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How the Fed Rates Hikes May Impact Raleigh Homebuyers and Homeowners

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The Federal Reserve increased short-term interest rates (known as the Federal Funds Rate) by 0.75% on September 21, 2022.  This means the Fed Funds rate is currently at 3.25%. The Fed Funds Rate is the interest rate that banks charge each other to lender/lend overnight.

It is critical to know, the Prime Rate (i.e. the interest rate the banks charge their top tier clients), is based on the Fed Funds Rate. The Prime Rate is set by large banks and is often used to determine the interest rates on lines of credit and credit cards. The formula for Prime is very simple…Fed Funds Rate plus 3. This means the Prime rate is currently 6.25%.

Raleigh Mortgage Rates 

Raleigh Mortgage rates and all mortgage rates on fixed-rate mortgages are NOT impacted by changes to the Federal Funds Rate. Raleigh mortgage rates fluctuate based on the supply and demand for mortgage bonds in the bond market. 

The Fed has been the biggest buyer of mortgage bonds in recent years with an unprecedented pandemic-era bond-buying program. Simply put, this is why there has been record low Raleigh mortgage rates recorded. The Fed is currently in the process of exiting their bond-buying programs. This unwinding is why the average interest rates on fixed-rate Raleigh mortgages have gone up by more than 3% so far this year according to data from Freddie Mac’s weekly survey of mortgage rates. 

The Martini Mortgage Group expects Raleigh mortgage rates to continue drifting higher as the Fed continues to exit its pandemic-era bond-buying programs.

HOME EQUITY LINES OF CREDIT (HELOC)

Interest rates on HELOCs change whenever the Fed changes rates. This is because HELOCs are based on the Prime Rate, which went up to 6.25%. 

HELOCs are typically quoted at Prime plus a certain percentage. For example, if your HELOC is Prime plus 1, your HELOC interest rate would be 7.25%. HELOC interest rates are likely to continue moving higher as the Fed continues to hike interest rates.

The average annual gain in home equity was $60,200 per homeowner from July 2021 to July 2022.

Raleigh Mortgage Broker Kevin Martini

Home prices have climbed 15.8% year-over-year from July 2021 to July 2022, according to the latest Home Price Insights and Homeowner Equity reports from CoreLogic, a leading global real estate data provider. If you currently have a HELOC it is important to know that it is highly probable that the Fed will continue raising the Federal Funds Rate which could significantly impact your housing costs. It may be smart to consider a ‘Cash-Out Refinance‘ right now to lock in your housing costs.

CREDIT CARDS

Interest rates on credit cards change whenever the Fed changes rates. This is because credit cards are based on the Prime Rate, which went up to 6.25%. Credit Cards are typically quoted at Prime plus a certain percentage, just like a HELOC.  For illustration, if your credit card is Prime plus 10, your credit card interest rate would be 16.25%. 

Credit card interest rates are likely to continue moving higher as the Fed continues to hike interest rates. If you have credit card debt today, perhaps you should consider ‘Cash-Out-Refinance‘ to unleash your equity and use it to payoff credit cards and other high interest debt.

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Logan Martini

NMLS 1591485 | Senior Mortgage Strategist | Martini Mortgage Group at | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | Equal Housing Lender

Kevin Martini

NMLS 143962 | Certified Mortgage Advisor | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | Equal Housing Lender

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How a Homebuyer can Benefit from a 2-1 Buydown by Logan Martini

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Just because bidding wars are declining and mortgage rates are jumping higher, it is still competitive out there for homebuyer and home sellers. This unique Raleigh real estate landscape is prompting many homebuyers to re-evaluate their homebuying scenarios.  Technically we are in a seller’s real estate market however there are many unique benefits to a homebuyer in this current market, a Martini Mortgage Group 2-1 Buydown is one of them.

What is a 2-1 Buydown

A “2-1 Buydown” is where the seller pay a fee at the closing to reduce the interest rate on your mortgage by 2% in year 1 and 1% in year 2. This results in temporarily lowering your monthly payment and potentially making the home more affordable for you.

Buyer’s Real Estate Market vs. Seller’s Real Estate Market

buyer's market vs. seller's market by raleigh mortgage broker logan martini

A buyer’s real estate market is generally anything more than 6 months and a seller’s real estate market is generally anything less than 6-months.

Housing inventory measures how many months it would take to sell all the houses currently listed for sale, at the current pace of home sales. For example, if there are 3,000 homes currently listed for sale, and an average of 1,000 homes are selling each month, there would be a 3-month housing supply. This is because it would take 3-months to sell all the homes currently listed for sale.

Raleigh Mortgage Broker Logan Martini

Will it become a Buyer’s Real Estate Market Anytime Soon?

Not likely for many reasons. One of the main reason it is not likely that it will become a buyer’s real estate market anytime soon is the lack of inventory and abundance of homebuyer demand. In fact, it may take not just years, it could take a decade for the housing supply to increase enough to meet demand. Sure, inventory has increased recently and this increase has created a unique opportunity for sellers and buyers.

If you’re a seller, you may have to be more competitive with the way you price your home and potentially offer some concessions like paying for the buyer’s closing costs or offering a 2-1 buyydown. If you’re a buyer, you have more inventory to choose from, but don’t expect prices to tumble anytime soon and you have to still be able to act fast.

What are the Benefits of a 2-1 Buydown?

A 2-1 Buydown reduces your interest rate and monthly payment during the first few years of homeownership, making the home more affordable for you. It can also allow you to benefit from owning a home now so you can start to build equity vs. waiting a few more years and continuing to rent. When the seller pays for the 2-1 Buydown, it would have a much greater impact on your monthly payment than asking the seller to reduce the list price of the home. This could be a great negotiating tool because a greater percentage of homes listed for sale in today’s market are seeing price reductions.

