Most every major mortgage finance economist is on record – or will be on record by the end of this week – as saying interest rates will rise in 2015.And they are probably right. On the conservative side it’s between 4.5-5%, with some outliers thinking it could be as high as 5.3% by the end of 2015.
Barring any major economic upheaval, yes, mortgage interest rates will be gradually climbing.So that’s one, and it’s really the easy one.
1. Mortgage rates will go up
Interest rates can't stay bound at such low levels. The National Association of Realtors isn't alone in predicting this will happen.But what about two and three? Have a look.
2. No more hiding the cost of mortgages
Well, these record low interest rates will no longer mask all the mortgage compliance costs arising from all the regulations that came down in 2014 – most especially, but not limited to, the Qualified Mortgage rule. Total loan production expenses – commissions, compliance, compensation, occupancy, equipment, and other production expenses and corporate allocations – took a giant leap up and increased to $8,025 per loan in the first quarter, up from $6,959 in the fourth quarter of 2013 and $6,368 in the third quarter of 2013.Low interest rates through 2014 have provided cover for how high these costs have reached. But the leaves will be falling off the trees.Which naturally leads to the third thing to know.
3. The cost of originating a mortgage is going to continue to be outlandish, and it could directly affect buyer behavior.
Lindsey Piegza, chief economist for Sterne Agee, said it could be challenging for buyers.“…With housing so ‘affordable’ over the past few years, consumers sense of normal has been adjusted down and when rates do start to rise, there is bound to be some sticker shock and negative reaction,” she said. “In other words, rising rates may cause some homebuyers to assess a new higher rate environment as ‘expensive’ (relative to low rates today) or unreasonably high, deterring new demand. “But new demand will remain dependent on the consumers ability to pay. Meaning if income growth is keeping up with rising financing costs, consumers are less likely to bat an eye,” Piegza said. “But if financing costs are rising and income growth remains stagnant, consumers are likely to be twice as unlikely to buy a home.”
Author:JP Piccinini Phone: 480-980-9025 Dated: December 3rd 2014 Views: 658 About JP: JP Piccinini is CEO and Founder of JP and Associates REALTORS (JPAR), Founder and CEO ofOdasi Real E...
JP And Associates REALTORS (JPAR) is one of the top 100 independently owned brokerages in the US. A full service real estate brokerage firm specializing in real estate sales and marketing services with multiple offices across the US and expanding quickly. JPAR is also one of Real Trends top 500 Brokerages in the US for volume and sales and in the top 1% in the US for sales.
Our mission is to provide extraordinary services and exceed our clients’ expectations by always committing to the highest levels of professionalism, ethics and standards in the real estate industry.
JP and Associates REALTORS is a real estate company with a solid structure and foundation built around service and productivity. We believe in providing a fun and rewarding environment for all our REALTORS® and therefore always ready to support our REALTORs® Associates in any market and in any condition. All our REALTORs® will always strive to close more transactions in a given year than the average REALTOR®. Our goal is to recruit and retain the most professional, better trained REALTORs Associates in the local market.
If you are interested in a new career in real estate or already have a real estate license but wish to learn more about our company please contact us directly to set up an interview. We offer our agents a 100% commission plan, company leads, training and mentoring and coaching from TOP Producers with no office, desk fees or monthly marketing fees ever. We are a full service brokerage at a transaction fee cost.
At JP And Associates REALTORS we strive to exceed our Clients AND our Associates expectations.
General Inquiries: firstname.lastname@example.org
Office Number: 1 (800) 683-5651
Texas Real Estate Commission Consumer Protection Notice
Don’t think you have the money to invest in real estate? Your IRA co
""When I decided to sell my house, Mindy immediately put me at ease with her complete and thorough knowledge of the real estate market. I trusted her because I knew she had a strong dedication to her clients and answered all my questions day or night. She is a great problem solver and has the determination to achieve solutions that work for everyone involved in the transaction.""