WMU 1.17.25 - Nice Week For Mortgage Rates

[@mortgagesincolorado]

NOTE: my email address has changed to [e-mail] (Luminate Bank was underwriting bank for NEO home loans - nothing has changed except the name) THE FACTS FOR THE WEEK OF 1.13: -Last week - rate hit almost a 2 year high -A lot of data helped this week: -Tuesday - CPP for December and Year over Year came in lower than forecasted which continues to show a downward trend in inflation -Wednesday - CORE CPI month over month came in at forecast and year over year can in lower than forecasted - this is the leading indicator in inflation and it shows a continual downward trend (lower inflation = lower rates) -As inflation continues to cool and unemployment continues to rise (it went down slightly last week - but that number will be adjusted in February) it opens the door for the Fed to continue to cut interest rates. WEEKLY MBS CHART BELOW: -The higher the candle stick the lower the rates - the circle is the last 5 days WHY HOUSING PAYMENTS ARE SO MUCH HIGHER WHEN BUYERS PURCHASE IN A LOWER INTEREST RATE MARKET: -In 2023 and 2024 Nerd Wallet did a survey that showed 28 million people wanted to purchase a home in the past 18 months HOWEVER, in 2023 - there where only 6million total closed transactions -Add to the fact that for every 1% drop in interest rates, 5,000,000 renters become eligible to purchase a home What this means - when rates come down, all of the buyers that have been sitting on the sidelines come to purchase a now home, combined with the number of renters to become eligible to purchase a new home - which leads to a lot fewer homes than home buyers. Limited supply with high demand = bidding wars, which equals higher purchase prices. The higher the purchase price, the higher the down payment. In addition, a higher purchase price has a much more significant impact on monthly payments as do interest rates. -Why does all of this matter? -More inventory allows more options -More inventory will allow one to purchase at or below purchase price -More inventory will allow the option of negotiating a 2/1 buydown -Once the fed drops rates, we will again see record number of loan applications. Buyer will flood the market and we will again see bidding wars. -IT IS CHEAPER TO PURCHASE A HOME WITH A 7% RATE AT PURCHASE PRICE, THAN IT IS TO PURCHASE A HOME AT 6% RATE AT 10% ABOVE PURCHASE PRICE -The most important thing to consider is WEALTH ACCUMULATION. -Those that have recently purchased, are under contract to purchase, or go under contract prior to September 2024 are going to reap the rewards of bidding wars going on in 4th quarter 2024 through 2026. -When we have bidding wars, home sales prices are driven higher. -For those that already own a home, the sales prices determine the value of the home you just purchased. -If the average bidding war is 10 to 15% above sales price. That is 10 to 15% appreciation in the home you already own. -Finally, those that already own a home are going to end up with the lowest rate anyways as they will refinance into that low rate. (I personally do a 3 year refinance guarantee that covers all closing costs except title charges). LONG TERM PROJECTIONS: -The Fed will continue to lower rates so long as unemployment continues to rise and inflation continues to cool WEEKEND AVAILABILITY: Brian Pintar Branch Manager Luminate Bank [e-mail] 303-478-1425 (call or text) MLS: 289801 PLEASE SHARE WITH FAMILY AND FRIENDS - REMEMBER WE ARE LICENESED IN ALL 50 STATES! (TECHNICALLY 49 AS I WILL NOT LEND IN NEW YORK) We also now offer HELOCS (home equity lines of credit) and Reverse Mortgages Brian Pintar Branch Manager NMLS# 289801 303-478-1425 [e-mail]