April 28, 2025 • 6 mins
Jeff Ostrowski of Bankrate says the rate is up %6,8, but that's a result of people choosing to stay in their home. The days 0f %3.0 look to be over, which may not be a bad thing!
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Episode Transcript
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Speaker 1 (00:00):
All right, just about seven forty in the morning on
(00:02):
this Monday, let's check in on the Legacy Retirement Group
dot Com phone line with Jeff Ostrotski Bankrate dot Com.
The housing market five years post pandemic. I appreciate the
time this morning, Jeff. So, Yeah, a lot of people
during the pandemic took advantage of some very very low
interest rates and either if they bought a new house
(00:22):
or they just refied, including yours, truly, they got a rate,
you know, around three percent, in some cases under three percent.
Those days are over.
Speaker 2 (00:32):
They are And can I say borrowers are green with
envy when I come through those three percent rates?
Speaker 1 (00:40):
Absolutely not gray with envy, that's for sure. So what's
going on? So rates today are what about mid sixes,
six six, six eight somewhere in there.
Speaker 2 (00:52):
Yeah, yeah, at six point eight eight percent in bank
Rate's latest survey. So you know, not terrible that mortgage
rates went as high as eight percent. They're about a
year and a half ago. As the said, raising rates
really aggressively. But you're right, during the pandemic, mortgage rates
plunged below three percent. That created a refinancing boom. It
(01:15):
really helped push up home values. Intriguingly, even as mortgage
rates shot up from three percent to eight percent, home
prices stayed high. So home prices keep setting records a
month after month, and that's really just a factor of
supply and demand. So even with those higher mortgage rates,
demand hasn't cooled enough to be sort of less than supply.
(01:39):
So it's definitely a strange market, kind of what no
one was expecting. But that's the housing market we have
right now.
Speaker 1 (01:47):
Yeah, how do you square that? If rates are at
you know, six seven, six eight, and people are trading
in a call it a three percent interest rate, I mean,
that's that's a lot of money. And and yet you're
saying that's not really changing people's minds. I would think
that would, you know, values go up, inventory goes down?
Speaker 2 (02:08):
Right, so's there are a few different factors there. So
maybe about thirty percent of buyers or first time buyers
and they don't really have any any previous mortgage to
be concerned with, so they're they're kind of just jumping
into the market, and they're they're buying because they're ready
to buy and not because of anything that mortgage rates
(02:29):
are doing. Sure, then then there's another significant percentage of buyers,
maybe a quarter of buyers who are paying cash. They're saying, hey,
I made so much money in the stock market or
selling my previous house, I don't want to deal with
the seven percent mortgage rates. So those folks are just
paying cash, and so then that leaves, you know, whatever's
left slightly less than half of home buyers who are
(02:52):
you know, they are doing what you just described, which
is trading a three percent mortgage for a seven percent mortgage.
That's team that's created what's been called the lock in effect.
So a lot of the homeowners, instead of moving every
seven or eight years like they might in a more
normal housing market, are staying in place. They're maybe remodeling
(03:14):
the house, maybe they're making view with a bigger house
or a smaller house than they really need, and they
just don't want to give up that super low mortgage rate,
so they're staying put. And that's affecting unitory of homes
for sale. So there's just less turn in the housing
market than there normally would be.
Speaker 1 (03:30):
Jeff, do you think we'll never get the toothpaste back
in the tube at this point? I mean, do you think, well,
I know, we won't see a three percent or a
sub three percent mortgage rate, But do you think we'd
ever get into the fours or even the fives.
Speaker 2 (03:44):
Well, I guess I would just say, be careful what
you wish for now. On the one hand, everyone looks
longingly back at the days of three percent mortgage rates,
But the reason that mortgage rates fell all the way
to three percent was because we were in a global
economic crisis. I mean, the US economy had gone very
quickly into a recession and a pretty deep recession. That
(04:06):
the economy pulled out in that recession quickly, just because
of all the stimulus from the federal government and the
Federal Reserve. But mortgage rates were low because something really
bad was happening in the economy. And so part of
the reason that mortgage rates have stayed high is that
there hasn't been a whole lot of bad in the economy.
There's the recession that everyone is expecting has yet to come.
(04:28):
So I guess I don't I don't think it's likely
that rates will go back to four percent. There are
some some thoughts that maybe they could get below six
percent if there's there's some some you know, political uncertainty,
some some uh, some economic direction that's more severe than
what everyone's expecting. But the consensus for now is that
(04:51):
mortgage rates are going to in the year like maybe
at about six and a quarter.
Speaker 1 (04:55):
Jeff Ostrowsky, Bankraade dot com. You introduced the word recession
into the conversation, chef, so we'll run with that for
a minute before we got to let you go. So
those fears are back recently due to volatility in the
stock market and tariffs and all of that. So should
we slip into a recession and we start to see
rates can maybe come down a little bit? What what
(05:17):
what are the Are there benefits or and or drawbacks
to buying a home or refinancing during a recession?
Speaker 2 (05:25):
Yeah, I would say if if the recession comes that
that that could be the impetus to push mortgage rates
down a bit. So that could create an opportunity. It
might make it more palatable for buyers to if you're
buying it at a six percent rate instead of a
seven percent rate, so that that could be somewhat helpful.
(05:45):
On the other hand, if you've got uncertainty around your
your job security or your income, that that's going to
make it harder to to you know, want to buy,
or to to qualify for a mortgage. But yeah, but
possible that a recession could push mortgage rates down a
little and cool off home prices, So maybe they just
stay flat for a while instead of continuing to go
(06:06):
up as they have been in most parts of the country.
