For people hoping to buy into a co-op or condominium – and for co-op boards thinking about refinancing their underlying mortgage – standing on the sidelines is no longer a good idea.
After hitting their lowest levels in half a century, mortgage rates have climbed rapidly in recent weeks and could go higher still, Brick Underground reports. According to mortgage professionals, interest rates are rising in response to positive national economic data, including a decline in unemployment, a rise in wages, and growing Treasury bond yields. What that means for a prospective home buyer with good credit in New York is that a 30-year mortgage for a co-op or condo that in December could have had an interest rate of around 3.75 percent now has a rate in the 4 to 4.375 percent range – and rising. Real estate pros advise co-op and condo buyers to lock in a mortgage rate now.
Limits on deductions under the new federal tax law have led to speculation that home values in high-tax states, including New York and New Jersey, will decline. Sales will then slow. If this happens, co-ops and condos that rely of flip taxes from apartment sales will see a dip in revenue. But the prospect of rising mortgage interest rates might inspire reluctant shoppers to become buyers, despite the tax implications, which could be a boost to the bottom line for co-op and condo boards.
“It's getting people off the sidelines,” says Ian Slater, a broker at Compass. "There's just been free money sitting around," in the form of very low interest rates. "People said, 'What's the difference? I can buy in July or I can buy in December.'" Now, those same people are eager to close.
As for refinancing, the last several years of low interest rates was the time to do it. Nathan Burke, senior vice president of National Cooperative Bank, says, "I'm not seeing more of a refinance opportunity."
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?