It seems as if everyone has finally come to the consensus that mortgage rates have only one direction in 2010 and that is up. Many will also agree that as mortgage rates continue to rise that home affordability will decline as they are inversely related.

What isn't so clear is the relationship between higher mortgage rates and the overall impact on real estate transactions.

I was watching CNBC's Diane Olick - Daily Realty Check for an update on Commercial Mortgage Backed Securities early this afternoon. Although the delinquency rates are even more frightening in commercial real estate, the tail end of her update is what Realtors in the residential arena really need to pay attention.

Did you catch that?

Mortgage applications hit a six month low as mortgage rates increased during the holiday week of Christmas. 23% less as mortgage applications came to a halt. It should be noted that since mortgage rates hit their all time low near Thanksgiving weekend, a 30 year fixed home loan rate had increased by 0.500% - 0.625% to end 2009.

If a half percentage increase in residential home loan rates could impact mortgage applications by 23 percent...

How Will Your Real Estate Business Be Affected by Higher Mortgage Rates?

 

Five Recent Blog Posts of Interest:

  1. This Is The Week Ahead for January 3rd
  2. Weekly Blog Update for the Week Ending January 2nd
  3. Will You Make A Difference with Your Life in 2010
  4. Don't Miss Virtual RE BarCamp on January 4th
  5. How Will Higher Mortgage Rates Impact the Housing Recovery

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5 Comments on How Will Your Real Estate Business Be Affected by Higher Mortgage Rates

JAN
08
2010
230,320 Points 4 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hi James-

Just saw this post come through on Twitter.  Yow!  I have had business in this week, but my heart goes out to those who don't.  I'd like your opinion, Do you personally account some of this to the extreme winter weather?

--Sara in San Antonio

 
12:11pm • #1
JAN
11
2010
3 Featured Posts

Sara - I think it happened to be a combination of the higher mortgage rates, seasonal/holiday mindset and extreme weather throughout the country.
12:32pm • #2
230,320 Points 4 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hi James-

Thanks for your response.  It is really difficult to predict what may be happening this year on a national basis and how that will affect buyer sentiment. We are waiting to see and getting our motivated people moved as quickly as we can; before we see rate changes.

--Sara
1:20pm • #3
JAN
17
2010
762,343 Points 69 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

That was staggering - commercial delinquencies up 500% and hotels 900%.  Who even knew about hotels....  These are strange times.
2:38pm • #4
3 Featured Posts

Jane- I would think that commercial delinquencies would be an even bigger issue for metropolitan areas such as yourself in Los Angeles. I'm sure that the strategic defaults by big banks such as Morgan Stanley and the exodus of corporate headquarters has not helped either.
2:50pm • #5

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Cmps

James K Barath, CMPS - Illinois Indiana FHA Loan Expert - GVC Mortgage, Inc

Crown Point, IN

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