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What happens when the Interest Rate goes back to Normal?

In year 3 of a 2-1 Buydown, your interest rate would adjust to its normal “note rate.” If market interest rates are the same or higher than they are today, you would just keep the loan and pay the normal payment. However it is being predicted by many economists, market rates may come down again. In that case, you may be able to refinance at the then-current rates. Keep in mind that interest rates are cyclical.

Connect with Logan Martini with the Martini

Let me know if you’d like for me to run some numbers and see if a 2-1 Buydown might make sense in your situation!

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Logan Martini

NMLS 1591485

Senior Mortgage Strategist | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | Equal Housing Lender

Things to Consider when Buying a Home (Martini Buyer Guide | Fall 2022)

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If you are a first-time homebuyer or a repeat homebuyer, there are many things to consider when buying a home.  Certified Mortgage Advisor Kevin Martini and Senior Mortgage Strategist Logan Martini curated the Fall 2022 Martini Buyer Guide to simply explain the current real estate and mortgage markets plus vital information about buying a home and the process of getting a mortgage.  The Fall 2022 edition of the Martini Buyer Guide has a dozen of informative articles that talk about things one needs to know about the current real estate and mortgage markets. 

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Fall 2022 Edition of Martini Buyer Guide

If you are buying real estate, if you are selling real estate, if you are refinancing a mortgage or if you work in the real estate arena then the Fall 2022 Martini Buyer Guide would be very helpful since it simply explains the current real estate and mortgage opportunity.

The Fall 2022 Martini Buyer Guide was curated to simply explain what is going on in the real estate and mortgage markets.

Logan Martini, Senior Mortgage Strategist & Raleigh Mortgage Broker

Contents of Martini Buyer Guide (Things to Consider when Buying a Home)

raleigh mortgage broker things to consider when buying a home martini buyer guide fall 2022 copy
A dozen powerful articles that simply and effectively communicate the current opportunity.
Martini Buyer Guide

Should I Buy a Home This Fall?

If you’re wondering if it’s the right time to buy a home, you should know you have an opportunity to grow your wealth, stabilize your expenses, and benefit from more options for your home search this fall. 

Expert Insights for Today’s Homebuyers

If you want to buy a home today, here are a few things experts say you should know about what to expect and why homeownership is so important.

More Options for Your Home Search

There’s no denying the housing market has delivered a fair share of challenges to homebuyers over the past two years. Two of the biggest hurdles were the limited number of homes for sale and the intensity and frequency of bidding wars. But those two things have reached a turning point.

Housing Market Forecast

The housing market is at a turning point, and if you’re thinking of buying a home, that may leave you wondering: is it the right time to make a move? Let’s turn to the experts for what the future is projected to hold.

Americans Choose Real Estate as the Best Investment

You’re not just buying a place to call home, you’re investing in your future.

The Benefit of Buying a Home Now

You may be asking yourself: should I buy right now, or should I wait? While no one can answer that question for you, here’s some information that could help you make your decision.

The One Thing You Need To Know About a Recession

The one thing you need to know as you watch the news and read the headlines today is that a recession does not mean falling home prices. 

Why the Housing Market Won’t Crash

With all the buzz in the media, you may start to worry the housing market is in a bubble. While it’s only natural for concerns to creep in that there could be a repeat of what took place in 2008, the good news is there’s concrete data to show why this is nothing like the last time.

What You Need To Know About Down Payment Assistance Programs

When it comes to buying a home, it can feel a bit intimidating to know how much you need to save. Here’s some information you’ll want to know about programs that could help you reach your down payment goals.

Things To Avoid After Applying for a Mortgage

Consistency is the name of the game after applying for a mortgage.

Tips for Making Your Best Offer

While the housing market is going through a shift, it’s still competitive for buyers because the overall inventory of homes for sale is low. Enjoy having more options as supply continues to grow this year, but keep these tips in mind to help you put in a strong offer once you find the one.

Top Reasons To Own Your Home

Homeownership has tangible and non-tangible benefits.

Getting a home loan and buying a home is a process…NOT an event.

kevin martini on instagram

There is no question that getting a mortgage and buying a home in Raleigh, anywhere in North Carolina or in the U.S. for that matter, is a process…it is not an event.  Since there is never a substitute for education, the home buying process needs to start with education of options available for your home loan regardless of the experience level of the homebuyer. The Martini Buyer Guide was created to provided factual information based on reliable sources and provides relevant information that go beyond the headlines.  Kevin Martini and Logan Martini understand that purchasing a home is more than just one single event. It is a process. They want to work with you during the process, to help you understand the process and help it go as smoothly as possible. Let them help you develop a plan that leads directly to homeownership and financial success, beginning with getting Approved for your Raleigh or Triangle Area or North Carolina mortgage today!

Certainty with a Frictionless Process

It has always mattered who does your mortgage however this sentiment is most important now as we live in a post-Covid world.  Communicating to a seller that you are just ready and willing to buy is not enough!  You need to communicate that you are able and this means you are able to make a ‘Same-As-Cash’ offer from a local lender that constantly provides on-time real estate closing that are frictionless. and provide certainty to all involved. An approval letter from a Mortgage Strategist with the Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation provides certainty that the transaction will happen and it will happen on-time without stress.  

Kevin Martini

NMLS 143962 | Certified Mortgage Advisor | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | [email protected]

Logan Martini

NMLS 1591485 | Senior Mortgage Strategist | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | [email protected]