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Metro Atlanta Real Estate News

Sales & Appraisal Expertise in Atlanta Since '89

By Hank Miller - Broker/Appraiser | Broker in Alpharetta, GA

Buyers Concerned with Price Hammered by Interest Rates

Mortgage interest rates have exploded over the last two weeks and have further confounded Atlanta home buyers. Already squeezed with low inventory, rocketing rates have eroded buying power and scored a bulls eye hit on affordability. Compounding that, underwriting remains combative with appraisal issues still on the radar as prices rise faster than comparable data is developed. Add to the mix, the revised FHA mortgage insurance policy and it’s easy to see why many buyers are flustered. Yet and still, the administration continues to push banks and lenders to approve mortgages to buyers with weak credit. Interesting policies in this turbulent period, but the one constant of late are the rising rates.

The take away here?

  • Get set up with a lender to minimize surprises 
  • When you find a home that works, review the data
  • Make an offer based upon that data
  • If it’s a good fit, then consider pulling the trigger
  • If rates are rising, is it better to save money on price or lock in a potentially lower rate?

While getting a great price is the goal, successful home buyers understand that consideration has to be given to what the wait will cost in terms of rate. Is a 5K reduction in price as good as a .25% lower rate over 15 or 30 years? At the end of the day, we knew the sub 4% rates had to end, buyers that continued to sit and wait can now be certain that Elvis has left the building – with the low rates in his pocket.

This article by Matt Graham from Mortgage Daily News is worth a read. Yes it’s boring but it’s also important to understand how things work and why it’s so important to work with a lender that you trust.

Mortgage rates have had a far worse week than than you’ve been told anywhere else, and today was even more freakishly destructive than the previous two days. Taken together, this is the worst week for mortgage rates we have on record. Today is one of two times in the past 10yrs where the average borrowing rate for top tier scenarios moved up by at least a quarter of a point. A quarter of a point may not sound like much, but in terms of day-to-day movements in 30yr fixed mortgage rates, it’s catastrophic. That leaves best-execution at a stomach-churning4.625% today.

PLEASE UNDERSTAND, this is real. Freddie Mac may have been out yesterday with the industry’s most commonly cited benchmark for weekly rate movements, but this is merely an average that’s tallied through Wednesday. Thursday took rates another eighth to quarter higher and today took rates another quarter higher again. If you’re a consumer staring at a rate quote in disbelief, please know that today’s movements are very real and very justified based on the price movements in MBS.

This movement will eventually end. It could be Monday or rates could go higher all next week. The assessment today is exactly the same as it was yesterday: We’d like to say “we’ve moved high enough, fast enough that we’ll probably be able to dig in and hold some ground here,” but that’s not safe yet. Market participants themselves, let alone mortgage lenders, are still feeling out the post-Fed-Announcement environment. There’s no reason rates can’t go even higher just because they’ve moved so high, so fast.

So if your a buyer out on the hunt, understand the situation. It might be best to execute on a deal if the home works and is at a price that is supported and reasonable. Never overpay, but understand the buyer’s market has been over for some time – now the rising rates are just reinforcing that.

Hank Miller,SRA 
Associate Broker & Certified Appraiser
Atlanta Communities Real Estate
678-428-8276 direct
hank@hmtatlanta.com
www.hmtatlanta.com

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