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RCBJ Talks With Mortgage Broker Kevin Joyce About The Volatile Environment Around Lending, Interest Rates and Home Buying
Q. What are you recommending to prospective home buyers regarding mortgage financing?
A. While it is true that mortgage rates have moved up significantly in the last year, the rates are still lower than historical averages. Since the Fed has signaled its intention to continue to raise rates throughout 2022, we are advising buyers to accelerate their home searches and lock in rates before the next rate hike.
Q. How has the increase in mortgage rates affected pricing of homes in and around the Hudson Valley?
A. There is generally an inverse relationship between mortgage rates and home prices, however we have not started to see significant pressure on home prices in the Hudson Valley. When comparing median home prices in our area during the first half of 2022 versus the second half of 2021, we do see continued price appreciation albeit at a slower rate. In Rockland County, 1Q 2022 saw a median price increase of 8.6 percent, while Westchester saw a 3.2 percent increase, Orange saw a 1.6 percent increase and Putnam County experienced a 2.2 percent price increase.
Q. How has the increase in mortgage rates affected the availability of inventory of existing homes?
A. The existing inventory had been turning over quite quickly in the last couple of years. This was driven by an imbalance in buyers and available inventory. We are starting to see a slowdown in both the number of offers per listing and the premiums offered.
Q. Do you see any impact on the pricing or availability of new homes?
A. Homeowners anticipating pricing pressure associated with rising rates have started to list their homes — driving a much-needed increase in inventory. We have experienced a couple of years of pent-up demand as the number of eager buyers far surpassed the number of houses for sale.
Q. Are you seeing any interest in the 15-year fixed rate mortgages which have a lower rate than the 30-year fixed?
A. The 15-year mortgage makes sense for certain buyers, and we always advise our clients regarding the benefits and drawbacks of the 15-year option.
Q. Have you seen a decrease in refinancing applications? Or is there a rush to refinance before rates go even higher?
A. We have not yet seen a decrease in refinancing applications. For the homeowner that missed the lower rates and is currently in a mortgage written before the last few years, it may still make sense to refinance.
Q. How will the mortgage refinance business be affected as the pool of homeowners eligible to refinance grows smaller?
A. If we are looking at refinancing a home just to cover the mortgage, only those with a 2-3 percent higher rate are likely to want to refinance in the current rate environment. That said homeowners refinance to take out money to remodel their homes, pay for an education, or pay off other obligations. There will always be a pool of homeowners that will need to refinance for these reasons.
Q. Have the increased rates limited the opportunities for homeowners to save money by refinancing?
A. Many homeowners use the equity in their homes to repay higher rate revolving credit lines such as credit cards. Since we have seen credit card interest rates increase well into the double digits, a single digit home mortgage refinance can still save the homeowner money.
Kevin Joyce, a licensed real estate and mortgage broker, owns QuestStar Mortgage & Joyce Realty. The company has offices in New York and New Jersey