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
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."