Mortgage Market Update – Downward Mortgage Rate Trend Continues

By Douglas Katz – 12/9/2022

From Freddie Mac:

Mortgage rates decreased for the fourth consecutive week, due to increasing concerns over lackluster economic growth. Over the last four weeks, mortgage rates have declined three quarters of a point, the largest decline since 2008. While the decline in rates has been large, homebuyer sentiment remains low with no major positive reaction in purchase demand to these lower rates.

Commentary

  • This could now be the reversal many have been predicting.  I think that borrowers assume further drops at their peril as rates could resume their uphill climb.  There are still a good number of experts reporting issues in the economy that still lead the Fed to continue to increase rates.  In the meantime, I recommend any borrowers lock, especially if they are close to closing.
  • In line with the Freddie report, the housing market is still stalled with buyers still reticent to enter the market.  Anecdotally, some of my pre-approved buyers are starting to look again at buying but inventory is still low and prices as still dropping in many markets.
  • There is a lot of adjusting of programs, pricing and guidelines taking place with the lenders and agencies that originate loans.  In the last week or so, there have been several important announcements on final 2023 loan limits for conforming loans and pricing adjustments for cash out refinances for example.  This will likely continue as the lenders work to balancer risk and reward with accessibility to credit.  Many recent changes were specifically targeted at first time and disadvantaged borrowers.  Regardless, it is imperative to stay on top of changes.  Your lender should be keeping abreast and notifying you of any opportunities to utilize a better program.
  • Good news this week on materials for building and renovation projects.  Items like lumber have dropped considerably from earlier highs which is good news for the homebuyers who have decided to make their existing home into their dream home. m
  • Layoffs are spreading beyond lending which is a strong signal that the toughest economic times of this cycle may still be ahead.  While it is tempering, inflation is still a problem and affordability, bit just of homes, but of living in general.  This makes purchases on the scale of a home in the backseat until the market shifts and confidence increases

I always end with a reminder that we have discounts available for veterans, first responders and law enforcement. Make sure that you check out the section of the page covering our commitment to those who served with discounted mediation services.  My lending partner also offers a discount as well, so if your buying or refinancing check it out

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