Mortgage rates bottomed out at 5.99% on February 27th – the day before the Iran war started.
Rates peaked one month later on March 27th – hitting 6.625%.
Rates then fell steadily into April but have since been rising in response to escalating tensions and rising oil prices.
I share all this because rates shot up again today in response to Trump’s latest action, called “Project Higher Interest Rates.”
OK – actually it is called “Project Freedom.” It is an effort by the U.S. to restore freedom of navigation through the Strait of Hormuz and free stranded commercial vessels.
This action escalated tensions and pushed oil prices (the main cause of higher rates) higher again.
Today’s average mortgage rate is 6.52%. We’re still below the peak we saw in March, but we’re getting close.
Dead Boomers Bode Well for Inventory-Starved Markets
“Crash bro” Darth Powell gleefully reminded us today on X that baby boomers are dying at the fastest pace in history, and that boomers own 40% of housing.
He further reminded us that boomers account for 55% of sellers. Mr. Powell was, of course, implying that this means we’re going to see a massive surge in inventory and an inevitable housing crash.
But Mr. Powell also insists that melting ice cream, birds singing, babies crying, and toothpaste going on sale at Walmart will cause a housing crash (hint: there’s pretty much nothing that won’t cause a crash, per Mr. Powell).
I actually see dying boomers as a good thing (and remember – I am a boomer), as boomers tend to own homes in established areas where there is often a lack of inventory. Home prices are suffering the most in areas with large numbers of new builds.
Furthermore, many inventory-starved markets desperately need more inventory. These include many Northeast and Midwest metro areas, as well as parts of the SF Bay Area. Even established pockets in Miami and Dallas (in two states known for price corrections) are still seeing very tight inventory.
Appraisal Waivers – Not Always Rational – Are Saving Us!
Our Appraisal Manager receives constant requests from our sales team for “property value checks” to assess how likely a property is to appraise at a high enough value to make a refi viable.
Recently, the sales team needed a $750,000 value to make a refi work in an Oakland, CA neighborhood, but unfortunately, the comparable sales supported a value of $620,000 at most.
Before killing the deal, though, our sales team ran the refi through Fannie Mae’s automated underwriter (DU) – and it waived the appraisal requirement.
This means no appraisal is required, making a refi with almost no equity viable.
This is great news for the borrower and us, but probably not so much for the health of the mortgage industry. This is because equity – not payments – is the primary factor preventing foreclosures.
In any case, this is a reminder that appraisal waivers are saving a lot of transactions right now – when we’re seeing a shockingly high % of appraisals come in low or “under contract price.”
Appraisal waivers are granted for transactions up to 90% loan-to-value, as long as there is a previous appraisal in Fannie Mae’s database.
Agents should have lenders run DU when their clients make offers to see whether an appraisal waiver might be available – alleviating appraisal concerns and allowing borrowers to waive appraisal contingencies.
