There is an incredible window of opportunity to buy a home happening right now
The October CPI numbers were released this morning and to nearly everyone’s surprise, they weren’t nearly as bad as had been anticipated. Make no mistake, they are not good. Inflation is still running hot, and when combined with a still-strong labor market, anyone still hoping for a Fed pause in the near future is dreaming. Even with today’s CPI news, the Effective Funds Rate will in all likelihood hit 4.5-4.75% in early 2023 before any substantive discussion of a pause occurs.
Nonetheless, the markets have reacted very positively to this less than terrible CPI report, and this includes the mortgage backed security market, with the 30YR UMBS 5.0 posting a 183 basis point increase as of late this morning.
Source: Mortgage News Daily, 11/10/2022
And because MBS prices directly correlate to mortgage rates, an increase here generally tends to result in a decrease in mortgage rates. Case in point, the rate on a 30YR Fixed Rate Conv mortgage posted a 55 basis point drop today, bringing the current rate to 6.67%. This marks the lowest rate we’ve seen since October 4, 2022, and one of the largest one-day drops in months.
Source: Mortgage News Daily, 11/10/2022
the window of opportunity
More importantly though is the fact that this all presents an incredible home buying opportunity for anyone who has been searching for a home, but has been kept to the sidelines because of interest rates. On a $600,000 purchase with 20% down, this reduces your monthly payment by over $200, from $3290 to $3087 when compared to the 7.3% interest rate from November 3, 2022.
And while $200/mo. might not seem like a lot in the face of rampant, but very slowly slowing inflation, the savvy Buyers out there can combine this interest rate dip with other tools, such as a seller-paid interest rate buy down. Case in point, a 2-1 buy down on the same purchase would drop your monthly payment to $2480 for the first year in your new home, a savings of over $800 per month versus a 7.32% rate.
If you read my October 2022 Market Minute, you already know that there are plenty of sellers out there right now sweating hard. That means that if you’ve done your homework and hired a rock-star buyers agent that understands the market, has a network of local lenders on hand, and can negotiate effectively, you could very well find yourself ringing in the new year in a new home. Best of all, you could be enjoying all that while paying well below market rates every month for your new home.
If you’ve been on the fence about buying, now might be the time
If you want to know how to make all this a reality, call me and let’s chat. There are an awful lot of starving real estate agents and lenders shouting about dipping interest rates on social media today, but unless they understand why rates are falling, and how to properly leverage the opportunities, you’re going to be disappointed in the outcome.
In the meantime, why now take a minute and check out the current inventory of homes for sale in Northern Colorado?
Don’t wait! The window of opportunity may not be open long.