Mortgage Insider

November 2023

Mortgage Rates Continue Rising

The average 30-year fixed rate hit 8% for the first time since 2000. Rates continue to rise as economic reports continue to show underlying inflation. The consensus is that the Fed will do one more 0.25% increase this year with hopes that inflation will come down in 2024. It is crazy to think that the average 30-year fixed rate was close to 3% a mere 2 years ago. This wide rate disparity is causing many would-be move-up buyers (that have to sell their existing home first) to wait it out until rates drop to somewhat lower levels. Most economists expect that rates need to come down to the 5.0 -5.5% area to spur a resurgence in the real estate market. Something has to give as both real estate and corporate investment has drastically subsided. Expect a lower interest rate environment in 2024, especially as we are in an election year.

UPDATE: With the week ended November 3, 2023, we have finally seen a nice downward rally in interest rates as the economy softens.

2-1, 3-2-1 Buydowns

With the rise in rates, loan buydown mortgages have become quite popular. With these programs, you can get a 1-2% lower rate for the first year or two of a 30-year mortgage with the final rate (in year 2 or 3) being slightly higher than prevailing 30-year rate. Most borrowers figure they will be able to refinance out of these programs as rates eventually come down.

2024 Conforming Loan Limits Increase

The 2024 conforming loan limit has been increased to $750,000 for single family homes and condos. In high cost areas like Orange & Los Angeles counties, the high balance conforming limit is $1,089,300. Many of our investors have already put into place these limits for loans funding in the 4th quarter 2023.

Cash-out, Home Equity Lending on the Rise

As credit card debt continues to surge (recently surpassed $1 trillion in US for the first time), cash-out refinancing and home equity (2nd) mortgages are growing. Despite the higher current rates, for many homeowners, they can obtain a lower “blended” rate by refinancing when compared to higher interest rate credit card and installment debt. While the cost of money has definitely gone up with most everything else, important to consider the “relative” aspect of money when considering investment decisions. Eventually, the economic cycle will change and there will be an opportunity to refinance a temporary higher mortgage payment. In the meantime, some of the best deals may be had today when there is far less competition, so don’t stop your plans over a temporary high interest rate environment. We would love to help you on your next deal. Please give us a call for the highest quality service in the industry.

Best Regards,