Boomer Error!
On Friday, I pointed out how FHA rates are now often far better (by over 1%) than Fannie Mae Rates in this blog: FHA Keeps Beating Fannie Mae!
And, I tried to impress everyone with an FHA rate quote – that I got wrong! I quoted 6.125% for a no-points loan, but the rate was actually 5.875%!
For expedience, I glanced at an old-fashioned rate sheet to calculate the exact rate – just like we boomers did back in the 1990s.
BUT – it turns out they have these things called “computers” that do all the calculations for you, and when I entered my scenario into one of those newfangled contraptions, the rate was much lower (because I missed some promotions).
Apologies to readers!
Note #1: this is also a nice reminder that “the rate” is never just “the rate,” as there are numerous factors that influence everyone’s rate, such as FICO, loan amount, property type, lock period, and purchase promotions by a particular investor.
Note #2: Any buyer putting down 10% or less should consider FHA financing now!
FHA Scenarios in Blogs Every Day
FHA rates are so low that we are going to start including an FHA scenario in my blogs every day to replace our jumbo scenario.
Once again, FHA rates are so much better now because Fannie Mae recently raised rates for many borrowers and because FHA lowered its monthly mortgage insurance premium by 0.30%.
Why More Buyers Coming to Market Is Terrifying
We have numerous clients making offers in various parts of Texas in the $350,000 to $500,000 price range.
They often find homes they love… but they don’t get them – and this is why: they are not making offers immediately.
Listings in that price range are getting snapped up, as Texas clearly did not get the memo that the housing market is “crashing.”
We are seeing similar situations play out in many CA markets too.
What makes this terrifying is the fact that a huge proportion of potential buyers are on the sidelines now because of the recent rate increases (almost 1% in February alone).
If rates fall and those buyers return to the market, I can only imagine how competitive the market will get if more listings don’t surface.
Opportunity for Buyers!
This is why Barry Habib reminded us again today that today’s higher rates are a great opportunity for buyers.
He did an entire analysis (chart copied below) that showed how buyers are far better off by accepting a higher rate now if it means getting a discount on a home in a much less competitive market.
Buyers who ignore this analysis will no doubt regret it when they return to the market after rates fall.
BIG WEEK FOR JOBS REPORTS!
Barry also reminded us today that this is a big week for jobs/employment reports. Barry and his team expect the data to be more realistic this time and to be worse than expected – which will likely push rates down.
The “big day” though still is May 10th, when Barry expects a very positive inflation report. Another catalyst that could push rates down is a stock market correction – like many analysts are predicting for April.
Jay Voorhees
Founder | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
