They Said Interest Rates Wouldn't Change
Didn’t the Government Say that Interest Rates Wouldn’t Change?
Mortgage interest rates, to include VA Mortgage rates, have increased significantly over the past month. Although the fed has stated that they will keep interest rates and other stimulus in place, the lending industry, taking advantage of strong demand, feels otherwise. Almost all mortgage money in this country comes from the fed. They lend the money, with strings, to the private lending industry….currently for zero interest.
In simple terms, the lending industry marks the interest rate up by a certain margin, which represents their overhead and profit. If you have been shopping for a home loan, VA or any other type, you have probably noticed the increase in rates. A well-qualified VA borrower just a few months ago could get an interest rate of less that 3.5% without any additional fees (points). Currently, the same buyer is looking at a rate of 4.25-4.5% depending on the various factors that go into qualifying for a mortgage….Credit Score, Debt to income ratio etc. I expect that rates will continue in a range of about 3.5-4.5% for the foreseeable future.
As I mentioned earlier, the Fed says that it will hold its rates at current levels thru 2014. I believe that going into the fall of 2013 that demand will seasonally slow, reducing the probability that the lending industry will raise rates further…at least before next spring. If demand continues as it has thus far this year however, it is possible that rates will rise further. The real estate market has turned around, and looks like it is going to continue upward. Home prices are much closer to the bottom that to the top…but as home prices increase, it appears that so will interest rates.
Keep in mind that if you wait on purchasing a home “until you get to know the area” that prices are going to continue to go up, and interest rates likely will too…but hopefully not until next spring.
Current Market Stats July 2013
177.2 Housing Affordability Index for all buyers, 1st Quarter 2013. Second most affordable on record.
$237,600 Median existing home price, 1st Quarter 2013; 14.1% higher than year ago but still 21.0% lower than 2007's 1st Quarter high.
28.6% Increase in single family building permits compared to 1st Quarter 2012.
$8.38b Dollar volume of commercial property sales in Washington as monitored by Commercial Brokers Association. Excludes multifamily.
4.2 Months supply of homes available for sale, end of 1st Quarter 2013 (5-7 months is a balanced market).
39.1% Proportion of Washington homes sales in 1st Quarter of 2013 with accepted Purchase and Sale Agreement within 30 days of listing.
3.56% Effective mortgage rates on loans closed in 1st Quarter 2013. Lowest on record.
$1.3B Dollard value of residential (single-family and multifamily) building permits issued in 1st Quarter 2013 (excludes land value); 37.4% above year earlier.
88,440 Seasonally adjusted annual rate of home sales in 1st Quarter 2013. Highest since 3rd Quarter 2007.
68,250 Number of seriously delinquent home mortgages in Washington in 1st Quarter; 10,600 fewer than a year earlier.
28,118 Total units authorized by building permits in Washington in 2012. 34.8% above 2011 but still 47.7% below 2005 peak. 18.5% Proportion of 1st quarter home sales reported as cash sales.