A Valley house is shown for sale in Peoria. Valley lenders should be fielding more calls since the Federal Reserve cut its benchmark rate by a half-point last week, according to Tina Tamboer of the Cromford Report.
Mortgage rates
Valley homebuyers to pay less, have more choices with Fed rate cut
Valley lenders should be fielding more calls since the Federal Reserve cut its benchmark rate by a half-point last week, according to Tina Tamboer of the Cromford Report.
Mortgage rates have dipped to a more affordable rate of 6.1% as of Sept. 19 — 1.4 percentage points lower than the average 7.5% mortgage rate in April, Tamboer said. A lower interest rate can translate into hundreds of dollars of savings on monthly mortgage payments.
On Sept. 18, the Federal Reserve “cut its benchmark interest rate by an unusually large half-point — a dramatic shift after more than two years of high rates that helped tame inflation but also made borrowing painfully expensive for consumers,” the Associated Press reported.
The rate cut was the first in more than four years, the AP story stated. A cut that size has the potential to have a bigger impact on U.S. finances, particularly in the housing market, where the benchmark rate is a key driver of mortgage rates.
“It has made (people) pay attention,” Tamboer said.
Lower interest rates can pay dividends. Now, some sellers are offering mortgage rate buydowns — where rates can go down by as much as 2% for the first year, she said.
For a first-time homebuyer — a $350,000 loan at 7.5% — a customer’s monthly payment would be $2,447, Tamboer said.
With the buydown, that same loan will take the monthly mortgage payment down to $1,691 per month plus taxes and insurance, she said.
The median price for a 1,200- to 1,500 square-foot starter home is $375,448, according to Tamboer.
“It makes it very affordable compared to what (the market) was doing five months ago,” Tamboer said. “...It makes everything on sale.”
For buyers, more listings and more choice can be a good thing for the market, Tamboer said. Sellers are going to be more willing to make repairs.
Homes that are move-in ready should sell quick while ones that have problems such as air conditioning and bad roofs will wind up “lingering” longer on the market, she said.
The Phoenix market “is leaning toward” buyers, but it’s not a full-blown buyers market as of yet, Tamboer said.
Cities such as Glendale is considered a seller’s market while cities on the outskirts such as Buckeye and Queen Creek are buyer’s markets, she said.
There are deals to be had in the Valley with borrowing costs coming down, she said.
“I think we might see a better fourth quarter than we have in a couple of years,” Tamboer said.
But Tom Brophy, data analyst at dataphaz in Phoenix, said lower mortgage rates could be short-lived.
There are still “many unknowns” such as the war in Ukraine and the Middle East plus the changes with the petrodollar — where world markets are expected to use different currencies rather than the U.S. dollar exclusively, Brophy said.
Happenings in other countries can effect how business is conducted in the U.S. Plus, there is an election on Tuesday, Nov. 5.
“I’m not ready to do a victory lap,” he said.
Brophy recommended those looking to buy a house have a plan and execute your plan based on your specific set of circumstances rather than waiting to see what the housing market may or may not do, he said.
But he says potential homebuyers should pay attention, know your plan and “look for breaks” in the narrative.
For instance, now is a better time than three months ago to refinance a mortgage, he said.
“There’s no good time for anything,” Brophy said. “...Get into that mindset.”
Existing home sales “fell 2.5% in August from the prior month to a seasonally adjusted annual rate of 3.86” million, according to a Sept. 19 press release from the National Association of Realtors.
Still, potential buyers who are in the market should have more homes to choose from in the short-term.
The tide has turned from a strong seller’s market where homes in shabby condition were being offered up.
Brent Ruffner joined Independent Newsmedia, Inc., USA, in 2021 where he writes about developments at TSMC and Maricopa County issues, including election topics.
He's written about stories that range from accusations that a Mesa monkey breeding facility is unsafe to what to do if you encounter a rattlesnake in the desert.
Community: He is a supporter of the American Cancer Society.
Education: Bachelor's degree in Journalism and Mass Communication, Arizona State University, May 2007.
Random Fact: He met former San Francisco Giants outfielder Willie Mays at a Phoenix Firebird game after winning a contest for an autographed baseball.
Hobbies: Hiking in the woods and collecting sports memorabilia.
By 
Comments
No comments on this item Please log in to comment by clicking here