Breaking Through Housing Market Gridlock
While buyers and sellers fret about interest rates, our market stagnates. Use this tool to help educate your potential clients about the opportunities and advantages to moving now, rather than waiting for what may happen later.
There is no doubt that buyers are in a tough spot with the rise in mortgage interest rates. Many buyers have simply assumed that they can't make a move because mortgage interest rates went up last year and haven't come back down. Although it seemed that the long-term interest rates (which relates to mortgage interest rates) might come back down if inflation stabilized, inflation is still higher than the Federal Government's target. In fact, the Bureau of Labor Statistics indicates that inflation in January was 6.3% over January 2022 which has declined by May to 4.1% over May 2022. The general target is to have year-over-year inflation to be around 2%.
Last week, the Federal Reserve indicated that two more increases may be imminent this year, but it is unknown how this will impact mortgage interest rates. Meanwhile, homeowners are still growing out of their homes or wanting to relocate to be closer to family, and renters are seeing their rent increase by five, seven, or even ten-percent or more over last year. Current homeowners feel stuck because if they sell, they are worried about trading-in their low interest rates. The whole market is in gridlock.
We need to help buyers get beyond the thought that interest rates are coming down significantly. Yes, I expect they will come down later this year, but waiting may not be in buyers' best interest. I don't see residential real estate prices coming down further. This means that you need to help buyers look into the future. To do that, you need tools to help them decide how to take the next step. Providing an Interest Rate and Payment Table is the first step to help them get there.
Sure, you could send potential buyers to an online mortgage calculator, but having a full printed table of payments allows folks who are analytical to see how an incremental change in interest rates or in loan amount can affect their payment. Having information in print empowers buyers and will help them envision the next step.
For well over a decade, we have had a table available that shows the applicable payments for a variety of interest rates and a 20% down payment (this document was formerly known as the Danger of Waiting), but we have just created a second and third table that takes into account a 0% down payment option which can be used as a loan amount and a 3.5% down payment option.
When using this document, don't overlook the fact that there are other housing costs for buyers to consider, including:
- Estimates for property taxes
- Estimates for property insurance
- Estimates for Mortgage Insurance Premium (MIP) in the case of a 3.5% down payment with FHA
- Any other closing costs or HOA fees
We have included principal and interest in this handout, but if you are meeting with a buyer, we recommend you reiterate this so they understand the numbers they are reviewing. We have also put a disclaimer in there that indicates that there is no guarantee that the buyer will qualify for a specific rate nor that this is an offer of a loan.
All three of these tables are available in our Club Zebra Vault to Club Zebra members, BUT we feel so strongly that this information needs to be in front of your buyers or sellers, we are making this available to all of our readers until the end of June. It is available in Microsoft Word for maximum editability.
Download the Interest Rate and Payment Tables
Do your part to get us through this gridlock! And if you like the tool we are giving you today, consider becoming a Club Zebra member. There is so much more in the Vault to explore!
By Denise Lones CSP, M.I.R.M., CDEI - The founding partner of The Lones Group, Denise Lones, brings nearly three decades of experience in the real estate industry. With agent/broker coaching, expertise in branding, lead generation, strategic marketing, business analysis, new home project planning, product development, Denise is nationally recognized as the source for all things real estate. With a passion for improvement, Denise has helped thousands of real estate agents, brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.