Posted July 28, 2014Tweet
An overwhelming majority of U.S. consumers expect current mortgage rates to rise in time for next year.
The data comes from Fannie Mae's National Housing Survey, a survey of 1,000 households which reflects changing American attitudes toward housing and mortgages. Expectations for rising rates may help to fuel the 2014 U.S. housing market.
The 30-year fixed rate mortgage rate is currently averaging near 4.5%.
Mortgage rates are dropping. As compared to pricing on New Year's Day, rates for a conventional 30-year fixed rate mortgage have dropped, as have rates for conventional 15-year loans.
FHA and VA mortgage rates have dropped, too.
The catalyst for this month's falling rates was the release of the December Non-Farm Payrolls report. According to the Bureau of Labor Statistics, the U.S. economy added just 74,000 jobs in December, which was the lowest monthly total in 19 months.
Wall Street thinks this kind of weakness can slow the Federal Reserve's plan to remove its mortgage market support.
Via a program known as QE3, the Fed has been purchasing $40 billion in mortgage-backed securities (MBS) monthly in the open market. The QE3 program creates artificial demand for MBS which helps to hold mortgage rates low.
Last month, citing a strengthening U.S. labor market, the Fed announced that it would taper its MBS purchases by $5 billion monthly, and would continue to reduce the program's footprint as the economy warrants.
As QE3's size shrinks, the "lid" on mortgage rates will begin to loosen.
The murky future of QE3 is among the reasons why December's weaker-than-expected jobs report led to a break in mortgage rates. Pricing for the 30-year fixed improved 60 basis points that day.
Should labor market weakness persists through January and February, the Fed may delay its QE3 taper. A delay such as this would help this season's home buyers looking for low rates, and also households refinancing via HARP 3, should the program be passed into law.
The Fannie Mae survey of American households shows nearly 60% of households expecting mortgage rates to rise between now and next year -- thirteen percentage points higher as compared to 12 months ago.
The Fannie Mae National Housing Survey shows that Americans expect more than just rising mortgage rates in 2014 -- they expect to experience rising home prices, too.
According to the survey, forty-nine percent of polled Americans expect home prices to climb next year with an average appreciation of 3.2 percent.
Last year, consumers grossly under-predicted how the U.S. housing market would perform.
In December 2012, survey respondents said home values would rise 2.6 percent in 2013. Since last year, though, values are up close to 10 percent nationwide with values in previously hard-hit cities such as San Francisco, California; Phoenix, Arizona; and Los Angeles climbing by twenty percent or more.
It's no wonder more Americans believe it's a "good time to buy a home".
Home values are rising and mortgage rates may, too. It's a combination which results in reduced purchasing power and higher, long-term homeownership costs.
Rents are expected to rise, too, which may be why two-thirds of those polled said they would buy a home as opposed to renting one if they were going to move.
In response to a different survey question, 33% of consumers said that "Yes, it's a good time to sell", which is up from twenty-one percent at this time last year.
This suggests two possibilities. One, that home sellers believe home valuations are more "fair" today, and are more willing to sell. Or, two, that fewer sellers are underwater on their mortgages, which makes it easier to sell a home.
Both possibilities are good for the health of the 2014 housing market.
For home buyers and refinancing households, this year's low mortgage rates have presented an opportunity to capture low housing payments -- especially if mortgage rates rise like so many Americans expect that they will.
Whether you're buying a home or refinancing one, low mortgage rates make for low monthly payments. You may be surprised at how low today's rates can be.
Get your personalized mortgage rate here. It's fast, it's free, and there's no obligation to proceed.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
Elaine A. Marketing
The Mortgage Reports is fantastic. I read it thoroughly and learn so much.
Ron Z. Real Estate Agent
I am a full-time Realtor and I look forward to daily updates from The Mortgage Reports. The advice is useful and the insight is important. Thank you!
Don B. Retired
The Mortgage Reports has helped me so much. I can't thank you enough.
2014 Conforming & FHA Loan Limits
Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.