March 17, 2023
Banking Disruptions - A Potential Silver Lining for Homebuyers
So much has happened these last two weeks in the banking sector. The collapse of two prominent banks has caused a state of panic, forcing the Federal government to move quickly to ease the minds of depositors by guaranteeing the security of their money.
Many predict that this news, though terribly scary, will pressure the Fed to slow down imminent rate hikes. Pausing rate hikes predictions have had an overall positive impact on bringing down mortgage rates.
Amidst the turmoil, we have acted swiftly to take advantage of this short window of opportunity to renegotiate interest rates for our clients who are currently under contract. Lower mortgage rates has also motivated many of our dormant buyer clients to get back into the home searching process.
While the stock market experiences huge volatility swings, we have noticed that real estate prices in LA and Orange County have remained relatively stable. Inventory remains low and good properties are still competitively overbidding and selling very quickly.
For more local real estate market insight, don’t hesitate to reach out to us. We are always here for you.
What We're Reading
Last week, the biggest news in the banking world was the collapse of Silicon Valley Bank, which was one of the nation's 16th largest bank. SVB buckled under pressure from the Federal Reserve's monetary policies that were intended to help combat inflation. SVB experienced a bank run by its depositors which led to its collapse and seizure by California bank regulators. In an effort to prevent additional banks from experiencing the same issues, the Fed may need to ease on additional rate increases. Mortgage rates have already started to decline (following 5 consecutive weeks of increases), this week dropping from 6.73% (Freddie Mac, average 30-year-fixed) down to 6.60%. Money's ‘A Whole New Level of Uncertainty’: How the Silicon Valley Bank Collapse Could Affect Mortgage Rates discusses where mortgage rates may be headed.
Many of our buyers this week took advantage of much lower interest rates (most were Adjustable Rate Mortgages), some able to renegotiate rates that they had locked in the previous week. If you would like some more insight into current rates, please feel free to reach out to either of us!
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