THE HONEST BROKER: BUYERS ARE TRAPPED IN A NO WIN SITUATION!
BY: DIANE LOTT, BROKER PARADISE FOUND REALTY, INC.
There is a sense of panic amongst buyers right now. They find themselves in a no-win situation with little housing to choose from, competition from other buyers and worst of all, that mortgage rates are on the rise.
First, the fact that there is very little housing available creates a two-fold dilemma for them. The low inventory coupled with desperation to out bid another buyer for the “house of their dreams” has driven housing prices up and there is no end in sight that this will be changing anytime soon. The competition is fierce. Buyers feel that they must be quick in deciding to place an offer on a home and can’t afford the luxury to have a slower, more judicious, pace to decide if that’s right for them. Under normal conditions, buyers “window shopped” for months to find the right home. Now, it’s see it and buy it or lose it to another more desperate buyer. This frenzy can lead to hasty decisions that they regret later.
Secondly, people signing papers for a new home loan will pay the highest interest rates since the start of the pandemic, according to new data released by governmental agencies. Mortgage rates for the typical 30-year loan have climbed to their steepest levels since early 2020 as the housing market looks to expected Federal Reserve rate hikes.
The average rate on the benchmark 30-year fixed-rate home loan was 3.56% in the week ending on Thursday — up from a 3.45% average last week and have raised now for the 3rd straight week according to data from mortgage giant Freddie Mac. The last time mortgage rates were this high was at the start of the pandemic. In March 2020, the average rate was 3.65%. It’s a big move from just as recently as mid-November, when the average 30-year rate was 3.08%.
Interest rates on home loans are being affected by expectations from the Federal Reserve, which has signaled that it’s likely to hike benchmark US interest rates at least three times this year to cool down inflation, which is stuck at 40-year highs. Also, analysts at Goldman Sachs said last week that they now expect even more rate hikes — four — this year, up from three hikes in its previous projections.
All these factors create a scenario for the current buyer to exercise caution but also not to sit on the fence too long if they can help it.
Diane Lott, Broker
Owner: Paradise Found Realty
Paradise Found Realty, Inc. of Palm City
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