I'd rather be refinancing than buying when mortgage interest rates finally drop.

[AJ Wong]

I might be eating these words later, but as far as I can tell, at least here on the Oregon Coast and beyond the market crash everyone is waiting has not materialized. 

The pandemic fueled low interest rate boom demand has normalized, but the market is still moving. Quickly. It was a slow start to the initial spring 2024 shopping season, but properties are still closing quickly, still nearly 1/4+ for all cash and the majority of investors are well capitalized due to the appreciation of their real estate and stock based assets. 

With that said, there have been more realistic seller expectations to the tune of significantly reduced purchase prices both pre and post executed agreements. Sellers are slowly realizing there are fewer buyers and focused on working with those at the table. Several recent transactions closed at 5%+ lower than the final asking price. 

With mortgage interest rates on a recent downward trend, we have already experienced an uptick in mortgage activity since the slower pace in February, March and April 2024. The expectations are that any reduction in interest rates of even .25% will accelerate buyer and investor activity and competition. 

For the moment I think there is a window to capitalize on a less competitive marketplace. I was recently quoted as low as the high 5%'s on a FHA loan for a new primary property..these are attractive borrowing costs in comparison to the comparable costs of renting a similar property profile.

If average 30 year fixed loan rates reach the mid 5%'s many of the NON-QM mortgage programs that are currently rate prohibitive will also become more workable as cash flow and return ratios improve. Additionally with further rate reductions, many mortgages originated within the past two years would likely benefit from a refinance to then current mortgage rates. 

In short the investments that are 'tough' to make the numbers work, will become much more investable to the degree they might no longer be available. I would personally rather be refinancing than offering on properties when and if interest rates decline. 

Are you actively investing this summer?