Happy New Year! After several years of near zero interest rates, the Fed finally pulled the trigger and raised rates. Although it did not have an effect on Mortgage interest rates, it will affect rates indexed to prime such as home equity lines of credit and commercial lines of credit. Markets project the Fed will continue to raise the rates during the course of this year another percent or so.
The Fed has been purchasing approximately $25 Billion dollars per month Mortgage backed securities (MBS). They are using funds that have been coming back from MBS they purchased in the past and they have been reinvesting it right back into buying more MBS. This has stabilized mortgage rates. Otherwise we would see a huge increase in interest rates.
Even if the Fed increases the rates another percent, I would be very surprised to see mortgage rates over 5%. Oil prices continue to be low, gold is off its high and inflation is not at the Fed target of 2%.
Currently our 30 year fixed is 3.75% and interest rates for super conforming are at 3.875%. We continue to be as much as .375% below the rates of our competitors. Rates are still extremely attractive for home buyers.
The new TILA-RESPA Integrated Disclosure (TRID) that was put in play by the Consumer Financial Protection Bureau (CFPB) in October continues to be problematic in Real Estate transactions. Closings have been delayed as lenders are getting acclimated to changes. Fortunately we have adapted our processing and have been able to integrate it into our work flow.
You can register for our next Home Buyer Seminar at www.HomeBuyer-Seminar.com Be sure to see the testimonial video of the last seminar on the homepage. The seminars are helpful whether you are a first time homebuyer or a seasoned real estate buyer. There is a $1,000 closing cost coupon for all those that attend.
Real Estate Market
The New Jersey Association of Realtors recently released statistics for the Month of November. As we get close to the end of the year, lets take a look at some year to date numbers for the state of New Jersey.
|YTD 2014||YTD 2015||Percent Change|
|Median Sales Price||$281,000||$285,000||1.4%|
|Avg Sales Price||$363,964||$365,902||0.5%|
|% of List Price||95.9%||96.3%||.4%|
|Days on Market||85||84||-1.2%|
The number that jumps out is the increase in closed transactions. With a big number of 12.6%, you would think that there would be a significant increase in average sales price. That’s not the case. Although a bigger increase in sales price would be nice, this is a sign of a healthy market that is in balance. If demand continues like this, an increase in sales price is inevitable. Another sign of a healthy market is the pending sales number. This shows that there is a strong pipeline of transactions going into 2016.
Looks like it’s a good time to be a buyer or seller. Just in case there is an increase in interest rates and demand remains steady, buyers should buy their homes soon.
Looking forward to a healthy Market in 2016!