Boston condo buyers don’t panic about rates
Boston Condos for Sale and Rent
Boston condo buyers don’t panic about rates
After a year full of record-high interest rates and home prices, experts say there are signs of improvement for the housing market in 2024.
In December, the average mortgage rates dropped below 7% for the first time since August and after an 8% peak in October, which pushed housing costs to the highest level since 2000.
“The decline poses good news for buyers,” said Jessica Lautz, deputy chief and vice president of research at the National Association of Realtors.
Interest and mortgage rates will slowly decline, giving people a “little bit more room in their budgets” when it comes to mortgage payments, experts say. Additionally, inventory is growing as new listings creep back up, said Nicole Bachaud, a senior economist at housing site Zillow.
Boston condo buyers don’t panic about rates
Boston condo interest rates are higher than they’ve been in recent years. But it’s a good time to take a step back and consider where rates have been historically—and what your alternatives are for navigating the current market as a buyer.
The last time 30-year fixed rates were above 6.5% was in 2008. But prior to 2008 and all the way back to 1971, rates were above 6.5%. Today’s rates are high when compared with recent years, but still very low on a historical basis. It’s good to keep this in perspective before you panic about where rates are right now.
I’d like to share some insights because I think they’ll come in handy in a Boston condo for sale search:
Boston condo Jumbo rates are lower than conforming rates.
Most downtown Boston condos buyers need a jumbo loan (amounts over $647,200). Jumbo rates are lower than conforming rates due to fees and restrictions imposed on Fannie Mae and Freddie Mac. This means you don’t have to accept higher, conforming rates for your purchase.
If you were qualified for a $1.4 million purchase with 20% down at the beginning of the year, your maximum Boston condo purchase price has been cut to around $1,050,000 at current rates. But prices are definitely weaker, which will help you regain some of that purchasing power.
Consider adjustable-rate and interest-only mortgages.
Boston condo borrowers who have adjustable-rate loans have historically paid less interest than borrowers with 30-year fixed rates locked in. Even so, most people haven’t been willing to accept the rate volatility which comes with adjustable-rate mortgages. As we recently there’s a good chance rates may decline later this year once the Fed has started to get inflation under control. If this happens, it could make sense to accept a lower rate for an adjustable-rate mortgage now, instead of locking in today’s high 30-year fixed rates. Refinancing to a 30-year fixed later is always an option.
Consider paying points to lower your Boston condo rate.
One point is 1% of the loan amount borrowed. Paying a point could lower your rate .25%-.375% in today’s market. This could mean thousands of dollars in savings over several years. And of course, it’s possible to ask sellers to cover the costs of that point through a credit.
