Mike Graessle:
Mortgage rates won't dent real estate market

Michael Graessle, president, Nelson-Vrooman Associates real estate agency in White Plains, expects short-term fluctuations in mortgage rates to have little effect on the local housing market.

By RICK ARCHER

Local mortgage and real estate brokers as well as national experts hesitate to predict where mortgage rates are going in the short term, but agree on one thing: it doesn't matter, in the short term.

While they differ on whether the recent decline in rates is a trend, they did agree that simple supply and demand will have a much greater effect on the Westchester market rather than interest rates.

"It's a hard market to predict," said Bob Armbruster, president of the National Mortgage Broker's Association.

After spiking in March, the 30-year fixed mortgage rate has fallen for eight of the last nine weeks, reaching 5.72 percent last week. Fifteen-year fixed mortgages have been falling as well, and now stand at 5.30 percent

For the most part, this is thanks to activity on the bond market, said Timothy Riley, branch manager of New York Mortgage Co.'s Purchase office.

"I don't think we're going to see a spike in the rates" at least over the next year, he said.

Armbruster differs with Riley. He said it's difficult to say whether the declining rates will last long, particularly since variable rates are up slightly. He expects an upward trend during the next year.

Michael Graessle, president of the Nelson-Vrooman Associates real estate agency in White Plains, also expects the rates to jump.

But neither the recent fall nor the prospect of a rise seems to have affected prospective buyers, he said. "Interest rates are still near historic lows," and people are still coming to the real estate market to take advantage of them, he maintained

For the immediate future, he said supply and demand, rather than interest rates, will have a more powerful impact on the local market.

Armbruster agreed. He expects little impact until rates exceed 6 percent and no serious fallout before they hit 6.5 percent. That development is quite a ways off, he said. "I think we've got a couple of good real estate years left."

Places like Westchester County, with stable employment situations and relatively limited prospects for new development, are likely to see real estate values continue to climb, he said.

Reilly agreed, saying rates must exceed 6 percent before home buyers would reconsider buying. Also, he said, because of innovative loan programs, including those requiring only interest payment for initial years, even if long-term rates rise, buyers will still find affordable loans.

"Ten, 15 years ago, we had half a dozen products. Now, you have enough products that you can get anybody into a house," he said.

"I thought we needed someone in the industry who would go out and educate our communities on what the aging issues are and the options of choice for our challenged population."