以看到房貸款利率可從 2021 年2%+的低點一路飆到12%+到2025 年時。當然，我們現在的情況跟70 和 80 年代時也不完全相同，所以大部分人認為聯準會這次不會加息那麼多。但不變的是他們會用升息來控制通膨，所以在短期內-利率比較可能是繼續往上爬，而不是下跌（除非通膨能得到控制）。
所以，如果您現在要買房的話，最好盡快鎖定利率而不是再等等，因為越等利率可能越高。如果未來利率下跌的話，您也可以重新貸款來獲得較低的利率。
第二個問題是，也許高利率會讓房市降溫，所以等房價跌了再買也許會更划算。關於這個問題，我們要來看看是什麼導致了現在的高房價 - 最主要的原因是現在的房源很少。在一個供需平衡的市場，我們需要大概 4-6 個月的房源，但是現在在整個 King County, 我們只有大約 0.49 個月的房源！為什麼呢?
1) 市場上缺乏新建築。由於勞動力和材料成本的提高以及人力資源的缺乏，建商沒有辦法建造新的屋源。加上建築業非常依賴借貸來蓋房子，升息會對建築業更加不利，所以短期來看，我們不大可能從建商那得到更多的房源。
2）現有房 - 大部分的房主現在不太願意賣房如果沒需要的話，因為大多數人近期都重新貸款拿到了史低利率。如果你拿到了2%+的利率，你會放棄那麼低的利率賣房去換更貴、更高利率的房子嗎？如果非必要的話，那麼大多數人應該是不會。所以現在更少的屋主願意賣房使得現有庫存量更少。
房源的缺乏加上大量的需求 - 科技公司一直持續不斷的招聘很多高薪資的科技人才來西雅圖，因此，即使利率攀升，房價也不太可能會下降。比較可能發生的情形是房價會繼續上漲，但是速度會放緩。如果我們往回看, 即使在美國貸款利率飆升至 18% 的那 4 年間（1977 年至 1981 年），全美房價仍每年平均上升10.3%。
所以您是否應該等一等看房價會不會因為攀升的利率而下降?
這看起來似乎是不大可能的。
那現在利率這麼高，我應該買房嗎？
如果你現在需要買房，那5%的利率其實在美國的房貸利率裡仍然被認為是低點，而且近期內房貸利率的趨勢是越來越高，而不是走低。所以如果您需要買房的話，最好盡快鎖定您的利率 (以免利率越來越高)。如果利率在之後有下來的話，您也可以重新貸款來拿到比較低的利率。
