05/13/2022
If you're wondering where interest rates on mortgages are headed and what they compare to, just look up and back. We are currently at 2009 levels and no sign of it coming down. Why do I say that? The Fed is no longer going to be implementing any quantitative easing which they began doing after the initial pandemic interest rate frenzy. This helped stabilize the market, and in combination with the lower rates the Fed had, brought the mortgages rates down to all-time lows. Now the opposite is happening, the Fed is quantitatively tightening and is increasing rates on short term debt with 6 more possibilities to increase this year. That will also effect mortgage rates. Couple that with no more quantitative easing, and you have a whole lot of sky above current price. In this scenario we wish there was a ceiling!
So why does it matter? Well, higher rates means less buyer interest on your home that just appreciated by 60%+ in the past 2 years because the buyers can no longer pay a mortgage at your price at the current interest rate. Less competition means more days on market, and eventually leads to your agent slashing the price of your home to get more foot traffic through your door. If you are buying that means less affordability. You are priced out of those $500k homes you used to be able to qualify for when the rate was 3%. Less affordability means you are stuck in your rental. That means your landlord knows what I know, and sees you have no where else to go so they can continue to spike rent prices while food, gas, imported goods prices are also increasing, its a lot. We haven't seen this big of a spike in mortgage rates in this short amount of time since the 80's. yes other events over longer periods of time have seen much bigger ebon and flows, but not over the course of 140 days. This run started after Christmas 2021. That's pretty significant and the clock is still running with plenty of room to the upside.
Decisions, decisions, decisions. If you are comfortable and staying put in your house, enjoy your low rate and leave the loan alone! If you are a buyer or seller reach out and let me know your situation and Ill help you see your options. If you are a homeowner, and are thinking about utilizing some of that equity in your property to slash monthly expenses in other areas because inflation is kicking your bank accounts butt, dont forget about your equity you can tap into. The sooner you do that, the better because as I started with, there is no ceiling to how high these rates could go. Even if I am wrong about rates continuing to rise and rates reverse, you can refinance again and just lower the rate again if rates do come down. But if they continue to go up, and the values start to cool off, you'll be glad you paid off all your debt at a lower rate when you had more equity. Its not for everyone, but if you are between a rock and a hard place, and you have equity, you have an out that can help you through these hard financial times! Also keep in mind, the rates you see are the average so your actual rate may vary depending on your scenario.
