rates jan 11

Boston condo for sale mortgage rates have been rising steadily:

https://www.mortgagenewsdaily.com/markets/mortgage-rates-01112022

How many guessers had rates in the mid-3s in the first half of January?

Lawrence Yun, chief economist for the National Association of Realtors, projects that mortgage rates will increase to 3.7 percent in 2022, pushed up by persistently higher inflation.

Danielle Hale, chief economist for Realtor.com, expects the 30-year fixed mortgage rate to average 3.3 percent for most of the year and be at 3.6 percent by the end of the year.

Daryl Fairweather, economist for Redfin, expects rates to rise slowly from around 3% to around 3.6% by the end of 2022, thanks to the pandemic subsiding and lingering inflation. That would mean about $100 more per month in mortgage payments for the median home.

MBA economists predict that the 30-year fixed-rate mortgage will rise to 4 percent by the end of 2022.

Bankrate.com predicts that the 30-year fixed mortgage rate will peak at 3.75 percent during the year and fall back to 3.5 percent by the end of the year. “Long-term rates will move higher in the first half of the year, but by the close of 2022, concerns about slowing economic growth will be unwinding that and bringing them back down,” he said. “This will be higher than where mortgage rates started the year but ending at levels previously unseen before the pandemic began in 2020.

Lending Tree predicts that the 30-year fixed mortgage rate will rise to near 4 percent by the end of the year.

If their predictions are right, then rates should flatline for the rest of the year and be a non-issue.

How many guessers had rates in the mid-3s in the first half of January?

Lawrence Yun, chief economist for the National Association of Realtors, projects that mortgage rates will increase to 3.7 percent in 2022, pushed up by persistently higher inflation.

Danielle Hale, chief economist for Realtor.com, expects the 30-year fixed mortgage rate to average 3.3 percent for most of the year and be at 3.6 percent by the end of the year.

Daryl Fairweather, economist for Redfin, expects rates to rise slowly from around 3% to around 3.6% by the end of 2022, thanks to the pandemic subsiding and lingering inflation. That would mean about $100 more per month in mortgage payments for the median home.

MBA economists predict that the 30-year fixed-rate mortgage will rise to 4 percent by the end of 2022.

Bankrate.com predicts that the 30-year fixed mortgage rate will peak at 3.75 percent during the year and fall back to 3.5 percent by the end of the year. “Long-term rates will move higher in the first half of the year, but by the close of 2022, concerns about slowing economic growth will be unwinding that and bringing them back down,” he said. “This will be higher than where mortgage rates started the year but ending at levels previously unseen before the pandemic began in 2020.

Lending Tree predicts that the 30-year fixed mortgage rate will rise to near 4 percent by the end of the year.

If their predictions are right, then rates should flatline for the rest of the year and be a non-issue.

Boston Real Estate Blog Updated 2022

Boston condos
Boston condos for sale 2022
https://www.mortgagenewsdaily.com/markets/mortgage-rates-01112022

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Rise in Boston mortgage rates and its impact on borrowers

We’re currently experiencing historically low mortgage rates in the Boston condo for sale market. Over the last fifty years, the average on a Freddie Mac 30-year fixed-rate mortgage has been 7.76%. Today, that rate is 2.81%. Flocks of homebuyers have been taking advantage of these remarkably low rates over the last twelve months. However, there are no guarantee rates will remain this low much longer.

Whenever I try to forecast mortgage rates, I consider the advice of Mark Fleming, Chief Economist at First American:

“You know, the fallacy of economic forecasting is don’t ever try and forecast interest rates and/or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”

Boston real estate

Boston real estate

 

Boston real estate mortgage rates

Boston real estate mortgage rates

Many factors impact mortgage rates. The economy, inflation, and Fed policy, just to name a few. That makes forecasting rates difficult. However, there’s one metric that has held up over the last fifty years – the relationship between mortgage rates and the 10-year treasury rate. Here’s a graph detailing this relationship since Freddie Mac started keeping mortgage rate records in 1972:There’s no denying the close relationship between the two. Over the last five decades, there’s been an average 1.7-point spread between these two rates. It’s this long-term relationship that has some forecasters projecting an increase in mortgage rates as we move throughout the year. This is based on the recent surge in the 10-year treasury rate shown here: The spread between the two is now 1.53, indicating mortgage rates could rise. Actually, a bump-up in rate has already begun. As Joel Kan, Associate VP of Economic Forecasting for the Mortgage Bankers Associationreveals:

“Expectations of faster economic growth and inflation continue to push Treasury yields & mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, & last week climbed to its highest level since Nov 2020.”

How high might Boston real estate mortgage rates go in 2021?

No one knows for sure. Sam Khater, Chief Economist for Freddie Mac, recently suggested:

“While there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3% range for the year.”

What does this mean for you the Boston condo buyer?

Whether you’re a first-time buyer or you’ve purchased a home before, even an increase of half a point in mortgage rate (2.81 to 3.31%) makes a big difference. On a $300,000 mortgage, that difference (including principal and interest) is $82 a month, $984 a year, or a total of $29,520 over the life of the home loan.

Boston Condos for Sale and the Bottom Line

Based on the 50-year symbiotic relationship between treasury rates and mortgage rates, it appears mortgage rates could be headed up this year. It may make sense to buy now rather than wait.

The Wall Street Journal has an interesting article entitled: Rise in rates is a headwind for housing. The article noted that the national average rate has jumped 

How does this impact Boston condo buyers? A general rule of thumb holds that every one-percentage-point increase in mortgage interest rates raises home costs for buyers by about 10%.

If you’re a Boston condo buyer and you locked in on a rate at 4.5%,  you would typically need an income of $84,000, assuming 10% down to qualify for a $400,000 30 year fixed-rate note.  If the rate jumps to 5.5%, the income requirement for the same loan would rise to $92,000.00.

One last point of interest, according to the Journal mortgage applications to purchase homes has fallen in the last two months as rates have surged.

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Updated: Boston Real Estate Blog 2022