I addressed the fiscal cliff in a very limited way in another post.
How will it impact the mortgage market?
For a year, rates have been moving down, where we’re seeing unheard-of numbers.
This is one of the big market drivers in the real estate market for many who had been on the sidelines, and seems to be driving up prices.
Conversations with lenders at HSBC, Sterling National, and Citibank, seem to focus on this financial cliff, though, as something that could shift the mortgage rates, and indirectly impact the broader RE market.
HSBC sees rates dropping 1/8 to 1/4 point in the near-term.
Sterling seems to see the political chatter moving the rates up and down to some degree.
My Citibank contacts see a
choppy lending market, rate-wise.
The rate impact boils down to this quote from my friend at Sterling, “If you maintain that that a massive cutoff in funds will slow- these mortgage bankers feel that we
could easily see the 10-yr down to 1.40%.”
So your borrowing costs could go even lower.
She continues, “However, if Congress works out a plan to mitigate disaster, as it were, with a longer term bipartisan plan to address the deficit, many expect to see the 10-yr yield heading back to 2%.”
Either way, most expect that lending will open up a bit, with various governmental lending programs.
The wrap-up is:
Lending, while arduous, isn’t the issue for most borrowers.
It’s about finding the property.
Let’s all hope for some additional inventory in the New Year.
Our odds are more than 50/50 to see that, in my view.