Mortgage rates up again

Mortgage interest rates rose last week and are hovering around 7%. I’ll update this post later today when Freddie Mac posts the average rates for the week.  The demand for mortgages is at a three-month low.

Rates will likely go down again but only if the US debt ceiling is increased. If not look for mortgage rates closer to 8% and more.

This might be the best time to hold off on buying a house unless you can pay cash.

As for selling a house, they are still selling quickly and often with multiple offers. Cash offers are fairly common this year.



Here are the updated weekly mortgage rate averages.

Chart from Freddie Mac with mortgage rates
Latest mortgage interest rate averages. 6.1.2023

Cash offers and closing costs

coinsThere are always closing costs when buying real estate. Most closing costs are related to the loan. There are origination fees and the buyer pays for the appraisal. In Minnesota, there is a mortgage registration tax. There is a fee for the buyer’s credit report and more.

Home buyers with financing will get a good faith estimate and will know what the closing costs will be. Generally, the buyer can expect to pay closing costs that will add up 3% of the sale price. Sometimes buyers ask the seller to help pay the closing costs.

When the buyer is paying cash they will still pay for title insurance, a closing fee, a title search, and a few more fees. Prorated taxes and HOA fees. There is no good faith estimate. The best way to find out what the closing costs will be is to get an estimate from the title company that will do the title work and the closing.

The closing costs for an all-cash offer are much lower than what they are when the purchase is being financed.

With a cash offer, the buyer needs to make sure they have enough cash to pay for the real estate and the closing costs. Asking the seller to pay the closing costs is exactly the same as paying less. Sellers do not like to pay the buyers closing costs.

When the purchase is being financed we understand that the buyer may not have enough cash for downpayment and closing costs.

People who are offering cash should get an estimate of what the closing costs will be and make sure that they have enough cash to buy the property and pay the closing costs.

Buying real estate always costs more than the sale price.

Interest rates lower but still high

I am not in favor of putting any kind of a spin on interest rates. Sure they went down a little and we saw an uptick in mortgage applications but the rates make houses less affordable.

People who bought houses when the rates were at rock bottom are not going to be selling anytime soon.

It is especially important right now to buy the right house and not the overpriced house.



Graph showing interest rates
Interest rates


Rates went down a little mortgage applications went up

I think 2023 is going to be an interesting year for the housing market. Interest rates have gone down a little and at the same time

US Mortgage Applications Jump the Most since 2020 Mortgage applications in the US surged 27.9% in the week ended January 13th 2023, the biggest jump since the first week of March 2020, as interest rates dropped to the lowest level since September, data from the Mortgage Bankers Association showed.”

Mortgage rate chart
Mortgage rate survey

The demand for housing remains high. Interest rates will likely go down further but we probably won’t see 3 or 4% again for many years.  Home prices will probably level out a bit but at this point in the Twin Cities, they are still rising.

Mortgage interest rates easing up

Graph of interest rates going down
Mortgage rate survey Freddie Mac

Mortgage interest rates will likely go down a little more but I don’t think we are going to see rates below 5% any time soon.  Home prices in the Twin Cities metro area are not falling but rising much more slowly.  Houses are still selling quickly but the number of new listings is down and so is the number of home sales.

The slightly lower interest rates make houses just a little more affordable. Mortgage interest rates reached a 20-year high last October.

In other news, rents have been going down after going up last spring and summer.