Mortgage Rates Increase, Mortgage Applications Increase, and Home Values Likely to Increase as Well
Over the last few months, mortgage rates have been increasing; but oddly, we are still seeing an increase in home loan applications. While the 30-year fixed-rate-mortgage (“FRM”) went from 3.69% to 3.75%, this is still lower than last year’s 30-year FRM of 4.94%. Similarly, 15-year FRMs rose from 3.13% to 3.2%. According to Freddie Mac’s chief economist, the increase in mortgage rates represents a society that is becoming less concerned about global insecurity; this is evidenced by the fact that mortgage applications increased by 15% when compared to this. Generally as mortgage rates go up, loan applications go down, but as of right now that is not the case.
There is a potential downside to the low interest rates, homeowners who have locked in 3ish% mortgage rates may be less eager to sell their homes and purchase new ones (which is what typically happens) if they will be forced to pay a higher rate on the new loan. The net effect of this potential issue would be an even shorter supply of homes in the face of a high demand from the buyer-end; this will likely increase the value of your home through basic economic mechanisms (e.g., equilibrium price).
At the Chernov Team we understand that knowledge is power, and knowledge of how the market is behaving is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.