Last year, DEC 19, 2016, it was 3.625% I closed Rifi loan with WFC.
This is not about 0.25%, FED commitment to increase 3 this year and 3 next year, totally 1.5%. The current fixed mortgage is around 4.625% now for 30 years.
On any case, we will see 30 year fixing jumping back to appx 6% or 6.5% by end of next year.
If you believe the forecast. They were supposed to hike 3 or 4 times last year? We got one. If they do that many hikes, it’ll be because the economy is roaring. Higher rates won’t deter buyers if wages go up enough to justify the rate increases.
Last year was election year, they stopped hiking to avoid issues with election. If you listen recent Yellen’s testimony to congress, she was urging rate hike 3 times this year and 3 next year.
If they need to maintain 3 hikes/year, they are forced to raise rate in March 15th. If they skip this chance, then it becomes two this year which FED is not interested.
Yes, they do it as economy is roaring, and they do it preempt as inflation is near 2%.
Higher rate do not deter strong buyer, but not weak one. Weak one will be permanently out of the market as they are not eligible, esp for those who seeks home less than 1 M in Santa Clara.
By end of next year, mortgage will be 6% or 6.5%. Economy will be doing fine with lot of employments, but individuals suffer as eligibility is reduced.
Rent started flattening or going down 1 year ago. Number of Home sales have been average or even below average. Is the population increase slowing or even flattening?
Rate increase will hurt BA market more since our affordability is already stretched. I think the high end market will flatten or decline. Middle and low end will do better as people are forced to buy homes under their previous standard
Someone posted the data. Bay Area is losing Americans and gaining foreigners. If there’s a pause or stop in foreigners, then Bay Area population will decline.
But rate maybe higher.
In other forum, someone said that it would be better to have mortgage insurance than higher rate since mortgage insurance would be gone as soon as your equity reached 20% but rate would stay same (in case you get fixed rate mortage). Not sure if this is fair and accurate statement, though.
Even wells fargo gives 10% down payment option without PMI. Yes, the PMI cost will be inside some 0.125% or 0.25% rate hike. When writing an offer, my friend gave 20% down payment, but well fargo suggested that he is approved 20% as well as 10% down payment loan for 30 year fixed and my friend accepted 10% as he likes to hold 10% cash at his hand. IIRC, it was for condo loan less than 417k.