Rising mortgage rates has been the big headline in real estate over the past several months. In this video, we will look at:
✅ What rates have been doing over the past three weeks
✅ How higher rates have impacted the market, offering some relief to buyers
✅ What economists are predicting for inflation and mortgage rates going forward
✅ The pros and cons of Adjustable Rate Mortgages (ARMs)
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Eric Andersen, B.A., M.Div.
Owner/Designated Managing Broker, Eric Andersen Homes
📲 Text/Call: 708.674.6725
📩 Email: eric@eandersenhomes.com
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I have a number of awards and designations, including:
⭐️ Platinum 2021 Top 1% Sales Award (Mainstreet Organization of REALTORS®)
⭐️ Top 3 REALTOR® in Brookfield, IL (2021)
⭐️ 20 under 40, class of 2021 (Mainstreet Organization of REALTORS®)
⭐️ Gold 2020 Top 3% Sales Award (Mainstreet Organization of REALTORS®)
⭐️ Endorsed Local Provider (RamseyTrusted)
⭐️ Best of Zillow
⭐️ Pricing Strategy Advisor (National Association of REALTORS®)
⭐️ Certified Staging Consultant (Mainstreet Organization of REALTORS®)
Transcript:
Rising mortgage rates have been the big headline in real estate over the past few months, which recently topped seven percent. But there has been some good news for the housing market, as rates dropped for the third straight week to an average of six point four nine percent, down from six point six seven percent the week before Thanksgiving. I’m Eric with Eric Andersen Homes, and applications for mortgages have increased, as you might expect with the good news about rates dropping, but only by four percent—a modest increase. Mortgage applications are still down by forty one percent when compared to this time last year. Homes are still selling quickly because inventory is low, but the market isn’t nearly as competitive as it was six months ago. This is a welcome relief for buyers, who are not having to compete for every listing and waive every contingency. Many sellers are even willing to consider sale contingencies, which means more opportunity for buyers who also need to sell at the same time. Joel Kan, an economist with the Mortgage Banker’s Association, said, “The economy here and abroad is weakening, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes.” If he’s correct, this will be great news for the housing market. Higher rates have been necessary for a time—the market was overheated and needed to cool down. But now that the market has begun to soften, it’s encouraging to see rates coming back a little. For those wanting or needing to buy in the meantime, several have taken advantage of adjustable rate mortgages. ARMs offer a lower interest rate in the short term but carry higher risk over the life of the loan, as the rate will adjust based on the loan’s corresponding index. Some buyers will get an adjustable rate mortgage in the short term (or maybe even a conventional loan with a higher rate) with the intention of refinancing down the road. This is where the phrase, ‘date the rate, marry the home’ comes from. But there are a few risks with this strategy. For one, there’s no guarantee what rates will be when you’re ready to refinance. Plus, there are costs involved with refinancing, so this option isn’t free. I work with some great lenders and would be happy to get you in touch with one of them if you need help with punching a home, and I’m of course happy to help with your purchase or sale of a home in Burr Ridge or the western suburbs of Chicago. I’m Eric with Eric Andersen Homes, a family-owned brokerage where we treat our clients like family.