· Mortgage Rates1 – Just when it was starting to look like the markets were settling down, a fresh round of CPI and more significantly, PPI data put us back in our place. The reason the PPI data (which came in up 0.6% month-over-month, twice what was expected) had such a big impact is that it is generally viewed as a precursor to future CPI data. It’s not one-to-one, but if the cost the people producing the goods pay goes up, it is a pretty good bet that they are going to try to pass those extra costs along to the consumer… which results in higher inflation. After the PPI data was released Thursday AM, interest rates moved high, taking our benchmark rate back up to 6.875% (6.878% APR).
· Weekly Market Data2 – Another steady week for new listings helped active inventory move slightly higher yet again. With 5,451 active listings currently on the market, we are setting up to end the month of March with more active inventory than we have seen at this time of the year since 2020. Median Days on Market dropped again to 11 days, marking the sixth straight week of declines. (Source REColorado, all DMAR counties, this past week – Thursday to Wednesday).
· Columbine Team Insight – It was a competitive week with only 33% of our offers being accepted, although those accepted were at list price. The losses came amid highly competitive bidding over list price. It is a reminder to dust off the toolbox and pull out the offer sweetening items such as appraisal gap coverage, health and safety inspection items, and escalation clauses (among others).
· Market Trends – While most homebuyers view Mortgage Insurance (MI) in a negative light, it is actually a very helpful tool that enables many homebuyers to afford homes they would not be able to otherwise purchase. When a borrower puts less than 20% down, lenders require MI to protect a portion of their investment should the borrower default on the loan. The cost of Mortgage Insurance will vary based on factors such as credit score, downpayment, and debt-to-income ratio, as well as other less common attributes like loan type, employment status and the number of borrowers. With the continued appreciation of home values each year, it can be a challenge for many borrowers to achieve the golden 20% down buying their first home, and mortgage insurance offers a great alternative. Mortgage insurance rates can also be quite low if the borrower puts more than the minimum down payment and has excellent credit. If saving for a down payment it is a good idea to understand the impact of purchasing today with mortgage insurance versus waiting and attempting to save faster than the home appreciation rates.
NOTES:
(1) The mortgage loan scenario presented assumes the purchase of a primary residence, excellent credit, an 80% loan-to-value (LTV), a loan amount of $480,000, a 30-year fixed interest rate of 6.875%, and a P&I payment of $3,153. The Annual Percentage Rate (APR) is 6.878%, which reflects a lender credit of 0.114% ($547). Monthly principal and interest payments, which will continue for the stated term until paid in full, do not include mortgage insurance, property taxes or homeowners’ insurance premiums and actual monthly payments may be higher. Interest rates are current as of 03/14/2024 and are subject to change at any time without notice. All loans are subject to credit approval. Other terms and conditions may apply. Not all loans or products are available in all states. Regulated by the Colorado Department of Regulatory Agencies, Division of Real Estate.
(2) Source: REColorado®, Inc for the period 03/07/2024 to 03/13/2024. Data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties. This representation is based in whole or in part on content supplied by REColorado®, Inc. and REColorado®, Inc. does not guarantee nor is it in any way responsible for its accuracy. Content maintained by REColorado®, Inc. may not reflect all real estate activity in the market.
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