The Standard 30 Year Fixed Rate Mortgage still hovers above 7%. With the Federal Reserve’s ongoing debates about whether to maintain the 5.25% Fed Funds Rate or raise it another 0.25% at their upcoming meeting, prospective homebuyers and current homeowners are faced with some tough decisions.
Federal Reserve representatives are currently leaning toward a pause in rate hikes, allowing the previous increases to settle in. However, recent economic reports suggest more resilience in the economy than one might expect after a year and a half of rate hikes. This leaves us in a precarious situation where the direction of mortgage rates remains uncertain. At some point rates will come down, but for now it’s “Higher for longer”.
The impact of these higher rates is being felt across the housing market, primarily affecting affordability. Traditionally, one would expect home prices to drop in response to rising mortgage rates. However, the housing market is anything but conventional due to several factors. Mainly demand outstrips housing stock.
- Homebuyers Adapt: Homebuyers are adapting to the reality of higher rates by proceeding with their purchases, banking on the potential for refinancing down the road when rates may be more favorable. This strategy allows them to enter the housing market despite the current challenges.
- Reverse Mortgages for Equity-Rich Seniors: Homeowners aged 62 and above, who find themselves asset-rich but cash-poor, are increasingly turning to reverse mortgages. This financial tool allows them to tap into their home equity without the burden of monthly mortgage payments, offering a lifeline for those struggling with retirement finances.
- Exploring Home Equity Lines of Credit (HELOCs): Many homeowners are exploring Home Equity Lines of Credit (HELOCs) to access cash without refinancing their existing low-rate first mortgages. This approach allows them to maintain their pre-existing favorable interest rates while addressing their financial needs.
If you are in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, SRES, SFR, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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