After 12 Months of Historic Lows
Hi Friends,
Mortgage interest rates have continued to rise since my last update. Many of you who are watching the ten-year treasury bond yield already know that the party is over. After 12 months of being at or near historic lows, the party had to end eventually. This move higher in mortgage rates, roughly .5% – .75% from the bottom last touched at the end of January 2021, may increase further as we head into May and June of 2021. The rising inflation data, confirmed by the Federal Reserve at their recent March 2021 meeting, is pointing to inflation heading over 2% and as high as 2.5% in the coming months. Whenever inflation goes above the Fed’s 2% target, mortgage interest rates will rise.
There is a potential for rates to come back down again in the Fall of 2021, after the negative inflation numbers from 2020 during the height of the pandemic fall off the rolling 12-month average, and inflation readings go back below the 2% target.
Buyers Face Low Inventory
This rise in rates is slowing down mortgage refinances and is also putting pressure on potential home buyers to get into a home now, before rates increase further. Unfortunately, a severe lack of inventory nationwide, especially in California, is not helping buyers as they scramble to capture the low rate environment.
Listings in the Bay Area, where I am located, are getting upwards of 30 offers and going for several hundreds of thousands of dollars above list price. Every offer written is expected to have no loan and no appraisal contingency, which is stressful for buyers. (Please refer to my