Rates stable with volatile stock market; Reno loans make lower priced properties more appealing
The market recorded wild swings again this week as markets alternatively sold off on fears of a trade war and were encouraged by strong economic data. The 10 year Treasury ended the week at 2.846%, little changed from last week, while the 2 year Treasury note reached a 10 year high of 2.295%. A narrow yield spread has historically been a harbinger of higher long term rates. Inflation data showed Core inflation at 1.8% for the last year, a little short of the Fed’s 2% target. Despite continued moderate inflation the Fed is still expected to raise rates next week and then 2-3 more times in 2018.
As buyers struggle with prices that show no sign of going down and huge competition in the mid/high price range, many buyers are looking to lower-priced neighborhoods or fixer upper properties in moderate priced neighborhoods. We just completed a 203K renovation loan purchase of an Oakland property that needs a lot of work. There was reduced buyer interest in this home because of the amount of work to be done, so our buyer could work with the seller to use this financing vehicle. $230,000 of improvements were priced into the financing so the property will be worth $700,000+ when the work is completed. We are the leaders in this type of financing, with a dedicated processing team that is fully versed in renovation financing.