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January 19, 2024
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January 19, 2024
Increased Inventory & Resale Transactions Expected in 2024
Market Update
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Rates ticked up just a little bit this week but still stayed below the 7% level on a conventional 30-year fixed rate mortgage, according to Mortgage News Daily. FHA and VA rates were hovering a little bit above 6%.
As mentioned last week, the FHA program has been a super popular program with lower interest rates and mortgage insurance than many of the low down payment conventional programs.
This week's market mover came off of our Monday Martin Luther King Jr. holiday with one of the voting members of the Fed - Atlanta Fed, President Raphael Bostic - making comments indicating that the federal funds rate might be higher for longer. This despite the continued decline in inflation. Another Fed governor and voting member, Christopher Waller, also indicated the following day that the Fed may not be in a hurry to cut rates.
The December retail sales report also didn't help us much, showing that the core retail sales came in at 4x the estimates. Is that an anomaly? Is it a buy-now-pay-later scenario for consumers with credit card debt piling up? We're going to have to wait a few months to see if this was an anomaly and irresponsible spending by the consumer or if they have extra money to spend due the higher wages.
All in all, rates are down well over 1% since their peak at 8.03% on October 19th last year.
Additionally, Fannie Mae came out with a recent white paper expecting mortgage rates to dip below 6% in 2024. They say this should start to thaw the existing home sales gridlock created by the lock-in effect caused by homeowners' low interest rates and bring some more inventory to the market, resulting in a higher number of resale transactions in 2024.
Mike Simonsen, President of Altos Research, said consumers are more sensitive to changes in interest rates than the aggregate of the overall change in rates. Stability in the market is very much preferred by the consumer. In other words, if rates jump dramatically, consumers typically freeze and wait until they see some stability come back into the marketplace.
Conversely, we could see a mad rush back in if rates drop quickly. Slow and steady will probably be our friend long term.
Finally, the number one reason homebuyers paused their purchase decision? Mortgage rates. 72.1% put their homebuying on pause because of mortgage rates. That's a lot of potential homebuyers if rates drop below 6%.
Get your buyers ready now so they're not up against all the multiple offers and likely higher prices later on this year!
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The information contained is the viewpoint of the presenter(s). Individuals should consult their own financial representative.
Estimated Mortgage Payment is for exemplary purposes only. Contact a licensed loan officer for exact numbers and APR. Additional rates and terms may apply and are subject to change without notice. Loan scenario assumes a purchase price of Zillow's list price and a 10% down payment. Points and fees not included. Property tax, homeowners insurance, mortgage insurance, and HOA fees are approximate and may vary. Other fees may apply. Product displayed is a conventional 30-year fixed rate mortgage using the current average rate as shown on Mortgage News Daily (mortgagenewsdaily.com).
Estimated Qualifying Income assumes a homebuyer has a FICO score above 740, no other credit debt, and a debt-to-income (DTI) ratio of 43%.
For exact numbers and APR or to run a loan scenario based on your own credit and income, contact our office at (858) 259-8700.
Rate Source: Mortgage News Daily. Rates displayed are approximate, subject to change, and do not necessarily reflect rates available to you. MND’s methods involve an objective component based on lenders' raw prices as well as a subjective impression from their network of originators. For more information about how these rates are calculated, visit www.mortgagenewsdaily.com/mortgage-rates/about.
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Equal Housing Opportunity. All loans subject to underwriting approval. Certain restrictions apply. Call (858) 259-8700 for details. All borrowers must meet minimum credit score, loan-to-value, debt-to-income, and other requirements to qualify for any mortgage program. CrossCountry Mortgage, LLC is an FHA Approved Lending Institution and is not acting on behalf of or at the direction of HUD/FHA or the federal government. CrossCountry Mortgage, LLC is not affiliated with or acting on behalf of or at the direction of the Veteran Affairs Office or any government agency. Certificate of Eligibility required for VA loans. By refinancing, the existing loan total finance charges may be higher over the life of the loan.
