Mortgage Rates for Buying a Home in Northern Virginia Have Likely Bottomed (from April 2018)

The technical movement of prices can be very powerful indicators of future movement.  The 10-yr treasury rate, the key driver for mortgage rates, has displayed a very convincing bottom which indicates the path of least resistance to be upward and higher rates.  Higher rates can have important implications on mortgage rates and home buyer behavior in the Northern Virginia real estate market.

10 Year Treasury 2

  • The 10-Year Treasury rate is the key driver for mortgage rates used to buy a home in Northern Virginia.
  • The market signaled a double bottom in July 2016 (Feb 2015 low not shown) in the 1.5% range.
  • The bottom was prelude to an initial 90% rate move in just 5 mos!
  • Healthy 13 mos. consolidation period led to Jan 2018 break-out to the current 2.75 – 3.00% levels (200% move in total).
  • Changes in mortgage rates have important impacts on buying a home in Northern Virginia and how much a buyer can afford.  A change in rate from 4 to 5% increases principal and interest on a $500,000 loan by $297/mo.  A buyer would have to reduce their loan amount by $55,000 (to $445,000) in order to stay in the same budget – mortgage rate moves are important!
  • Key Takeaway – mortgage rates for buying a home in Northern Virginia are still at relative historical lows, but higher probabilities have shaped to support the theory the train has left the station from the exaggerated low rate environment experienced for years.  The market could be returning to more historically normal mortgage rates and cost of money.  Normal mortgage rates are also consistent with a healthy macro-economy!

Disclaimer: The above references an opinion and is for information purposes only.  It is not intended to be investment or financial advice.  Seek a duly licensed professional for such advice.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: