The interest rate on a 30-year mortgage is rising to its highest level since June, but that doesn’t seem to be slowing the market in Norman, according to local experts.
According to weekly data released by the state-chartered mortgage loan company Freddie Mac30-year fixed rate mortgages averaged 3.18% for the week ending April 1, after falling to a record low of 2.65% in January.
Rob Schaerer, broker and partner at Dillard Group Real Estate and 360 Realty, said one of his clients recently became 3% committed and the rate you actually get depends on the region, among other things.
“It is also dependent on the borrower,” said Schaerer. “There are a lot of clues that will ultimately play a role in the final APR someone will receive, such as the number of traits they have.”
According to Schaerer, the current total portfolio of a lender is 14% of investment loans. He said that while it wasn’t a significant amount, it was much higher than what Fannie Mae and Freddie Mac are willing to do.
“There will be a huge inequality in the lender’s loan portfolio with some lenders going to be much higher than others in terms of their interest rates, and I think this has moved into the owner-occupier category,” Schaerer said.
Mortgage applications were down 2.2% from last week, according to the weekly Mortgage Bankers Association survey. Application rates have fallen in 10 of the last 12 weeks since mortgage rates hit record lows.
“For every little bit in which people’s payments increase, there will be a certain number of people who are taken off the market or fall in price from one market to another,” said Schaerer.
Schaerer said the fear of missing out will be the driving factor in the market, even if with hindsight the view is clouded and a potentially good interest rate currently looks less attractive.
“There may be a short-term decline in the market as people try to say we are waiting for interest rates to fall again, but at some point interest rates will stop falling,” Schaerer said. “It’s a little absurd when a financial institution says they’ll be lending someone $ 200,000 at 3.18% for 30 years.”
Terry Teel, mortgage lender at the Bank of Oklahoma in Norman, said the interest rate hike in recent months has had little impact on the lender side as buyers expect interest rates to rise.
“People don’t say they don’t want to buy anymore or anything.” Said Teel.
Despite the rising rates, Schaerer said it continues to see a record low in inventories and that new homes are being built at a rapid pace.
Schaerer currently said buyers are still willing to pay above list price and get what they can before it’s gone.
“I have recently seen situations in which people forego rating quotas, which is the big new thing that is reaching our market,” said Schaerer.
According to ForbesDispensing with an evaluation option can strengthen a potential buyer’s offer from the seller’s point of view. After waiving a valuation contingency, the buyer cannot withdraw the purchase price and renegotiate it if the valuation price is lower. This can be an indicator that the buyer is taking the purchase seriously.
“In the past, an independent appraiser sent by the bank valued the house at a lower amount than the contractually agreed purchase price and held back a little on the market,” said Schaerer. “When competition gets tougher it becomes a situation where the buyer needs to be able to find terms that are more likely to get the seller to accept them in order to get a home.”
Given the current market, it is important for potential buyers to find a lender they can trust and who is willing to explain the details of the process thoroughly.
“The phone calls are great, but it helps many first-time buyers to sit down and speak in person,” said Teel.