For the prudent home buyer, watching the shifting mortgage rates has become a habit; this habit may be paying off. Over the last week, the rate on a 30-year fixed rate mortgage (“FRM”) dropped to 4.06%, this represents the largest single week reduction in the mortgage rate in roughly 10 years. While home sales typically drop during the second quarter of the year, the 4% FRM is a very good sign that this year might be better. Ultimately, lower rates have a psychological effect on would be buyers, and that bodes well for Q2 sellers.
While a low FRM rate is a good indicator that housing sales will increase, there are certain factors that get in the way. The primary hurdle for people seeking houses in the Sherman Oaks, Encino, and Studio City areas is that the average price of a home is still far above the national median. Notwithstanding the fact that increased housing prices make many houses unaffordable for the average earner, mortgage applications have increased by nearly 9%, indicating that the reduced rate has spurned interest in home buying.
A reinvigorated housing market, particularly during a slow season, represents a major opportunity for lenders whose bottom line took a hit in the face of last year’s high rates. At the Chernov Team, we understand that knowledge is power, and changing interest rates represents savings of several thousand dollars over the lifetime of a mortgage. At the Chernov Team we know that whoever shows up the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.