[quote=SK in CV]Oh it was wonderful. My first mortgage loan somewhere around 1978 was 14%. Refi’d at just under 12% a couple years later and I was ecstatic. Just checked Zillow and that condo is worth somewhere around $190K now. (there are somewhere around 75 identical condos, so the value is probably pretty close to accurate.) I paid just under $70K. If we see those kinds of rates again, it won’t drop down to the price I paid, but based on current rents, it probably could drop down to $100K. The good old days. When Realtors actually earned their 6% :P[/quote]
In this same era, we purchased a duplex for just under 74K in an “underserved” area of SD with a CHFA (now Cal HFA) loan of about 10.5% The FHA rate (which this type of loan was patterned after), rose to about 13.5% by 1983!
I have absolutely no idea what duplexes in this area are going for now.
I’ve read here about numerous Piggs recently refinancing over and over again to get a fixed rate of as little as .5% less than their current mortgages, and start all over again at 30 years, lol.
Whether refi closing costs are wrapped into a new mortgage or “paid” by the lender, there is no free lunch. These costs are getting paid thru the interest rate if they are true “no-cost” mortgages.
If mortgage rates rise significantly, I believe this will have the effect of pricing a lot of fence-sitters into reality. It seems a lot of current would-be buyers are dead set on a property purchase and/or area that is only achievable and maintainable on a long-term basis with a =<5% 30-yr fixed rate loan. Of course, this scenario does not apply to all-cash purchasers.
Among today's buyers, the starter-property or "real-estate ladder concept" of yesteryear (to eventually obtain the home/area desired) seems to be dead. IMHO, I think its demise had a lot to do with the long period in recent history of easy lending criteria (already extinct) and low mortgage rates (in danger of becoming extinct).
It will be interesting over the next 3-5 years observing if rising rates will change buyers perceptions, especially those of first-time buyers :=]
