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Waiting on rates to drop

Tick Tock Goes the Mortgage Rate Clock: The Wait is On

09 Aug, 2024

There’s a lot to unpack when it comes to today’s housing market. With so many factors currently influencing the market—inflation, fear of recession, the Presidential election, etc., it’s no surprise that we are all anxiously waiting to see if the Feds will lower the rates soon. Here’s what we know:

The Feds are Hinting at Lowering the Rates

At the end of July, the Federal Reserve decided not to lower interest rates, however it is hinting that the change could be around the corner.  “The economy is moving closer to the point where it will be appropriate to reduce our policy rate,” Fed Chair Jerome Powell said at a recent news conference. “That time is drawing near. That time could be in September if the data support that.”

With the end of summer on the horizon for the housing market, real estate professionals are gearing up for the Fall and Winter slowdown of business. However, will the pending rate drop give the market the boost it needs?

What Lower Rates Could Mean for the Housing Market

When we look at the market as a whole, lower rates may not necessarily mean a revival to the market. In fact, many experts are saying even if rates lower it won’t be until a substantial change in home inventory and prices takes place that we see the needle truly move.

Of course, for some buyers, this pending rate drop could be all it takes to qualify for the home they want. Which is why lenders and real estate agents need to be ready to take advantage of this change for their clients if it happens.

According to usatoday.com, “Lower rates would reduce borrowing costs for mortgages, credit cards, and auto and other loans while fueling stocks. It also would trim bank saving account yields that finally have been generating healthy returns.”

How to Get Your Buyers and Sellers Moving Even When Rates are High

September is just around the corner, so hopefully we’ll see the interest rates drop soon, but in the meantime how can real estate professionals encourage their clients to make a move?

  • Look into VA and FHA Assumable Loans—An assumable mortgage allows someone to find a house and take over the seller’s existing mortgage loan without applying for or having to get a new mortgage. This means the remaining balance of the seller’s loan, their mortgage rate, repayment terms and other loan terms stay the same—but the responsibility for the debt is transferred to the buyer. If the house has gained market value since the original seller’s loan was secured, the buyer will need to cover that difference at closing. This means at closing the buyer pays in cash to the seller the “equity” in the seller’s house. The buyer then takes over the payments to the seller’s lender. These types of loans are becoming very popular right now. To learn more, click here.
  • Navigate the Number Game—Sometimes all it takes is a little creativity to get the numbers to work for your buyers or sellers. In fact, if you look at a lower home price with higher rates and a down payment, the loan cost could end up being quite similar to a 3-4% interest rate. This is why it’s so important your clients work with an experienced and knowledgeable lender to understand what they can truly afford. They also need real estate agents that will understand their unique needs while encouraging them to “bend” a little to get into a home that works best for them.
  • Talk About the Risks of Waiting—Many of your clients want to wait, and that’s understandable. However, sometimes waiting means they lose out on the home of their dreams. If the home they want is on the market now, and it has the potential to grow with them—and for them—waiting for rates to drop means losing that home. Is it worth it?

Velocity Title Moves Your Business Forward

No matter what the housing market is doing, Velocity Title supports the real estate industry with a comprehensive line of title services that add value to each and every transaction. With a focus on the best CUSTOMER EXPERIENCE, Velocity Title incorporates leading title TECHNOLOGY and EXPERTISE into every transaction—enabling the final step in the home buying process to be EASY, EFFICIENT and INFORMATIVE. To learn more, visit our website or contact us today!

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