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Posted April 18, 2014
in Mortgage Market Headlines

Are They Wrong? Just 3% Of U.S. Consumers Expect Lower Mortgage Rates In 2014.

Fannie Mae survey : Now is a good time to buy a home

7 in 10 U.S. consumers think now is "a good time to buy a home", as 90% believe home values will either rise or remain unchanged through 2014.

Conducted by Fannie Mae, the March National Housing Survey suggests strong housing demand and rising competition for homes.

For buyers making a move within the next 12 months, the best "deals" in housing may be the ones you find today.

Click to see today's rates (Feb 7th, 2016).

U.S. Consumers : "It's Easier To Get A Mortgage"

Each month, Fannie Mae releases its National Housing Survey, a collection of consumer observations and expectations for the U.S. housing market.

The March 2014 survey shows respondents harboring healthy confidence in U.S. housing, and optimism for the next 12 months.

Since bottoming out in 2011, home values have shown steady recovery. In some U.S. markets, values are higher only slightly; New York City is one such market (except for its condos). In other markets, such as San Francisco and Los Angeles, values are demonstrably higher.

On average, U.S. home values have increase close to 20 percent from two years ago and, in many cities, are within striking distance of last decade's peak.

All of this has not gone unnoticed.

Consumers have seen the speed at which values are rising, and now recognize that the 2-year rally will likely continue. Just five percent of Fannie Mae respondents expect home prices to drop this year -- half as many as from one year ago.

69% believe that "now" is a good time to buy a home.

More on what consumers are thinking :

  • 38% of consumers think now is a good time to sell, up from 26% last year
  • 68% of consumers said they'd buy if they were moving; just 28% would rent.
  • 52% of consumers said getting a mortgage would be easy today.

In addition, consumers expect rents to rise faster than home prices. Rents will rise 4.2 percent, consumers say, versus 2.7 percent for home prices.

This is notable because when rents rise, it shifts the Rent vs Buy discussion toward "Buy". And, with today's prevalence of low- and no-downpayment mortgages, including the FHA mortgage requiring a 3.5% downpayment and the no-money-down USDA mortgage, it's fairly simple to join the ranks of homeownership.

More buyers means more demand, which pushes home values higher.

It's no wonder that the U.S. housing supply remains near an all-time low. There are more potential buyers in today's market than the number of active home sellers, creating a "seller's market".

As demand exceeds supply, home values rise.

Click to see today's rates (Feb 7th, 2016).

Should You Expect Higher Mortgage Rates?

U.S. consumers expect more than rising home prices through 2014 -- they expect mortgage rates to rise, too.

More than half of all consumers think mortgage rates will climb between now and next year, and just three percent expect mortgage rates to fall. Higher mortgage rates increase the cost of homeownership and can slow the pace of home sales.

For every 1 percentage point increase to mortgage rates, purchasing power slips 11%. If you could afford a loan of $400,000 at 4% mortgage rates, you can afford a loan of just $356,000 at 5%.

The direction of this year's mortgage rates will be dictated by the health of the U.S. economy, the strength of the U.S. Dollar, and the Federal Reserve's various stimulus programs, including the mortgage-rate suppressing "QE3".

Via QE3, the Federal Reserve buys mortgage-backed bonds on the open market monthly, which creates extra demand that drives bond prices up. As bonds prices rise, mortgage rates drop.

Inflation rates are another focal point of this year's rates. As inflation rates climb, mortgage rates will go with them. Inflation is the enemy of U.S. mortgage rates.

Today, though, the 30-year fixed rate mortgage rates averages close to 4.25% with points.

How Much Home Can I Afford?

U.S. consumers expect higher home prices and higher mortgage rates through the end 2014, and into early-2015. It's no wonder so many think now is "a great time to buy". Relative, buying today looks like a good way to save money.

If you're among those prepping to purchase, consider moving up your time frame. Housing market sentiment can be a self-fulfilling prophecy. When buyers expect prices to rise, they often do.

Get today's live mortgage rates now. Quotes are available online, at no cost, and with no obligation to proceed. Plus, your social security number is not required  to get started.

Click to see today's rates (Feb 7th, 2016).

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.

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2016 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)