March 27th Moorings

Hello and welcome to this week’s edition of Moorings. Before we get into any news, let’s take a look at rates and where they are at. Currently a borrower looking to purchase a home with five percent down and adequate credit history, income, assets and other qualifying factors would expect to have an interest rate of 4.75% with a one percent origination fee or 5% with no fee.  This is large unchanged from last week several weeks before that with only a minor one eighth percent change at any given time. That scenario is based on a qualifying credit score of 740 or more, whereas going down to a score of 640 (the minimum allowed), causes the scores to go up to 5.375% and 5.625% respectively. Just this past week I had a former client who had always had stellar credit but due to a mistaken address on a bill, they had a $17 collection fee show up on their credit which impacted her score enough to drastically change the rate on a loan for a vacation home that she was looking at purchasing. Like I’ve said many times before, it’s imperative that you keep an eye on your credit score and keep it at 740 or above.

In major financial news, the United States Treasury Department announced it is going to begin selling some of its massive Mortgage Backed Securities holdings. This is important to anyone looking to purchase or refinance a home. That’s because this announcement immediately pushed Bond prices significantly lower, as Traders tried to get their own positions sold. Think of it as a financial game of musical chairs… in which no one wants to be the last one standing with a mitt full of 4% Mortgage Backed Securities in a 5% market. This isn’t the last we’ll hear about this – and since home loan rates are tied to Mortgage Backed Securities, this creates the potential for home loan rates to rise in the near future. Fortunately, home loan rates are still at very attractive levels for now, despite the Bond market taking a hit for most of last week. So if you’ve been thinking about purchasing or refinancing a home, this is the time to see how you can benefit before rates possibly move higher. Because as bad as it was to lose some Bond pricing in the last few days, prices could move significantly worse depending on how they hold on.

In more local news, I thought I would give a brief update on Wrightsville Beach real estate. Year-to-date there have been 14 homes sold on the Island at an average selling price of $923,429. These homes sold at an average of 88% of their listing price and were on the market for an average of 240 days. While perhaps not the best of statistics there is at least some movement in this market including one property that sold for nearly $3,000,000. Well that’s it for this week, until next, Be Blessed and Numbers 6:24-26 be on you.