All right, just about seven forty in the morning on
(00:02):
this Monday, let's check in on the Legacy Retirement Group
dot Com phone line with Jeff Ostrotski Bankrate dot Com.
The housing market five years post pandemic. I appreciate the
time this morning, Jeff. So, Yeah, a lot of people
during the pandemic took advantage of some very very low
interest rates and either if they bought a new house
(00:22):
or they just refied, including yours, truly, they got a rate,
you know, around three percent, in some cases under three percent.
Those days are over.
Speaker 2 (00:32):
They are And can I say borrowers are green with
envy when I come through those three percent rates?
Speaker 1 (00:40):
Absolutely not gray with envy, that's for sure. So what's
going on? So rates today are what about mid sixes,
six six, six eight somewhere in there.
Speaker 2 (00:52):
Yeah, yeah, at six point eight eight percent in bank
Rate's latest survey. So you know, not terrible that mortgage
rates went as high as eight percent. They're about a
year and a half ago. As the said, raising rates
really aggressively. But you're right, during the pandemic, mortgage rates
plunged below three percent. That created a refinancing boom. It
(01:15):
really helped push up home values. Intriguingly, even as mortgage
rates shot up from three percent to eight percent, home
prices stayed high. So home prices keep setting records a
month after month, and that's really just a factor of
supply and demand. So even with those higher mortgage rates,
demand hasn't cooled enough to be sort of less than supply.
(01:39):
So it's definitely a strange market, kind of what no
one was expecting. But that's the housing market we have
right now.
Speaker 1 (01:47):
Yeah, how do you square that? If rates are at
you know, six seven, six eight, and people are trading
in a call it a three percent interest rate, I mean,
that's that's a lot of money. And and yet you're
saying that's not really changing people's minds. I would think
that would, you know, values go up, inventory goes down?
Speaker 2 (02:08):
Right, so's there are a few different factors there. So
maybe about thirty percent of buyers or first time buyers
and they don't really have any any previous mortgage to
be concerned with, so they're they're kind of just jumping
into the market, and they're they're buying because they're ready
to buy and not because of anything that mortgage rates
(02:29):
are doing. Sure, then then there's another significant percentage of buyers,
maybe a quarter of buyers who are paying cash. They're saying, hey,
I made so much money in the stock market or
selling my previous house, I don't want to deal with
the seven percent mortgage rates. So those folks are just
paying cash, and so then that leaves, you know, whatever's
left slightly less than half of home buyers who are
(02:52):
you know, they are doing what you just described, which
is trading a three percent mortgage for a seven percent mortgage.
That's team that's created what's been called the lock in effect.
So a lot of the homeowners, instead of moving every
seven or eight years like they might in a more
normal housing market, are staying in place. They're maybe remodeling
(03:14):
the house, maybe they're making view with a bigger house
or a smaller house than they really need, and they
just don't want to give up that super low mortgage rate,
so they're staying put. And that's affecting unitory of homes
for sale. So there's just less turn in the housing
market than there normally would be.
Speaker 1 (03:30):
Jeff, do you think we'll never get the toothpaste back
in the tube at this point? I mean, do you think, well,
I know, we won't see a three percent or a
sub three percent mortgage rate, But do you think we'd
ever get into the fours or even the fives.
Speaker 2 (03:44):
Well, I guess I would just say, be careful what
you wish for now. On the one hand, everyone looks
longingly back at the days of three percent mortgage rates,
But the reason that mortgage rates fell all the way
to three percent was because we were in a global
economic crisis. I mean, the US economy had gone very
quickly into a recession and a pretty deep recession. That
(04:06):
the economy pulled out in that recession quickly, just because
of all the stimulus from the federal government and the
Federal Reserve. But mortgage rates were low because something really
bad was happening in the economy. And so part of
the reason that mortgage rates have stayed high is that
there hasn't been a whole lot of bad in the economy.
There's the recession that everyone is expecting has yet to come.
(04:28):
So I guess I don't I don't think it's likely
that rates will go back to four percent. There are
some some thoughts that maybe they could get below six
percent if there's there's some some you know, political uncertainty,
some some uh, some economic direction that's more severe than
what everyone's expecting. But the consensus for now is that
(04:51):
mortgage rates are going to in the year like maybe
at about six and a quarter.
Speaker 1 (04:55):
Jeff Ostrowsky, Bankraade dot com. You introduced the word recession
into the conversation, chef, so we'll run with that for
a minute before we got to let you go. So
those fears are back recently due to volatility in the
stock market and tariffs and all of that. So should
we slip into a recession and we start to see
rates can maybe come down a little bit? What what
(05:17):
what are the Are there benefits or and or drawbacks
to buying a home or refinancing during a recession?
Speaker 2 (05:25):
Yeah, I would say if if the recession comes that
that that could be the impetus to push mortgage rates
down a bit. So that could create an opportunity. It
might make it more palatable for buyers to if you're
buying it at a six percent rate instead of a
seven percent rate, so that that could be somewhat helpful.
(05:45):
On the other hand, if you've got uncertainty around your
your job security or your income, that that's going to
make it harder to to you know, want to buy,
or to to qualify for a mortgage. But yeah, but
possible that a recession could push mortgage rates down a
little and cool off home prices, So maybe they just
stay flat for a while instead of continuing to go
(06:06):
up as they have been in most parts of the country.
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