Today's mortgage rates may have returned to levels we haven't seen since August of 2009, but don't think you can't still find some bargains from brokers. According to CNBC's Diana Olick, rising mortgage rates aren't the result of reduced competition among lenders, nor are they a reaction to higher home sales over the past five months. Instead, Olick reports, overall good news in the economy has sent bond rates higher. When bonds pay out higher interest rates, banks have to balance the scales by raising interest rates.
Even though Olick and other journalists have spoken to economists that worry about a drop in home sales and refinancing deals due to climbing mortgage rates, real estate brokers I've spoken to over the past few weeks love to highlight another quirk of today's market: Short sales, foreclosure auctions and nervous developers have busted holes in the pricing structure of new home sales and of "flipped" properties.
Buyers finding deals despite higher mortgage rates
Here in Philadelphia, for example, a wave of condo conversions and new construction projects has hit the market at the worst possible time for speculators. Sparkling, high-rise units that might have previously sold in the middle six figures are being auctioned off at one-third or less of their original listing prices. One nearly complete condo complex has abandoned construction on a block of $700,000 units, selling them at auction for the equivalent of $95,000 each, to private buyers brave enough to take on the task of finishing the project.
That's got to be the ultimate fixer-upper - and it's the kind of deal that has many prospective homeowners rethinking their options. Even at a higher mortgage rate, a sweet deal on a new home or a showplace property can stretch your dollar. A colleague of mine negotiated $30,000 in uncompensated seller assistance from a developer desperate to sell one of his remaining units without triggering reassessments on other properties in the same development. That assistance brought him and his wife up to 80 percent equity, eliminating PMI and getting them into a much nicer neighborhood than they might have afforded otherwise.
Shop mortgage rates online for reliable pre-qualification numbers, so you can better take your deal to builders, brokers and developers eager to unload some of their bad investments. Great properties are on the market right now - and they're on sale.