Here is the mortgage news you need now before you buy a home in New York City. The big news in real estate is rising mortgage rates. In the first two weeks of 2022, the 10-year bond yields increased over a quarter-point and they are expected to go higher. As of this morning, the 10-year Treasury Note ticked up to 1.827%. The December CPI report showed inflation at 7% which is a 40 year high. Meanwhile, the Fed announced that they are likely to start increasing rates in March with as many as 5 rate hikes this year. What does all this mean for you if you are planning on buying or selling residential real estate in New York City this year?
The national average for a 30 Year fixed conforming purchase is now hovering around 3.5%. Jumbo 30 Year fixed rates can still be found at 3.00%. You can even get a 10-year ARM for as low as 2.50%. These are historically low and the market consensus is that it will take several months before the rates show significant increases. Prior to the pandemic, the average 30 years fixed rate was 3.75% and it is likely that we will see that rate again by the end of the year. These are still low rates even at 3.75% and more in line with where rates were in 2019 which were almost 4%. The market consensus is that it will take several months for mortgage rates to increase significantly so you still have time to get into the market. Right now all the economic news is baked into the current rates.
The New York City properties priced below $2 million are the ones most likely to be impacted by rising mortgage rates but if you watch my video on my predictions for 2022 you will know that I said I don’t think they’ll be that much downward pressure on prices as a result of rising mortgage rates and here’s why. Rising mortgage rates will not put downward pressure on pricing. This prediction is counterintuitive and I am going out on a limb here. An increase in mortgage rates typically makes properties less affordable and depresses pricing. An increase in mortgage rates impacts the market most strongly for properties priced below $2 million as that buyer is more price sensitive. Yet an increase in rents will drive cash pied a terre buyers and cash investors into the market, which could stabilize any potential downward pressure on pricing.
We all love a bargain so if you know the rates are going up why not jump in the market now? I would be happy to introduce you to a mortgage professional.