No, there will be no dirty jokes here.
I’m talking about both going sideways.
I wouldn’t say that I’m waiting for the other shoe to drop, per se, but I have continually expected the dreaded “We’re seeing rates beginning to climb.”
It’s like the conversation with your parents when you were in high school that they have finally caught onto your skipping classes- you know it’s going to happen at some point.
In fact, it would probably happen just when the sun starts to come out in the spring, on a day like today….
However, I’ve again reached out to my mortgage friends, and am getting plenty of good news.
I’ll break it into two pieces, low rates and lending growth:
1) Rates still low
One mortgage broker is concerned that new regulations would cause rates to pick up, but rates are down this week.
I’ll tie the reasons for rates being down to more competition in the lender marketplace for buyers.
Why would there be more competition?
My friend Frank Cronin says, “Portfolio lenders are seeing value in the collateral and now looking to attract clients with their mortgage programs.”
Okay, so that just means that banks see the bottom and feel that they are making safer bets on residential real estate.
That sounds reasonable, and to some degree explains why…
2) More Mortgage products available- aka Lending Program Growth
Every mortgage broker I speak to has more mortgage programs- if they feel like values are going up, they want to capture more buyer business.
Many of the difficult
condo pre sale, condo litigation,
and building budget reserves issues have been ironed out-
making underwriting easier.
I’ll just say that the pendulum has swung back from over-crazy conservative to near-normal.
Does this mean that the tons of new buyers in the market will push values up?
Lenders certainly feel that values aren’t going down.
The competition which we’re seeing in the marketplace for buying
can’t hurt the pricing for sellers.
The argument that one should pay below the 2007-2008 pricing is holding less water, as the inventory across the marketplace shrinks.
Does this mean that the time is now?
Some might argue that
new lending
now creates
a
period of time, a moment that
prices has not been fully affected yet,
since it’s the first
round of the new lending in Manhattan in some time.
Hmm…I’ll buy that on its face, but still see lots of negotiations behind the scenes.
Another mortgage broker I’ve spoken to tells me that her pre-qualifications have started to convert into real loan qualifying-
buyers submitting offers and winning bids.
It should be a busy Spring.
Lastly, I think it’s interesting that there are new rules that have gone into effect as of April 1st regulating how mortgage brokers are compensated (That it will be based on the amount of the loan, not the product.
I think this is a big win for consumers- at least in theory.
Clearly, buyers and those refinancing will want to make sure they have all of the information.