Welcome! This blog tracks the real estate market in the Central Shenandoah Valley, featuring market data and analysis, an exploration of common buying and selling questions, and candid commentary on all things real estate.
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Well, things weren't looking so good for a while there. Just after the election interest rates shot up from 3.6% (+/-) all the way up to 4.3% (+/-). In that moment, it seemed that there wasn't any stopping rising interest rates, and we might see 4.5% followed by 4.75% before we knew it.
Now, however, things seemed to have shaken out a bit differently than anticipated (or feared) with interest rates now hovering between 4% and 4.25%. Yes, it was fantastic to have interest rates under 4% for the past year (and more) but if we stay just over 4%, I don't think they higher rates will have a significant negative impact on the buying market in 2017.
Well, it seems the mortgage interest rates might really, finally, be on the rise -- for good. Over the past several years there were several times when I thought they might be rising -- but then they'd fall again a few weeks later.
We have seen a rather steady increase in mortgage rates since November 2016 -- and it is not yet clear when that increase will slow down or stabilize. Maybe around 4.25%? Hopefully?
From June 2016 - October 2016 we saw average rates below 3.5%. We're now up to 4.3%. That types of a change in mortgage interest rates impacts payments for buyers and could affect the number of home sales we will see in 2017.
While I don't think we'll see rates fall back below 4% in 2017 -- I am hopeful that they'll stay between 4.25% and 4.75%. Stay tuned for further updates.
Just after the election, mortgage interest rates started rising. They started around 3.5%, and have since climbed to somewhere between 4.25% and 4.3%. It seems unlikely that they will come back own anytime soon -- if ever.
So, what do these new mortgage interest rates mean for home buyers? Well, higher mortgage payments, naturally. The graph above shows the potential change in a monthly mortgage payment for a median priced home ($190K) as well as a home priced at $250K and $350K. The payment scenarios above assume that you are financing 80% of the purchase price -- and yes, I know, plenty of folks are really financing 90% or 95% of the purchase price. If you are financing a greater portion of the purchase price, the monthly payment will be higher, and the increase in the monthly payment will be greater.
As you can see above.....
As always -- for actual payment scenarios, you'll need to consult a mortgage lender. Shoot me an email (scott@HarrisonburgHousingToday.com) and I can make some recommendations.
Mortgage interest rates jumped nearly 0.5% over the past week or two, but they are still below 4% given the current average of 3.94% -- and if we look at that rate of 3.94% in nearly any historical context, that is a TREMENDOUSLY LOW mortgage interest rate.
As shown above, that is below the average annual mortgage interest rate for every year since 1972 with only two exceptions -- the average rate of 3.66% in 2012 and 3.85% in 2015.
Interest rates could edge even higher after the first of the year, so if you like that first digit of your mortgage interest rate being a 3 instead of a 4, and if you'll be buying soon, you may want to start the buying process sooner rather than later.
Stay tuned for where interest rates go next week -- but following the election, they jumped nearly 0.5% up to almost 4%. This takes us back to where we were nearly a year ago -- and is not a tremendously high level, but is much higher than where we were a week ago.
Read more via Google News.
Mortgage interest rates edged up, barely, this week to an average of 3.52%. That pushes us above the 3.5% mark, after several months mostly below that mark.
Let's look at a slightly longer (5 year) perspective....
As shown above, we are currently seeing some of the best interest rates in the past three years. The only time we have seen similar rates was in Fall 2012 through Spring 2013.
Let me know if you need a recommendation for a mortgage lender for a purchase or refinance.
Mortgage interest rates were historically low a year ago, though they around 3.86%. Now, they are REALLY low, with the current average of 3.48%. But at the end of the day, they have been at or below (or just barely above) 4% for the past 12 months -- which means that it has been a fantastic year to lock in one's monthly housing costs.
But, will the interest rate be rising in December or January? There is some talk that the Fed will increase the "Fed Funds Rate" in December, which could lead to an increase in mortgage interest rates.
Oh, and just to put things in a slightly larger context, here is an illustration of average mortgage rates over the past three years....
Maybe mortgage interest rates will never rise??? I have been thinking they would rise for quite a while now (years) but they just keep getting lower. Today's average rate of 3.43% is an absurdly wonderful opportunity to lock in your monthly housing costs at extremely low levels.
Now, admittedly, Janet Yellen (US Federal Reserve Chair) has indicated that rates could go up soon.
But until then, enjoy the low rates. If you're buying in the next 6 to 12 months, right now (or soon-ish) could be an especially opportune time to lock in your mortgage interest rates.
Oh, and here are today's rates in a longer context, of the past three years....
Silly me! Appraisal delays are NOT only related to increasing sales.
Teri Robinson, of Vision Appraisal Services, kindly educated me on some of the other factors that are affecting appraisal delays.
So, it's not just more than just more sales, more fully, it is....
More Sales + More Paperwork + Fewer Appraisers = Appraisal DelaysStill want to read more? Keep reading, from Teri....
