This post was contributed by a community member. The views expressed here are the author's own.

Health & Fitness

Mortgage Rate Rises Could Spur Homebuyer Action

Potential homebuyers may enter the purchase market sooner rather than later, responses to Fannie Mae’s latest National Housing Survey indicate.   According to the GSE’s findings, 57% of respondents expect prices will continue to rise in the next 12 months—a survey high. The share of those expecting prices will fall stayed flat at 7%.  

The survey also notes a pickup in mortgage rate expectations. The number of consumers expecting rates will rise over the next 12 months spiked 11 percentage points to 57%, another survey high. Only 4% said they expect rates will drop. 

 Meanwhile, sentiment toward both buying and selling fell back slightly, with 72% of respondents saying now is a good time to buy and 36% saying it’s a good time to sell.    “The spike in mortgage rate expectations this month seems to have had an impact on a number of the survey’s indicators and may increase housing activity in the near term by driving urgency to buy,” said Doug Duncan, SVP and chief economist at Fannie Mae. “Consumers may recognize that today’s still favorable mortgage rates and homeownership affordability levels will recede over time. Given rising home and rental price expectations and improving personal financial attitudes, more prospective homebuyers may be deciding that now is the time to get off the fence.”   Americans’ outlook on the economy deteriorated slightly, though many were more optimistic about their personal situation. The share of people who expect their own personal financial situation to improve over the next year jumped to 46%, its highest level in three years, while  16% said they expect their situation to worsen, unchanged for the third consecutive month.

As interest rates rise, homebuyer purchasing power decreases. With a 1% increase in mortgage rates the average person will lose about 35k in purchasing power. (i.e. If you were pre-approved a few months ago for 400k, you will now qualify for about 365k)

If you are currently in the market for a home and your pre-approval is more than 45 days old I would suggest having it updated. Feel free to contact me with any questions or to update your approval.

Mark S. Fisher
Licensed Mortgage Loan Originator
NMLS#478240

Cell (347) 242-1206

www.markfishernyc.com
www.bronxhomebuyer.com

We’ve removed the ability to reply as we work to make improvements. Learn more here

The views expressed in this post are the author's own. Want to post on Patch?