Has the volatility in the interest rate market subsided? Has inventory increased?

I hope you’re enjoying the start of Summer!  My kids had their last day on June 9, and my wife’s last day teaching her 2^nd graders was June 16^th.  It’s officially Summertime in the Mutter household!

We’ve already spent Memorial Day weekend camping with some great friends, and we’ve spent another weekend with some other families up in Caseville.  Plans like these are typical for us in the Summer – my wife is off of work, but it’s one of my busier times for work, so we usually plan a good handful of long weekends as a compromise. 

Summer is already in full-swing for our family, but that doesn’t mean that housing news isn’t happening!  Let’s discuss a few of the questions I’ve been receiving often lately.

Just a quick reminder:  These articles I share here are researched and written by me!  As part of my commitment to ongoing support for my clients and partners, I write these articles to help them understand what’s really happening in the markets, beyond the headlines and soundbites.

What have interest rates been doing?

Since my last newsletter, rates have continued to do what they’ve done for the past 18+ months – they’ve been volatile!  From mid-April to mid-May, we enjoyed some relative stability – and when I write “relative,” that’s what I mean!  During that period, rates hovered within a range of about .25%.

Beginning in mid-May, though, we saw a strong trend of rising rates, thanks in large part due to the debt ceiling drama in Washington DC.  Now that a deal has been struck, rates have improved some, but they have not regained the ground they lost during the second of May.  At the time of this publication, the average rate for a Conventional 30 year fixed 6.99% (7.03% APR).

What’s the best rate strategy in this climate?

Due to the volatility in the financial markets, I am advising all my clients to lock the interest rate as soon as we’re able to.  It’s always possible that rates could improve, but in this climate, the potential for downside risk is huge – gambling on the interest rate could cost .25% in rate in a single day.  While rates could always improve, the prudent & responsible decision is to lock the rate sooner than later.

Should I buy points?

“Points” are an additional fee charged by the lender in exchange for a lower interest rate.  With memories of 3% rates, it can be tempting to want to buy down the interest rate on today’s transaction, but in most cases, it’s not a great idea.  In short, you’ll reap greater rewards (a lower rate) on a refinance when rates improve than you will buying down your rate today.

Inventory

We are trending near record lows for the number of homes listed for sale across the country.  There are currently fewer than 450,000 homes for sale across the entire US.  For some context, in the leadup to the 2008 housing crash, there were over 4,000,000 homes for sale!  By contrast, inventory in today’s market is anemic.

Here in our local markets, the homebuying experience today mirrors that of every summer since 2019.  Even though interest rates have increased sharply, inventory remains incredibly tight, so the level of competition for buyers remains high.

What’s it all mean?

Despite the increase in interest rates, buying a home can be very challenging in this market.  These conditions make it even more imperative to work with an excellent real estate team – one who’s proactive and understands how to win in this market!

If you found this interesting or helpful, please feel free to share it with a friend, family member, or co-worker – it’s my goal to educate and empower as many people as possible during this incredibly unique time in housing!

I am here to help!

If you are looking to purchase a new home or have questions about the market, getting preapproved, etc., or

If you are a Realtor or a Broker looking for a lender with great financing solutions to help educate your clients on the state of the market to help them feel good about their decisions, ..

Please call today – I am happy to help however I can!