Mortgage rates continue to climb to pre-COVID levels | New
The rate on a 30-year mortgage is rising to the highest level since June, but that doesn’t appear to be slowing the market in Norman, according to local experts.
Based on weekly data released by a federally chartered mortgage lender Freddie mac, 30-year fixed rate mortgages averaged 3.18% for the week ending April 1, after falling to a record low of 2.65% in January.
Rob Schaerer, broker and partner at Dillard Group Real Estate and 360 Realty, said a client of his recently stuck at 3%, and the rate one actually receives depends on the region, among other factors.
“It also depends on the borrower,” Schaerer said. “There are a lot of circumstantial things that end up playing a part in the final APR someone gets, like how many properties they have.”
Schaerer said a lender’s current overall portfolio is 14% investment loans. He said that while it’s not a significant amount, it’s significantly higher than what Fannie Mae and Freddie Mac are willing to do.
“There is going to be a huge disparity based on the lender’s loan portfolios which is going to cause some lenders to be much higher in terms of rates than others, and I think that has spread to the category of lenders. owners occupied, ”Schaerer said.
Mortgage applications fell 2.2% from last week, according to data from the Mortgage Bankers Association weekly investigation. Demand rates have declined in 10 of the past 12 weeks since mortgage rates hit an all-time high.
“For every little increase in people’s payments, there will be a certain number of people who are going to be taken off the market, or move from one market to another, in terms of price,” Schaerer said.
As rates move towards pre-COVID levels, Schaerer said fear of missing out will be the driving factor in the market, even with hindsight clouding the view and making what might be a good rate right now look less appealing. .
“There may be a short-term pullback in the market as people try to say ‘we’ll wait for interest rates to come back down’ but at some point interest rates won’t come back down,” he said. Schaerer. “For a financial institution to say that it is going to lend someone $ 200,000 at 3.18% for 30 years is a bit absurd.”
Terry Teel, a Bank of Oklahoma mortgage banker in Norman, said rising rates in recent months have had little effect on lenders as buyers expect rates to rise.
“People don’t say they don’t want to buy anymore, or anything like that.” Teel said.
Despite the rate hike, Schaerer said he continues to see record inventory and new homes are being built at a rapid rate.
Schaerer said buyers today are always willing to pay above the list price and get what they can before it goes away.
“I’ve seen situations recently where people are giving up on valuation contingencies, which is the new big thing to hit our market,” Schaerer said.
According to Forbes, forgoing a valuation contingency may strengthen a potential buyer’s offer from the seller’s perspective. Once an appraisal contingency has been lifted, the buyer cannot go back and renegotiate the purchase price if the appraisal price is lower, which may indicate that the buyer is serious about their business. purchase.
“In the past, when an independent appraiser sent by the bank appraised the house for less than the contracted purchase price, it kind of dampened the market a bit,” Schaerer said. “As the competition gets fiercer, it becomes a situation where in order to get a home the buyer will have to be able to find terms more inclined to convince the seller to accept it.”
With the market as it is, Teel said it’s important for potential buyers to find a lender they can trust and who is willing to fully explain the details of the process.
“Over the phone is great, but it helps many first-time buyers to be able to sit down and talk in person,” Teel said.