Market Update: Everyone is reading the news and seeing opinions and facts flying around about mortgage rates, inflation, and the market. If you have been riding the high wave of being a seller there is a chance this will slow down as the market adjusts and if you have been a buyer in this market this could also impact your financials and change your purchase price to align with the new rates. So what exactly does all this mean for you as a buyer or a seller?
- Yes, interest rates have gone up. The good news is that if you are doing a 30-year jumbo they are still hovering right over 5% and if you are doing a conventional 30-year they are still under 6%. Yes, that is significantly higher than the rates we were seeing just a few weeks ago, but putting things into perspective these rates are still not bad.
- Are you going to have to adjust your list price as a seller to be in line with the interest rate shifts? Possibly. Think about it this way, a 6% mortgage rate monthly payment is equal to a mortgage payment with a 5% rate when the asking price is reduced by roughly 8.25%. A 6% mortgage rate monthly payment is equal to a mortgage payment with a 4% rate when the asking price is reduced by roughly 16.25%.
- What if you executed a contract last week that stated on your third-party financing addendum that your rate cannot exceed 5.5% for a conventional 30-year loan? In this case, as a buyer, you have an automatic out if you have not locked in your rate. For sellers, this is not great because it is not much you can do other than put pressure on the buyer to lock in a rate or adjust their third-party financing terms.
- Buyers, this could be a great time to take advantage of what was an aggressive sellers' market just a couple of weeks ago to now a good sellers' market. There may be a good amount of buyers that are no longer your competition as interest rates or the stock market has impacted their financial ability to continue to purchase in the same price range as you.
To sum it up now is still a good time to buy and sell. Buyers, home prices are not expected to go down, in fact, they could continue going up. Buy before that happens because you could be looking at high prices and higher interest rates before you know it. Sellers, it's still the right time to sell. Consult with your agent about timing, pricing, and all the important details needed in order to have a successful sale and get the most for your home!
We are closely monitoring the market conditions as they are changing every day and will continue to keep our clients updated. If you have any specific questions feel free to reach out!