Mortgage rates down slightly, but are bigger moves ahead?
The national average for a 30-year, fixed-rate mortgage ended trading on Wednesday at 6.15%. That’s down 0.06% from the previous close.
Analysts, traders, and industry insiders are expecting the next round of Consumer Price Index data to drive the market. If the CPI for December comes in at 7.1% to 6.5%, it’s expected that mortgage rates won’t move all that much. If it comes in under 6.3% or actually ends up above 7.1%, there could be a large move in mortgage rates as a response.
Is the mortgage refinance market starting to turn around?
While the rate at which homeowners are refinancing is much lower than it has been in previous years, lenders did see a 5% increase in refinance applications comparing last week to the previous week. Total mortgage application volume was also up 1.2% during the same time period according to the Mortgage Bankers Association.
Mortgage rates are lower than the previous peak in the 7%-range, and it appears that the cool off in rates spurred homeowners to look into refinancing. Whether this is a trend or a brief pause really depends on which direction mortgage rates go from here.
What is the 2% rule & why do real estate investors need to know it?
The 2% rule of real estate investing states that a property’s rental income needs to be at least 2% of the purchase price. Following this rule enables an investor to maintain a positive cash flow if the monthly rent is at least 2% of a purchase price. However, there are other factors that an investor needs to consider beyond how much they can charge for rent. Vacancy rates, operating expenses, debt service expenses, initial investments, and property taxes should all figure into your calculations.
The 2% rule can be a valuable starting point, but it’s not the only determining factor to consider.
Is there a rental property you’ve been eyeing? Contact our team today to learn more about how we can help you get a loan to finance your next rental property.
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