Our Three-Pronged Approach to Managing Interest Rates

• Mortgage Rates¹ – It was another unfriendly week for interest rates, and we saw our benchmark rate touch the 7% range – coming in at 7.000% with a slight discount fee (APR 7.059%).  Part of the challenge was commentary from a couple of Fed Presidents suggesting there should be another rate hike at the next meeting to ensure we hit the 2% inflation target.  Add in the uncertainty around the debt ceiling and the pressure on mortgage rates for the past two weeks has been higher than it has been in a while.

• Weekly Market Data² – In good news, active listings continued to grow, inching up to 4,930, with 1,226 new listings hitting the market in the last week.  Buyers will appreciate the fact that (for the second week in a row) only a little more than 25% of the new listings went under contract in their first week on the market.  Of the 878 closed sales, 55% were under contract in under 7 days, which continues the cooling trend from our peak of 59% a couple of weeks ago.  This pushed our Median Days on Market (for those homes that closed) back up to 6 days.  (Source: REColorado, all DMAR counties, this past week -Thursday to Wednesday).

• Columbine Team Insight – We saw heavy competition this past week with only 36% of offers being accepted, however none of our accepted offers were over list price!  We do expect to see offer acceptance rates start to improve this weekend with the unofficial start to summer and a drop-in buyer activity – as focus shifts to vacations and other outdoor fun activities.  Add in the increase in mortgage rates and if you are eager to land a new home, it may be an opportune time to jump in and get the house you want… and we’ll work on your interest rate with our three-pronged strategy.

• Market Trends – When is the best time to buy – when no one else is!  While we all understand the pressure higher interest rates put on your budget, many savvy, well-qualified buyers view the dynamic that is currently unfolding as an opportunity to jump in and get the house they want while others sit on the sidelines.  And on the financing front, we utilize a three-pronged strategy to help our clients get into the best situation possible:

• First, as a brokerage (vs a bank or direct lender) we will look across our portfolio of competing lenders to find the best rate available at the time we are ready to pull the trigger – unless there is a reason, we like to keep our options open.

• Second, most of our lenders allow for a one-time rate renegotiation while the loan is in progress, giving us the option to capture upside if we see significant market improvements.

• Third, we actively monitor our clients’ loans to see if we can refinance into a better interest rate post-closing – and if the opportunity arises, we reach out to alert them.

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 6.625%, and a P&I payment of $3,073.  The Annual Percentage Rate (APR) is 6.720% with a 0.077% discount fee ($370).  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 06/01/2023 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 05/25/2023 to 05/31/2023.   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.