Happy New Year! I hope you all had a festive and wonderful holiday season. As January 2nd is upon us, it’s time to start planning for the year ahead. With that, I want to touch on a few financial and real estate topics that may be beneficial to everyone.
In the beginning of December, all the talk was about increasing interest rates, home prices declining and inventories rising. Now in the beginning of January, things are looking a little different. How is that possible? The Fed increased the benchmark interest rate .25% in December, it’s the holiday season where there tends to be less home buyers and even less sellers and we are going into winter when it’s typically slow. The easiest way to explain this is to look outside.
While the decent winter weather can account for more people buying and selling homes, that has nothing to do with interest rates. I mean the Fed did raise the interest rate in December, so how can mortgage rates dip shortly thereafter? Well it depends which window that mortgage money comes from to fund a home purchase. There are two common ways to get a mortgage, a local or larger bank or a mortgage lender. We at CrossCountry Mortgage happen to be a mortgage lender, which means we lend money directly to the consumer. We are governed by each state’s Division of Banks and are considered a non-depository lending institution. Meaning we don’t provide bank accounts, we just provide money for home purchases and refinances directly to the consumer.
We at CrossCountry, tend to get our money through the secondary market, which is affected more by bonds and the stock market. The price of the mortgage bonds has gone up lately, and that means the yield has gone down. When yields go down, rates go down. So the stock market is beating up the bond yield, which is good for mortgage rates. Local banks tend to get their money from the treasury and fed, and they are the ones who just increased their rates. So with the stock market getting clobbered, here is one bright spot in the financial markets!
So what will really happen with interest rates and housing prices in 2019? It depends on what type of house you want, where you want it, the down payment amount and credit scores.
If you don’t have the answers to the above questions, contact me today for a no-cost and hassle-free mortgage and home ownership consultation!!
email@example.com and 617.688.6891
180 Main Street, Suite A, Gloucester, MA, in historic downtown Gloucester