American Pacific Mortgage

American Pacific Mortgage

Thursday, April 14, 2022



Interest rates are up across the board, and they aren’t coming down anytime soon.  This has the effect of eroding affordability for many prospective buyers, but it certainly has not slowed down the market…yet. Inflation has taken off and there is no end in sight, given current events.  So, the days of rates in the 2’s, 3’s and 4's are gone. Frankly we are looking at a return to a more “normal” rate environment. 

In the past when rates were higher, many opted for ARM loans.  These are Adjustable Rate Mortgages.  Typically the start rates are lower vs. a 30 year fixed loan, since they adjust to market level over an index at some point in the future.  However, currently the yield curve is pretty flat, and some think we will see an inverted yield curve which is not a good sign…and is a precursor of a recession, the elephant in the room.  An inverted yield curve means that investors see more risk in the short term vs. longer term.


Contrary to what many of those standing on the sidelines hope, we are not going to see a drop in home values.  We may see a slowdown in appreciation rates (over 19% countrywide last year) but there is no reason to believe homes will drop in value.  Stall out a bit, maybe.  The problem is the short supply of new housing.  Builders stopped building homes over the decade following the great recession caused by the Mortgage Meltdown, and we do not have enough housing supply.  This, coupled with low inventory of existing homes for sale creates demand far greater than supply, the perfect storm for increased home prices.  Remember, real estate is the best hedge against inflation and a great long-term investment. And coastal California real estate is always in demand.


We have a number of fully ACE* approved purchase clients out making offers right and left.    In this market it is not unusual for buyers to make three to five offers before one is accepted.  We always will call the listing agent to assure them of our client’s qualifications, and strategize with our client’s agent regarding contingency periods, whether we should waive contingencies, etc. 

* With our ACE approval, our clients have gone through complete underwriting of income, credit and assets.  They just need to find a property!


Most homeowners have a tremendous amount of equity to play with, whether to pull out cash for upgrades or remodeling, adding a new pool, or to buy another home.  Sometimes we recommend a refinance of the existing first mortgage, but depending on the interest rate of their primary mortgage, a HELOC may be the better avenue.  Much depends on how much cash is desired.


When I bought my first home in 1984, the average rate was 13.88%  So, no complaining!               


I am taking a series of Hip Hop classes offered through Casa Romantica, the historical property located on the bluff above the San Clemente pier. They offer various arts and music events open to the public.  What a blast!

Steve and I will be scuba diving in Cozumel in June.  Coz is a Caribbean island off the coast of Cancun, Mexico.  We have been there before a few times (like more than four) and are looking forward to some great diving and relaxation.

Life is Good!  And don’t hesitate to call us with any questions you may have.