Have Rates Peaked? What's Ahead for Home Buyers?

Economy & Mortgages
Have Rates Peaked? What's Ahead for Home Buyers?

The Mortgage Bankers Association held its big annual convention recently, and shared its two-year outlook about the economy and its impact on interest rates. In summary, with inflation expected to fall from the current 3.8% to 2% by the end of next year, the MBA doesn’t expect the Fed to hike interest rates further this year.  

“(The Fed is) already at a place where if they do nothing, and inflation holds or falls further from here, they’re going to be slowing the rate of growth, and the cumulative impact of the rate increases they’ve already made are not fully felt yet,” said Mike Fratantoni, MBA’s chief economist.

The MBA’s baseline forecast is for mortgage rates to end 2024 at 6.1% and reach 5.5% at the end of 2025. That would be welcome news pointing to possible refinance opportunities for borrowers taking out mortgages at today’s rates.

“As mortgage rates come down…borrowers will see less of a trade-off in moving,” said Joel Kan, the MBA’s Deputy Chief Economist. “I think that’s when you’re going to see more inventory free up,” Kan said. Low inventory has been sustaining home prices, even with the dramatic increase in interest rates. But don’t count on prices softening as inventory appears, though. If rates fall as expected, a rush of sidelined buyers may keep prices up. This is expected to be compounded by more first-time buyers appearing, with Millennials -- the largest age cohort – already entering prime homeownership age.

All this forecasting aside, what do homebuyers and sellers face today?

With interest rates now slightly lower, but still near their highest point in more than 20 years, both buyers and sellers have to adjust their expectations. We help clients do this, by properly assessing and extending their financial horsepower through access to a wide range of innovative loan products.

Another important adjustment has to do with the type of property you may be considering. We’re seeing “move-in” properties selling quickly while those needing upgrades are taking longer to sell.

Properties that need some love are where savvy real estate buyers find opportunity!

A seller listing one of these in this tough market is more likely to be a motivated seller (versus an opportunistic one) and may be open to a lower offer. Renovation loans are key strategic tools in turning these unloved properties into beautiful investments.

The bottom line is that opportunities exist throughout all market cycles. And it’s our mission to help you take advantage of those, quickly.

Contact us today if you or someone you know is thinking about a purchase, and we’ll put together a winning plan.

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