No, it’s not floods, tornadoes, or alligators, but interest rates are the common denominator among home buyers these days.
According to a Berkshire Hathaway Home Services survey, eight in ten prospective home buyers thought rising interest rates were the number one challenge that might face the real estate industry. 84% of current homeowners answered the same way. Those searching for a home worried that rising interest rates and the ensuing mortgage rate increases would affect their ability to afford a home. Though interest rates are currently low from a historical perspective, they look to be on the way up. Only 20% of prospective buyers said a recent rise in rates would motivate them to make a purchase before further increases.
All that being said, demand was there in 2021. Applications for new mortgages rose recently compared to January, driven by solid employment gains. In a perfect world, increases in employment and income continue throughout 2021 and offset the potential Federal Reserve’s incremental interest rate hikes.
Now let’s take a look at the numbers.
Housing inventory decreases are now commonplace. The long-term inventory trend continues to drop as well, having dropped year-over-year for 21 straight months. Thanks to low inventory and affordability issues, existing-home sales will fall.
As we head into the hottest months in the real estate industry, prospective borrowers should seek preapproval from a lender, understand their budget, and start working with a realtor about their housing needs. The early bird gets the worm!
As for lenders, caution remains supreme and probably will for some time. Though the new administration in Washington has not been hawkish toward the banking world, the Consumer Financial Protection Bureau remains in existence. It continues to enforce fair lending standards, TRID, RESPA, and other regulations.
A Better Way to Close with BNNServices
Since 2008, BNNServices has been trusted by title agencies, mortgage lenders, servicers, and consumers to perform loan and document signings in multiple languages across the country.
Unlike other signing services, BNNServices “touches” each and every file 8 or 9 times to ensure the process moves forward free of delays. That’s why we’ve completed over 250,000 signings in all 51 jurisdictions and maintained a closing ratio of 96 percent.
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