Opinion: Leveraging opportunities in a rapidly shifting real estate market

For the last few years, high interest rates and soaring home prices have helped create affordability issues for potential homebuyers nationwide, including here in the Springfield market.

Over the last roughly 30 days, however, mortgage interest rates have fallen below 6.5% and begun approaching rates in the upper fives.

Opportunities in real estate are once again on the rise.

Like many potential homebuyers, we’ve been waiting for these market conditions for a while now.

We’re excited to see the numbers finally head in the right direction and help borrowers navigate refinance loans and the uptick in home purchases in the wider market.

Many customers are seizing these opportunities to own a home, expand their square footage or refinance their mortgage and save hundreds of dollars a month on their monthly payments.

As rates drift down, we’re also receiving calls from potential buyers who are considering whether it could make sense to wait out the market and achieve bigger savings.

Since the Federal Reserve is likely going to cut rates twice again this year, these customers ask, isn’t it better to wait for interest rates to drop again?

There isn’t a simple answer to that question, but we do think there’s a best answer. Yes, rates are trending downward now, and it’s possible that they will continue to do so. However, it’s important to understand that whether they do drop again isn’t controlled by the Fed’s cuts.

Mortgage rates are primarily tied to the bond market, which lives well into the future. What that means is that the Fed’s recent cut was already priced into mortgage rates before it happened, and that much of the anticipated second and third cuts are already reflected in the market as well.

In essence, waiting on interest rates to drop can easily become waiting around for something that has already happened.

Additionally – especially in a rapidly shifting real estate market that’s influenced by political events, Fed staff changes and years’ worth of pent-up buyer demand – we can tell you from experience that rates always tend to go up a lot faster than they go down.

Over the last three years, rates have dipped below the 6.5% mark a few times but only stayed there for about a week before rapidly rising again.

So, rather than asking if rates will go lower, think about whether you’ll be ready to act when the opportunity arises.

When you drive down the street and see a great house for sale, are you prepared to take the necessary steps before making an offer?

Are you able to jump on rate drops when they happen and refinance your home, confident that you can refinance again in a year if the rates fall lower?

Do you feel that you’re equipped to confidently move forward with the mortgage process?

For us, that all adds up to the best answer we mentioned above: Instead of relying on an unpredictable market, take control of the process by talking through options with your lender and supplying them with all the information they need to help you through preparatory steps like prequalification, mortgage insurance and matching the right loan with your personal financial goals.

The best lenders will walk you through those processes, explore different loan structures and term lengths to find the best fit for your unique situation and help you be ready to move quickly when conditions are favorable.

This is especially true with banks that partner with local real estate agents to build shared market expertise.

Remember that when the market moves, it moves fast.

Lenders in these organizations will communicate with you throughout the process, help you move at the same speed as the market and make sure your loan closes on time.

Mike O’Neill is mortgage banking director and Doug E. Page is executive vice president and consumer lending director at OakStar Bank. They can be reached at moneill@oakstarbank.com and dpage@oakstarbank.com.