So, hardly to our surprise, mortgage rates hit 6’s. And, overall, this may not be such a bad thing at all. If you talk to loan officers and real estate agents, many will tell you how hard it was for many would-be homebuyers to get their offers accepted during the prior two years of historically low rates. Over-enthusiastic bidders were offering much more than the asking price to win their bids, but many homebuyers simply gave up after many unsuccessful attempts.
Now, as rates moved up, the housing market naturally cooled off in many areas, simply because there is less competition. As the result, an average homebuyer has a much higher chance of having their reasonable offer accepted. And it is a good thing. After all, what good are historically low rates when you cannot succeed at buying the house you like.
How long will we have of this calm before the next storm hits? Opinions vary, but Fannie Mae is projecting mortgage rates dipping to mid 4’s by the end of next year. If they are correct, one would reasonably expect the market to start heating up again around that time.
Another important question is what will happen to house prices. Will they decline during this slowdown? I think, while some decline is possible, overall, home prices tend to be sticky on the downside. I wouldn’t necessarily count on seeing noticeably lower house prices down the road. But for the near future, we can expect less over-enthusiastic homebuyers bidding the listed prices up, which is all good and healthy. So, happy house hunting, my friends!
Roman Shulman, Superior Funding Corporation, Newton, MA. NMLS ID 2927. Mass. Lender and Broker license MC2972. Same day pre-approvals. Same day property TBD underwriting approvals on many loans we originate and fund.