MORTGAGE UPDATE
By Kris Barros
Rate hikes are almost certain to come this year. With the Fed leaving its options open for a rate hike in June at the conclusion of a recent meeting, mortgage rates spiked to a six week high Wednesday. Fannie, Freddie and MBA economists are split on what is likely to happen for the balance of 2016. General consensus is that 2017 will see rates in the 4’s. Most of what you read is “chicken little” meets “the boy who cried wolf” with no one really knowing what is around the corner. Never mind down the road. Those indicators that historically predicated rates and housing trends may be sending us in circles and the wrong direction.
While any rate hike will impact refinance applications you wouldn’t expect a moderate hike to dramatically impact purchase applications. Increases of an eighth or a quarter of a point really don’t price borrowers out of the market. With the current lack of inventory and the number of new housing starts necessary to meet demand not likely to catch up for quite some time, incremental increases in interest rates wouldn’t put too much of a damper on the purchase market. However, at this point in the home buying season it appears other factors may be weighing on home sales.
April saw a drop in home listings as current home owners seem either content or are possibly wary of re-entering the market with such limited inventory to choose from as they try to move up. Builder confidence has remained positive but has been unchanged through this season. Regulation and a lack of buildable lots are making building more difficult. In addition it is the lower end homes that are in demand. If you have a limited number of lots to build on it only makes sense to make the most of each one. Starter homes are not what you want to be building.
None of us have been down this road before. There are too many things that are different today to really find a direction by looking at old indicators. So pick a good lender you trust to ride shotgun. Turn the up radio and enjoy the ride.
#Mortgage #MarketUpdate #Loans #HomeSales #McAllisterIntlGroup
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