Excerpted from MND:
http://www.mortgagenewsdaily.com/
“Taper tantrum” refers to the market’s reaction to the revelation that the Fed would begin reducing the pace of its asset purchases in mid-2013. For most of us, that’s as bad as it gets for bond markets. Even for those who lived through the brutal weeks in April 1987, the worst 3 days of the taper tantrum represented a more abrupt change in yields in terms of the percentage of gains erased compared to the worst 3 days in 1987.
It’s scary to consider, then, that the past 3 days (Wed, Thu, and today) have actually seen a bigger intraday yield spike than the worst 3 days of the taper tantrum! The fact that we can even begin to compare this move to the taper tantrum puts it in a league of extraordinary sell-offs that have rarely been seen in modern bond market history. It’s worth noting, however, that most of those extraordinary sell-offs were precipitated by the recent juxtaposition of long-term or all-time low yields.
What do higher rates mean for the NSDCC real estate market?
If you are thinking of selling in the next six months, you should put your home on the market today, while the uncertainty is still relatively unknown. I can be reached at (858) 997-3801!
Trump was less than impressive on 60 Minutes last night, and way too vague. It doesn’t sound like he will be saying anything to calm the markets, and any new economic policy will take months – or years – to implement.
It is virtually irresistible for home buyers to wait-and-see if prices come down. They will expect some trade-off for the higher rates, but our casually-motivated sellers are going to think lower prices are somebody else’s problem.
Higher rates will have an impact on keeping deals together too. Once a buyer secures a property and opens escrow, then their lender delivers the bad news – boom, the payments turned out to be higher than expected. The home inspection will be the last straw, and if the sellers take the repair requests too casually, deals will be dying.
It’s hard to imagine that the robust momentum we’ve enjoyed while rates have been in the mid-3’s will continue with rates in the 4’s. Something has to give.
The media won’t be helping either:
http://www.cnbc.com/2016/11/14/trump-effect-pushes-mortgage-rates-to-4.html
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We will be moving into our home next week and we locked in at 3.875 with a jumbo loan. Good move or not? Kinda worried that home prices might be coming down. Should I be concerned?
If rates continue higher, I think we see a complete shutdown in transaction volumes (sorry Jim) but no significant decline in prices.
Owners have cheap financing and can rent to cover the mortgage if necessary. And everyone is going to want to hold real assets in case Trump stimulus and Easy Janet eventually cause inflation.
Absolutely – stagnant city here we come!