Mortgage Lenders Turn ‘Desperate’ as Soaring Rates Roil Industry
Danny Meier had one of the busiest years of his career in 2021.
The 36-year-old closed roughly $799 million worth of loans at Academy Mortgage Corp., ranking him among the top producing originators in the US. Now, he’s bracing for a 20% reduction in business and recently had to cut several staff.
“It’s scary,” Meier said in a phone interview. “We have sellers panic listing, and then you have buyer fatigue and buyers stepping out altogether really fast.”
Business has started to evaporate across home-lending firms in recent weeks, after the Federal Reserve boosted borrowing costs to tame decades-high inflation….See more at Bloomberg.
2. Mortgage Rates for June 27, 2022: Fixed Rates Cool Off Again
According to CNET, A variety of fixed mortgage rates decreased today. The average interest rates for both 15-year fixed and 30-year fixed mortgages went down. But we did see another hike in the average rate of 5/1 adjustable-rate mortgages.
My advice, No matter whether the housing market is red-hot, in a cooling-off stage or something in-between, one can and should seek to save money on financing by seeking multiple offers on a mortgage.
3. Sales of existing homes fell in May, and more declines are expected
Sales of existing homes in May dropped 3.4% to a seasonally adjusted annualized rate of 5.41 million units, according to the National Association of Realtors.
This reading is based on closings during the month, therefore representing contracts likely signed in March and April. During that time the average rate on the 30-year fixed mortgage rose from right around 4% to 5.5%. It is currently right around 6%, according to Mortgage News Daily. Rising rates, along with rapid home price appreciation and continued low supply, have given affordability a triple punch.
First-time buyers made up just 27% of all transactions, down from 31% a year ago. Affordability is clearly hitting them hardest, as rents are rising as well.
In all this depressing news, there is an opportunity for savvy buyers . Find out at CNBC.
4. Worried About a Housing Market Crash? The Smartest Real Estate Investors Know These 3 Things.
As housing data continues to roll in, it’s becoming blatantly clear that the real estate market is cooling down. The verdict is still out as to whether or not a housing market crash will follow, but those who are concerned can rest easy knowing these three things.
Point number 3. Down markets are opportunities to buy
The real estate market following the initial crash of 2007-2008 led to tremendous buying opportunities for those who had the knowledge and the capital. Higher inventory and less demand lead to deflated real estate prices; lower real estate prices can lead to better returns and better appreciation down the road.
It’s important to remember that mortgage rates are rising right now, and with inflation remaining somewhat untamed, it’s likely those rates will increase. Higher rates mean a higher cost of borrowing, making cash king after a crash. Those who have the funds or private capital available to take advantage of low prices will likely be rewarded for being able to buy low.
Keeping this point plus two more in mind, you’ll be positioned to ride out the storm with ease and possibly be in a better position because of it.
5. Rent Ain’t Cheap, 70% increases, and lowest vacancy rate in 14 years
Rental bidding wars, 70 percent rent increases, and the lowest vacancy rate in 14 years: What does a landlord think?
A year ago, property owners were doing anything they could to woo tenants: paying broker’s fees, offering multiple months of free rent, even giving away Pelotons. In February 2021, the Manhattan vacancy rate stood at 11.79 percent. Within a few months, everything changed. As people flocked to the city last spring in anticipation of a reopening that never really happened, the vacancy rate plummeted and the rental market turned brutally competitive. Renters started reporting increases of 50, 60, and even 70 percent on lease renewals. Desirable apartments now receive hundreds of inquiries. There are lines around the block at open houses and baseline 15 percent broker fees. Bidding wars, unheard of until last year, now happen in nearly a quarter of Brooklyn and Manhattan apartments, according to the latest Douglas Elliman market report.
Renters have reacted with disbelief, despair, confusion, and TikTok videos. We are, after all, still living through a pandemic. Read the rest at Curbed.
Your Turn:
Savvy buyers and sellers are not driven by Wallstreet. There are many factors that plays out on how one react on day to day news and movement. One may sit back and watch, while another may seize the opportunity to act. What are you? Proverbs 22:13, The lazy man says, “There is a lion outside! I shall be slain in the streets!”