Rates vary by lender — a lot

Plus, the Fed's recent moves

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  March 25, 2023 | Issue #85

Good morning! This week we’re talking homeownership costs, generous sellers and the *growing* importance of shopping around for your mortgage. This issue of Money Moves was written by Aly J. Yale.   Mortgage rates on the move Money; Shutterstock Average mortgage rates have dropped for two straight weeks now, slipping from 6.73% to 6.42%, according to mortgage purchaser Freddie Mac. The dip was something housing experts told reporter Leslie Cook was a major possibility after the collapse of both Silicon Valley Bank and Signature Bank earlier this month. In an article published on March 15, Cook wrote, “The upheaval caused by the banks’ implosion could cause a shift in mortgage rate trends.” The reasoning? Concerns for the banking industry might spur the Federal Reserve to ease up on its rate hikes. This week, that *sort of* happened. While the bank didn’t outright reverse course on its rate hikes, it did implement a smaller increase at Wednesday’s meeting than experts had been predicting before the turmoil in the banking industry. And just as those experts predicted, rates slid. Conventional loan rates — which is what Freddie Mac tracks — are now down 18 basis points for the week and are significantly lower than their 2022 peak of 7.08%. FHA rates have dropped quite a bit, too. According to Mortgage News Daily, the average interest rate on a 30-year FHA loan is now just 5.72% — down a full percentage point in less than six months. The dips offer much-needed relief to homebuyers, who have struggled with rising rates for months now. Whether they continue, though, is another question. As economist Lisa Sturtevant put it, the banks have “introduced a whole new level of uncertainty into the economy.” For more: ‘A Whole New Level of Uncertainty’: How the Silicon Valley Bank Collapse Could Affect Mortgage Rates The Fed’s moves: The Fed Just Raised Interest Rates Again Despite Recent Bank Failures. Here's What It Means for You   Chipping in Money; Getty Images Rates aren’t the only thing that have changed drastically over the past couple of years. Apparently, sellers’ attitudes have, too. As reporter Sarah Hansen recently put it, “While it was common during the pandemic for desperate homebuyers to bid well above asking price and bend over backwards to meet demands from sellers to land a house, the tables have now turned.” According to data from Redfin, a whopping 45% of sellers made concessions to buyers in December, January and February, meaning they covered some portion of the buyer’s costs. That could look like paying a buyer’s closing costs, buying down their interest rate or covering certain repairs. In some places, the number of concessions are even more notable. In Las Vegas, for instance, a jaw-dropping 77% of sellers offered concessions. San Diego, Sacramento, Phoenix and Denver weren’t far behind. So if you're shopping for a home? Heed Hansen's advice, and take this as “a reminder that the real estate market where you live might not look the same as the market in another city or state." For more: Nearly Half of Home Sellers Are Now Giving Concessions to Buyers to Close the Sale   How many lenders should you apply with? Getty Images Comparing lenders has always been important to finding the lowest interest rate, but apparently, it’s getting even more critical. According to a new report from Freddie Mac, rate disparities among lenders are growing. Between 2010 and 2021, borrowers who got at least two rate quotes saw an average rate difference of 10 basis points — meaning a 6% rate vs. a 6.10% one. That’s not a huge difference, but it’s one that could save you money, nonetheless. In 2022, though, that spread jumped, notching a 20-point difference for those who get two rate quotes and a pocketbook-padding 50-basis-point difference for those who get four. To put that into perspective, let’s look at a 30-year loan of $300,000. Here’s how the payment and total costs would shake out at 6% and 6.50% rates (a 50-basis-point spread). The real savings will depend on your loan amount and rate, but Freddie Mac estimates borrowers who get at least four quotes save around $1,200 a year — or about $36,000 over the course of 30 years.   Beyond the mortgage Money; Getty Images If 6%-plus mortgage rates weren’t enough to scare you away from the housing market, new data on homeownership costs might be. According to a new survey of 1,000 homeowners, the typical house costs its owners around $17,500 per year — and that’s not even counting the mortgage payment. These costs include things like utilities (the costliest line item), maintenance, home improvements, property taxes and home insurance. Of those surveyed, nine in 10 respondents say owning a home is more expensive than they anticipated. I’m definitely not surprised. (My home insurance renewal came in the mail yesterday and it’ll cost me a whopping $800 more than last year. Oof.)   Happy hunting, P.S. Spot a weird or unique home listing? Share it with me on Twitter, where I’m @alyjwriter, or via email at alyjyale@gmail.com. P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page.   Money’s Essential Home Buying Resources: Spring 2023 On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates. Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips. Key question: How much house can I afford?   This newsletter is free because Money earns a commission when you click or make purchases from the links in this email and on our site. We also receive compensation for some of the products and services featured in this message. Offers may be subject to change without notice. Learn more about how we make money. Privacy Policy • Advertise With Us • We're Hiring! To stop receiving these emails, unsubscribe or manage your email preferences. Copyright ©2023 Money Group, LLC. All rights reserved. Metro Office Park Calle 1, Building 7 Suite 204, Guaynabo, Puerto Rico 00968, USA