What’s Going On With Real Estate?
What are Interest Rates this Week?
Rates continue to be low: 3.25% on 30 Year Conventional Loan with 20% down.
What’s on the market?
How has the Market Activity been this week compared to this same week last year?
This week in Alameda, 4 properties have Sold (1 under list price, 3 above list price). This same time last year, 14 properties Sold (2 below list price, 4 at list price and 8 sold above the list price).
My good friend and experienced lender, Mic Ascarrunz of PNC Mortgage, weighs in on how things have been going in the lending world.
1) What has the home purchase and refinance volume been like for you since the SIP order?
Refinance transactions were on the rise(three times as many as normal), just prior to the SIP order, due to the drop in interest rates. Since the SIP order, refinance transactions are still one and a half times what is normal. In regards to purchase transactions, those are still moving strong. I had two buyers go into contract over the last 7 days, closed two transactions last month, one this month, four pending close for May, and five more actively looking.
2) How are rates and do you anticipate large fluctuations soon?
Rates are at the lowest that I have had in my 16 year career. But there is still room to drop a bit more. Due to lender capacity issues, rates are being held to mitigate the influx of new applications.
3) If someone called you today ask you if it was the right time to buy, what advice would you give him/her? What are some things to consider?
Are you experiencing any delays in the process? It is “never” a bad time to buy. Buyers need to consider where they are financially and if “now” is the best time for them. Do they have a large enough down-payment to qualify or keep their payment within their comfort range. Do they have ample reserve assets to qualify and/or give them room to breathe, if necessary. What is motivating them to purchase a home in the first place. Currently, the only delay that I am having, is with regards to the appraisal process. Most people do not know that appraisers do not work for the bank that is providing their financing. Lenders use third party vendors that reach out to local appraisers who then perform the inspection. Due to the heavy increase in refinance applications and COVID, the appraisal process has doubled in some markets. Where before, I was able to have an appraisal completed in 5 – 7 days. That has now become 7 – 15 days on average, with quotes of up to 21 days in some markets. Our internal processes are business as usual and if not for the appraisal process, we would still be able to close a purchase in 15 days.
4) Are you seeing still seeing refinance applications coming in? Would you recommend homeowners to consider refinancing now?
Yes and yes. If a client can drop their interest rate by at least .250% or drop their payments by at least $125.00 per month, then it makes sense to refinance. The reason behind these numbers is based on recouping closing costs(if applicable) with 24 months or less. But some clients are holding out for too much in my personal opinion and should take “the bird in the hand”. For instance, I have one client that has an interest rate of 4.125% and I am able to give them 3.375% now. They are holding out for 3.000%(which may never happen), even though the new payment would save them over $200.00 per month.