Wait for rates to go down?

5 Replies

Due to the bond market going crazy the last few days, within 24hrs my rate on a SFH investment house went from 4.375% to 5.5% !!!! I did not lock in yet.

It is an increase of $120 per month. The question I have is should I wait to see if the market recovers a little so the rate " hopefully" goes down a bit? I don't want to be on the sidelines waiting and then get out bid on the house. There is a highest and best in place already and the house was listed 24hrs ago! The open house had 26 ppl go thru, the house will not last. The broker likes my offer better because its 20% down, $2500 above asking, with a $5k deposit and i will let sellers rent for a few months until there house is built. Much stronger than an FHA , first time buyer. But $120 per month more for that rate is alot. The COI will be 10.6%.

tough to answer! The consensus is rates go up from here, which might mean the opposite! Rising rates generally put a damper on r.e. sales so you might be better served waiting and getting a better deal with higher rates

Originally posted by @Bob Romano :

Due to the bond market going crazy the last few days, within 24hrs my rate on a SFH investment house went from 4.375% to 5.5% !!!! I did not lock in yet.

It is an increase of $120 per month. The question I have is should I wait to see if the market recovers a little so the rate " hopefully" goes down a bit? I don't want to be on the sidelines waiting and then get out bid on the house. There is a highest and best in place already and the house was listed 24hrs ago! The open house had 26 ppl go thru, the house will not last. The broker likes my offer better because its 20% down, $2500 above asking, with a $5k deposit and i will let sellers rent for a few months until there house is built. Much stronger than an FHA , first time buyer. But $120 per month more for that rate is alot. The COI will be 10.6%.

Don't day trade real estate.

When rates are up, there are basically three possibilities:

- Rates continue to go up, maybe even return to historic norms of the 7% range. You will be glad you locked what you could, when you could! Rent comparables with financing at 7% must charge more rent, which allows you to charge more rent too, except for you the delta is just additional net profit. 

- Rates stay the same. It's a wash. Waiting would have done nothing for you, good thing you didn't sit on the sidelines for nothing.

- Rates go down. Great, refinance and increase your cashflow. You got the home while others were scared off by rates AND you get the rate you want on a permanent basis.

You are dammed if you do and dammed if you dont . If anyone knew what rates , stocks , bonds , etc will do tomorrow , they would be rich . 

If you want the house lock in now 

i agree with @matthew paul, there is no way to predict any of this, and one of the worst regrets suffered is that of lost opportunities, you can hear it if you talk to any senior citizen about investments, rarely do they tell you about their victories, most of the time they will tell you about the one that got away, and so it is with life. Carpe Diem my friend, its truly all you have, good luck!