You may have heard the phrase mortgage rate lock-up recently, as a quick update, it is the unwillingness of a homeowner to part with a very low mortgage rate for a much higher one, or simply the inability to part with a lower mortgage rate, since qualifying to purchase a home with much higher rates would be impossible. eh needs a great incentive to sell, unless they want to give up that value. How valuable is your low mortgage rate? Freddie Mac reports that six out of 10 borrowers now have a mortgage rate at or below 4%, and that mortgage rate stabilization is a benefit for homeowners with fixed-rate mortgages. This has never been more true than last year and has changed, and simply put, mortgage rates have more than doubled from their record lows in 2021. As a result, those who kept rates low at that time now own something of high value. It made moving more difficult for those who need a mortgage to buy a home. Even if you qualify for a much higher interest rate, do you want to give up your lower rate? It’s not as if house prices have dropped so you simply trade in your old lower fixed rate mortgage for a new, much more expensive one. But how much will you lose if you do? Well, we might know by now. Determining the Value of a Mortgage Price Insurance Thanks to some scary math, this value has now been determined by the economists at Freddie Mac. They determine the value of a mortgage rate by taking the difference between the outstanding balance of the mortgage and the current value of the mortgage at prevailing market interest rates. After 29 months it’s about $236,379, with a very low principal and interest payment of $1,007. 90,000 reasons to move, be it for a much better job, lifestyle, etc. Otherwise they will need to stay where they are, which seems to be the most common outcome at the moment given the scarcity of the current housing stock. Those who took out mortgages in 2020 and 2021 have an average mortgage value of $77,000 and $85,000 respectively Perhaps even more surprising is that those who took out a mortgage in 2023 have an average mortgage value of $10,000 Overall, homeowners with fixed mortgages financed by Freddie Mac have a total fixed loan $25 billion (30 years) and $15 billion in total equal loans. For example, the unpaid principal balance of Mac’s mortgage portfolio Tells you why this phenomenon is so impactful, and why there is such a shortfall in inventory available for sale right now While this will dampen home sales and mortgage facilities, it should help support home prices at a time when affordability is rarely the worst Freddie Mac said her company’s official forecast for the next 12 months fell 1.3%, while early house prices fell 1.3%, while early house prices fell 1.3%. Early Homes increased by 1.3%. They’re anticipating an upward revision, in short, they’re anticipating continued tight inventory due in large part to the effect of this lock-in, which should keep volume down but prices up.
Source link
