Weekly Special | September 9, 2019

Will Mortgage Rates Establish A New Low?

Perhaps the most significant non-local factor in the health of the Tallahassee real estate market is the availability of cheap money. As you can see in the graph below, current mortgage interest rates are very near a 50+ year low.

Earlier this year, Mitch Wright of Bay Mortgage Capital advised me to keep a close eye on mortgage interest rates as the Brexit vote was likely to have a significant impact on mortgage interest rates worldwide.

Whether it was Brexit or just good juju from the mortgage shamans, we have seen rates decline now for nine consecutive months, helping to balance home affordability even as home prices rise.

There are many buyers in the market who are very cautious and are waiting to “pull the trigger,” either because they believe home prices will fall or mortgage interest rates will fall.

I am confident that home prices for 90+% of the Tallahassee housing market will continue to rise (we are short on supply and builders cannot deliver single-family detached homes at yesterday’s prices), so don’t wait for this reason.

As far as waiting for lower rates: Don’t be penny wise and pound foolish! Create a simple spreadsheet to see what interest rates do to your payments versus rising home costs.

If you are a buyer and plan on moving within the next 60 days, I would recommend you float your rate with the market but keep a very close watch on daily rate fluctuations.

I would also advise you keep your mortgage originator on speed dial and be prepared to lock your rate if there is any sudden movement in either direction. As always, seek guidance from your mortgage lender on how to proceed to ensure you position yourself for the best outcome.

The original one-page Weekly Special PDF is still available.