Mortgage Rates Have Dropped For a Month Straight
Mortgage rates are at their lowest in more than four months. It’s worth taking a fresh look at them.
Yes, the Fed is still making lots of noise as it grapples with inflation. Ignore that for a moment. We just had a client get a 4.125% interest rate that is locked for sevne (7) years. It was less expensive for her to buy than to rent, with a normal 20% downpayment. So if you’re waiting for rates to drop further, I’m not sure that there’s any reason. Lower rates are here right now. What are you waiting for?
But don’t just take my word for it.
I sought out advice from a mortgage broker who does between $1-1.5 Billion of business every year. Here is his thought process, broken down:
if mortgage rates fall and no one is around, does it still make a sound?
$1 Billion Dollar Mortgage Broker Advice
- If you’re thinking about buying in New York, there’s a good chance you’re overthinking mortgage rates.
- Don’t be afraid of them- Because it doesn’t matter what they are.
- Even after a month of drops, they have further room to come down.
Here’s the Truth
- You’re going to refinance.
- Over the last seven years, the average homeowner in New York refinanced their home 3 times. Three times!
- If you pay 6% for one year, and refinance into a 5% rate, over 10 years that 6% rate becomes 5.1%.
- So what- you paid 0.1% extra for a house you loved?
What Is Your Emotional Brain Telling You?
- You’re pissed that you didn’t get the 2.5% rate that your friend got on his purchase in 2021 or early 2022.
- But he bought in a bidding war, and overpaid for the apartment.
The Takeaways
- Today, you have no pressure. Fewer buyers competing for property. For now.
- Get in before rates drop- and prices start to rise again.
- Not only can you refinance. You will. Again and again.
And It’s Not Just Him
I read twenty different annual reports- banks, and hedge fund letters, each trying to see over the horizon. While they don’t see every sector in the same light, each of them agreed on one thing- that mortgage rates are going to drop this year. So stop looking at the headlines, and stop putting your head in the sand. This is how to think about mortgage rates today. I hope it motivates you into action! -S