Newspaper article THE JOURNAL RECORD

Undaunted by Rising Interest Rates

Newspaper article THE JOURNAL RECORD

Undaunted by Rising Interest Rates

Article excerpt

Though interest rates are beginning to top their highest level in over two years, the local housing market has yet to see the negative effects typically associated with higher rates. In fact, the Oklahoma City market has seen one of its best summers in terms of new home buying.

According to Betty LaJeune, manager of Re/Max Preferred Properties and vice president of the Oklahoma City Metro Association of Realtors, 1999 home sales are keeping close pace with 1998's record- breaking totals. Through July of this year, about 7,227 homes have been sold, down 4.3 percent from 7,556 last year.

"Last year was a banner year for us and we are not that much far off from that," she notes. "We still don't know what the rest of the year will hold, but things don't appear to be slowing down."

LaJeune estimates around 20 to 25 percent of the home sales activity has been related to displaced families from the May 3 tornadoes, while the remainder has been generated by buyers scurrying to close purchases before the rates go higher.

"I think there is no doubt right in the first few months after the tornado the market was affected," says LaJeune. "However, we are pretty well to the end of seeing the tragedy's effects."

Steve Harry, senior vice president of Harry Mortgage, says his company is currently quoting a 30-year fixed mortgage rate of 8.375 percent, and a 15-year fixed rate of 8 percent. Harry notes the jump is significant from the low rates of 6.5 percent which were seen last year.

"Because of the higher rates," he says, "we are seeing people that are wanting to lock in their interest rates as quickly as they can once they have their house under contract."

Other buyers who don't relish paying more than 8 percent for a mortgage are switching to cheaper adjustable-rate mortgages. Whichever choice they make, housing industry economists are advising home buyers to not count on lower mortgage rates this year.

"If mortgage rates go lower than they are now, they won't go a lot lower," says Robert Van Order, an economist with Freddie Mac, the Federal Home Loan Mortgage Corp. "Waiting for mortgage rates to get back to 7 percent won't get you a house very fast."

Harry anticipates rates could go from 8.50 percent to 8.75 percent before the end of the year. However, he does believe there may be some hope on the horizon.

"The real speculation is what happens in January," explains Harry. "There is strong possibility that rates will fall substantially in the first 60 days of 2000 because of Y2K."

Some economists are predicting that with countries like France, Germany and Japan not being Y2K compliant, those countries will transfer billions into our economy in late 1999, resulting in a tremendous amount of surplus in the country's liquidity.

Even if rates do continue their upward climb throughout the remainder of 1999, LaJeune is confident any negative effects on the real estate market would be short term. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.