Article By: Jim Porter – December 15, 2022
The FED raised the overnight lending rate by 50 basis points Wednesday and the yield on the 10-year Treasury bond is now 3.50%, which is down from 4.25% in October.
The yield curve remains inverted with the two-year Treasury at 4.24%.
Mortgage rates have dropped by more than 1% over the past month. CNBC and Bloomberg are stating a national average for a 30-year, fixed-rate mortgage today is down to 6.3% from 7.3% but for 700-plus FICO score buyers. Local lenders are quoting rates today with a 5 handle.
An official recession looks inevitable, and most homebuyers remain on the sidelines, but I have a feeling the real estate market will be better in the first quarter than it was in this miserable fourth quarter. The word is getting out about this recession in comparison to the Great Recession in 2008.
Nationwide, there were 1.5 million foreclosures in 2008 and only 162,000 in 2022. The homeowners are healthy with low-rate first mortgages on their homes. Historically, home values remain steady during and after a recession. Since 1980, the Great Recession of 2008 was the only recession that resulted in home values crashing and that was because the whole thing was caused by absurd and fraudulent mortgage lending from 2003 to 2007.
Now would be a good time for renters to get prequalified and look at what the numbers would be to purchase in Solano County. There is no cost to do this with most local lenders and believe me, us mortgage brokers and loan officers are not too busy. I don’t think it would be a terrible mistake to wait for three to six months to buy a house, but it is never too early to get the ball rolling on the free preapproval process.
Fannie Mae is suggesting we will see rates below 5% in 2023 but gee whiz, I don’t think you or your adult kids should wait for the market to change to a seller’s market. Buy now and you won’t cry later.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
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