Since the 2008 downturn and subsequent housing collapse, the turmoil in the financial industry created many burdensome regulations on the only Licensed/Certified person in the financial process (prior to Loan Officers having to be Licensed/registered).So -- I stand corrected since yesterday -- yes, higher sales volume is contributing to slower appraisal timelines -- but there are other big picture factors at work here as well.
If I said, a year ago, that mortgage interest rates were going to rise soon --- I was WRONG!!!
Current mortgage interest rates are just below 3.5%, and while I am still thinking that they could or will start to increase soon --- I would not be surprised if they are still below 4% a year from now.
Buyer still have great buying power, and the opportunity to lock in super-low interest rates for the next 30 years.
Well -- there has never been a better time to lock in an interest rate this year than RIGHT NOW! The average 30-year fixed mortgage interest rate has continued to drop over the past month, to the current average rate of 3.54%.
Perhaps it's silly, but I don't even have "rates will be going up soon" as a part of my vocabulary anymore. I said that for years (because that is what everyone assumed) and I was wrong, year after year. Sure, rates would go up a bit, but they'd then come right back down a few months later.
So -- buyers, rejoice! If you are buying now/soon, you can lock in a super low mortgage interest rate on your mortgage!
Fear not -- cheap money is still available. By that, I mean that the interest you will pay on a new mortgage still remains at record low levels. The current average mortgage rate for a 30-year fixed rate mortgage is still at 3.58%, the same spot it was one month ago.
If I had to guess, I think we'll probably stay under 4% for the remainder of 2016. Crazy to imagine, I know, but that is my prediction. The low rates don't seem to be leaving very quickly.
Given continued low interest rates and some increase in home values, let's take a new look at the opportunities of buying versus renting.
RENT = $1000/m. There are regularly options for renting a two-story townhouse in Harrisonburg for approximately $1000 / month in Avalon Woods, Beacon Hill, Stonewall Heights, Liberty Square, etc.
BUY = $865/m. With a 95% loan, buying such a townhouse apparently may cost as little as $865 per month assuming a $140K purchase price and 3.875% interest rate per SunTrust Mortgage's payment calculator....
This shows an $135/month cost savings of buying instead of renting. If we then look at the difference between renting and buying over a five year time period, the advantages start to pile up.
As you can see, this builds a rather compelling case for buying instead of renting if you are going to be living in this potential townhouse for the next five years. Two other factors to keep in mind....
Mortgage interest rates have been at an average of 3.85 over the past 12 months. Fantastic, right?
But wait, they are currently hovering at 3.58%! Wow!
Perhaps this has been part of what has inspired so many buyers to sign contracts in recent months.
Money continues to be cheap. Mortgage money, that is. The average mortgage interest rate fell again (slightly) to 3.71%, after having risen for a few weeks. This is a good bit below the 12 month average of 3.853%. And, notably, interest rates continue to be below 4%, as they have been for most of the past year.
This is still a great time to lock in your long-term housing costs!
There seems to be a LEAP DAY SPECIAL on mortgage interest rates -- though the rates are diving down low, as opposed to leaping up high.
The current average mortgage interest rate (on a 30 year fixed rate mortgage) is an astonishing 3.62%. This is well below the average over the past year (3.86%) and in fact, is the lowest rate we have seen anytime in the past year!
Lock in your interest rate today -- and Happy Leap Year and Leap Day!
Fear not, interest rate watchers, while mortgage interest rates were on the rise -- climbing up above 4% at the end of December, they have now tumbled back down to 3.79%.
When the Fed raised its key interest rates, it seemed that mortgage interest rates might finally be leaving the sub-4% range for good.
Not so much.
It's anyone's guess where mortgage interest rates will end up in December 2016 -- but their recent trajectory (down, down, down) no longer has me worrying (as much) that we will see a steady increase through the year up to and beyond 5%.
So, after almost a decade, the Fed raised rates. What happened to mortgage interest rates? Per the graph above, not much has happened thus far. Rates have edged up a bit over the past few weeks, and have headed back into the 4-point-something territory, but we were there (and a bit higher) as recently as this past summer, so that's not necessarily new territory.
Maybe if we look back a bit further, we'll see that this rise to 4.01% is really disastrous?
Nope! If we look back over the past three years (2013-2015) we'll notice that there as a long time frame during those years (shaded in yellow) when the rates were above 4 percent.
So, we'll see where things go from here, but thus far, the Fed's actions do not seem to have resulted in an end to super low mortgage interest rates.
The Federal Reserve announced on Wednesday that it will raise its key interest rate for the first time in almost a decade. This is expected to lead to gradual increases in mortgage interest rates.
WASHINGTON - The Federal Reserve said on Wednesday that it would raise short-term interest rates for the first time since the financial crisis, a decision it described as a vote of confidence in the American economy even as much of the rest of the world struggles.Read more in this NY Times article.
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