Mortgage interest rates have exploded over the last two weeks and have further confoundedÂ 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 stillÂ on the radar as prices rise faster than comparable data is developed. Add to the mix, theÂ revised FHA mortgage insurance policyÂ and itâ€™s easy to see why many buyers are flustered. Yet and still, theÂ 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?
While getting a great price is the goal,Â successful home buyersÂ 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 â€“ with the low rates in his pocket.
This article by Matt Graham fromÂ Mortgage Daily NewsÂ is worth a read. Yes itâ€™s boring but itâ€™s also important to understand how things work and why itâ€™s so important to work with a lender that you trust.
Mortgage rates have had aÂ far worseÂ week than than youâ€™ve been told anywhere else, and today was even moreÂ freakishly destructiveÂ 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 byÂ at least a quarter of a point.Â A quarter of a point may not sound like much, but in terms of day-to-day movements in 30yr fixed mortgage rates, itâ€™s catastrophic. That leavesÂ best-executionÂ at a stomach-churning4.625%Â today.
PLEASE UNDERSTAND, this is real.Â Freddie MacÂ may have been out yesterday with the industryâ€™s most commonly cited benchmark for weekly rate movements, but this is merely an average thatâ€™s tallied through Wednesday. Thursday took rates another eighth to quarter higher and today took rates another quarter higher again. If youâ€™re a consumer staring at a rate quote in disbelief, please know that todayâ€™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: Weâ€™dÂ like to sayÂ â€œweâ€™ve moved high enough, fast enough that weâ€™ll probably be able to dig in and hold some ground here,â€ but thatâ€™sÂ not safe yet. Market participants themselves, let alone mortgage lenders, are still feeling out the post-Fed-Announcement environment. Thereâ€™s no reason rates canâ€™t go even higher just because theyâ€™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.Â Never overpay, but understand the buyerâ€™s market has been over for some time â€“ now the rising rates are just reinforcing that.
Associate Broker & Certified Appraiser
Atlanta Communities Real Estate