Why Are Mortgage Interest Rates Increasing?

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According to Freddie Mac’s latest Primary Mortgage Market Survey, the 30-year fixed rate mortgage interest rate jumped up to 3.94% last week. Interest rates had been hovering around 3.5% since June, and many are wondering why there has been such a significant increase so quickly. 

Why did rates go up?

Whenever there is a presidential election, there is uncertainty in the markets as to who will win. One way that this is noticeable is through the actions of investors. As we get closer to the first Tuesday of November, many investors pull their funds from the more volatile and less predictive stock market and instead, choose to invest in Treasury Bonds.

When this happens, the interest rate on Treasury Bonds does not have to be as high to entice investors to buy them, so interest rates go down.  Once the elections are over and a President has been elected, investors return to the stock market and other investments, leaving the Treasury to raise rates to make bonds more attractive again.

Simply put, the better the economy, the higher interest rates will go. For a more detailed explanation of the many factors that contribute to whether interest rates go up or down, you can follow this link to Investopedia.

The Good News

Even though rates are closer to 4% than they have been in nearly 6 months, they are still slightly below where we started 2016, at 3.97%.

The great news is that even at 4%, rates are still significantly lower than they have been over the last 4 decades, as you can see in the chart below. Continue reading

Posted on November 22, 2016 at 5:41 pm
Bradley Mulliner | Category: Buying/Selling Tips, Helpful Articles, new home, new home owners, Real Estate Activity | Tagged , ,

Starting to Look for a Home? Know What You WANT vs. What You NEED

In this day and age of being able to shop for anything anywhere, it is really important to know what you’re looking for when you start your home search.

If you’ve been thinking about buying a home of your own for some time now, you’ve probably come up with a list of things that you’d LOVE to have in your new home. Many new homebuyers fantasize about the amenities that they see on television or Pinterest, and start looking at the countless homes listed for sale with rose-colored glasses.

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Posted on October 19, 2016 at 4:41 pm
Bradley Mulliner | Category: Buying/Selling Tips, Helpful Articles, new home | Tagged ,

“Harvard: Why Owning A Home Makes Sense Financially”

Harvard: Why Owning A Home Makes Sense Financially | Keeping Current Matters

Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University expanded on the top 5 financial benefits of homeownership in his paper –The Dream Lives On: the Future of Homeownership in America.

Here are the five reasons, each followed by an excerpt from the study: 

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You're paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.” 

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are considering a purchase this year, contact a local professional who can help evaluate your ability to do so.

 

Posted on February 17, 2016 at 10:14 pm
Bradley Mulliner | Category: Buying/Selling Tips, clients, Helpful Articles, new home, new home owners, Real Estate Activity

Portland homes selling in less than a month in Q3.

Portland homes selling in less than a month in Q3.

Still not sure whether or not it a good time to sell your home?  Homes are definitely selling quickly as long as they are price right. Yes this is still a sellers market in most areas around the Portland market and with the lack of inventory it appears that it is going to remain this way for a while.

SEATTLENov. 12, 2015 /PRNewswire/ — Matthew GardnerWindermere Real Estate Chief Economist, found Portland homes were on the market an average for just 27 days in the third quarter of 2015. This represents a drop in 10 days from the second quarter. Multnomah and Washington Counties also saw homes sell in less than a month.

“The average time it took to sell a home in the region was 92 days, with thePortland market in particular dropping from 37 to 27 days. This shows that the hot Portland economy is causing the demand to keep supply flying off the shelves,” said Gardner. He added one caveat, “There was a decline in state employment in September and the unemployment rate did rise, but I do not see this as a trend so much as a temporary blip.”

Looking at how the situation compares to the same time last year, the supply shortage drove home prices 6.1 percent higher year-over-year to $309,565. “What’s more impressive, sales activity rose by 21.6 percent when compared to the third quarter of 2014, exceeding the 20.9 percent year-over-year growth rate that we saw in the second quarter,” said Gardner.

As a result, Gardner believes that the housing market has tipped even further in favor of sellers. For Portland area buyers, this means it’s more important than ever to do the prep work to be able to move fast when buyers find a home they wish to buy:

  • Get pre-approved for a mortgage in advance (unless making an all-cash offer), and be ready to document the funds to be used for a down payment.
  • Retain an experienced buyer’s agent, who knows the local area and whom you trust. Go with them to see properties within 24-48 hours of listing.
  • Have advance discussions on what to write into offers: escalation clauses, quickness of home inspection, and even offering to rent the home back to the seller after the sale to give them more time to move. If the buyers and their agent have already confirmed those decisions, they can move faster in writing up the offer when the time comes.

Matthew Gardner joined Windermere Real Estate in July 2015 as its national Chief Economist with over 25 years of professional experience both in the U.S. and U.K.  Gardner has watched the Oregon economy and housing market for his entire career, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics.

To read more from the third quarter Gardner Report and about Matthew Gardner, visit http://www.windermere.com/blogs/.

About Windermere Real Estate

Windermere Real Estate is ranked the largest regional real estate company in the Western U.S. with over 300 offices and 7,000 agents serving communities in AlaskaArizonaCaliforniaColoradoHawaiiIdaho,MontanaNevadaOregonUtahWashington, and Mexico. Last year, Windermere closed over 77,000 sides for more than $27 billion in dollar volume. The Windermere family has a proud heritage of serving our neighbors via the Windermere Foundation, which funds services for low-income and homeless families. Since 1989, the Windermere Foundation has contributed more than 30 million dollars towards improving lives in the communities where we live and work. For more information, visithttp://www.windermere.com.

If you are a looking at buying a home, in this article there are some great tips that you should do the make the process go smoother, or you can visit http://bradmulliner.com/buying-and-selling-tips/ for more information.

Photo – http://photos.prnewswire.com/prnh/20151111/286564

SOURCE Windermere Real Estate

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Posted on November 13, 2015 at 7:27 pm
Bradley Mulliner | Category: Buying/Selling Tips, clients, Helpful Articles, new home, new home owners, Real Estate Activity, Uncategorized | Tagged , , , ,

Getting the keys to your new home.

This is always an exciting time for a new home owner. One thing that I always enjoy watching is the excitement on the faces of a new home owner.  I always let the client open the door and walk through first.  Their eyes light up as if they are seeing their home for the  for the first time all over again.  I love to here the remarks about the changes that they are going to make, watching them open every cupboard, going through every room, turning on every light in the house even in the middle of the afternoon.  I was able to experience again yesterday with my newest home owners, what an enjoyable experience.

Posted on September 25, 2015 at 6:02 pm
Bradley Mulliner | Category: clients, new home, new home owners | Tagged , , , ,