[ad_1]
Despite the latest decline in mortgage rates, the market remains highly sensitive to rate movements, with purchase demand experiencing significant swings in response to small rate changes, according to Freddie Mac chief economist Sam Khater. “Over the last few weeks, latent demand has been on display with buyers jumping in and out of the market as rates move,” Khater said.
The Mortgage Bankers Association reported Wednesday that applications for home purchase loans dropped 1% week over week, while refinance application activity rose 5%.
According to Fannie Mae’s Home Purchase Sentiment Index (HPSI), consumers have expressed growing expectations that mortgage rates and home prices may decline in 2023 – perhaps influenced by easing mortgage rates and home prices observed in recent months.
“However, the HPSI remains very low by historical standards, particularly the ‘good time to buy’ component, and respondents continue to cite high home prices and unfavorable mortgage rates as the primary reasons for their pessimism,” said Doug Duncan, Fannie Mae’s chief economist. “As we enter 2023, we expect affordability to remain the top challenge for potential homebuyers, as even small declines in rates and home prices – from the perspective of the buyer – may not produce sufficient purchasing power. At the same time, existing homeowners may continue to wait to list their properties since many have already locked in lower mortgage rates, creating minimal incentive to sell and buy again until rates are more favorable. We think the resulting tension will contribute to a continued decline in home sales in the coming months.”
Want to stay up to date with the latest housing industry news? Get well-curated articles in your inbox and always be the first to know by subscribing to our FREE daily newsletter.
[ad_2]
Source link
