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Mortgage Rates Fall After Post-Election Spike

A home for sale sits behind a sign that reads, "sale pending,"in San Diego, Aug. 14, 2013.
Associated Press
A home for sale sits behind a sign that reads, "sale pending,"in San Diego, Aug. 14, 2013.
Mortgage Rates Fall After Post-Election Spike
Mortgage Rates Fall After Post-Election Spike GUEST: Phillip Molnar, reporter, San Diego Union-Tribune

There is good news and not so good news in the San Diego real estate market this spring. Good news is that mortgage interest rates have leveled off from a spike the took after the election. Not so good is what San Diego homebuyers have become very used to hearing. There are not that many homes on the market. Joining me is Philip a real estate reporter with the San Diego Union Tribune. Welcome to the show. Thank you for having me. The interest rates for mortgages have moved around since the election. 3.6% than 4.3% and now back to 4%. What does those numbers actually mean in terms of what people are paying? Just a small change in interest rates is a pretty big deal out of the West Coast warehouse cost a lot of money. So a change in interest rates usually even a small bit since the election can mean the difference between paying about 100 out -- $100 more to $160 more a month. That's a big deal and people are looking as to whether or not they can afford to buy a house. Especially if you're looking long term over the life of the loan as well there are some pretty big things to consider. If you take like a median home price in San Diego County in 2016 that is about $490,000. The rate you would have gone the day before the election he probably would have spent about 600 30,000 on the house over the -- 640,000 on the house over the life of the loan. Even at what it is today that number goes up to 676,000. You can see over a 30 year period. It is a pretty significant impact. Why have the rates been so volatile because of the election. Right after the election I spoke to economists and there was a lot of concern among money managers and investors that a lot of Trump's policies that he would not be able to pay for such as infrastructure and possibly the wall. Because of that the anticipated that that would increase inflation. When there is increased inflation that a lot of times investors think it is a good idea to take their money away from government-backed assets. One of those would be bonds. The mortgage rates are based on following the 10 year treasury bond so if people are kind of moving away from bonds and sort of looking more toward the stock market as they did after the election that causes mortgage rates to go up. Once the stock market started booming the room or people that had exuberance over tax reform and things that were putting a lot of money in the stock market. So since some of these things had actually happened with the administration more of the money is going back into bonds. That is the theory of the experts that I talk to. Especially even in the last couple weeks there was a pretty good article in the Washington Post in an interview with Donald Trump and the president was saying that we will try healthcare again to get some reform passed there and we will actually postpone tax reform and that is the big thing that the market was looking forward to. So& There was kind of crazy with the last couple days he could see the interest rates on mortgages going down. It was pretty wild. One of the experts he spoke with told you that interest rates don't matter that much if there are no houses to sell. What is the inventory like homes this spring. It is not so hot at the moment. It is half what it was in 2010. Usually economists say about six months worth of inventory available. We are at less than two months and we have single-family homes it is even less like one month. So there's not a lot out there and there's a lot of competition. Realtors I talked you are still saying we are getting multiple offers on all the different properties they are out. That is kind of going on. Interesting enough back in October the median home price here in San Diego went over half $1 million so it had up to about $507,000. Has gone down since then and is kind of hovering around 490 to 495,000. To me that sounds like a sane number that I could never afford one thing to note is it has been pretty steady and not so eager to go up. I think a lot of that at least according to the experts is that it's this affordability wall. What is the overall advice you are heading buyers and sellers in the market right now. The advice from realtors and mortgage loan people is always like I now. So that is something to keep in mind that the kind of might have a point especially since the consensus is that interest rates are going to keep going up for mortgages and if you are thinking about over the next couple of years I am I know Matthew Shafer a senior mortgage loan person I interviewed is recommended while you have 18 months you are going to buy a house just do it now because rates will keep going up. You have been kind of hearing that for a lot of years and there is kind of a hope that maybe home prices might start to inch down it's hard to predict. I've been speaking with Philip the real estate reporter with the San Diego Union Tribune. Thank you. Thank you for having me.

Interest rates on home loans have declined since a post-election surge, leaving median San Diego homebuyers spending about $64 less per month on mortgage payments for someone buying a home in April than if they bought a home late last year, the San Diego Union-Tribune reported Monday.

Averages for 30-year fixed-rate mortgages rose from 3.59 percent in early November to 4.32 percent in late December, the Union-Tribune said, before falling to 4.04 percent Monday.

Real estate reporter Phillip Molnar wrote that these rates are still historically low. And whatever incentive falling interest rates have on potential homebuyers is relatively small, since the low supply of moderately-prices homes has a much larger impact on high home prices.

Molnar joined KPBS Midday Edition on Tuesday to discuss what's driving these mortgage rate swings.