Where is the Mortgage Market Headed?
Chief economists predicted the economy would rebound in 2010. However, the it was sluggish with slow growth rates for many years. The economy contracted in the first quarter of 2014, but in the second half of 2014 economic growth picked up. The Federal Reserve tapered their quantitative easing asset purchase program & the price of oil fell sharply. Consumer perception of inflation and inflation expectations are set largely by the price they pay at the pump when they refill their gas. With growth picking up the consensus view is interest rates will rise around the middle of 2015.
What’s the Average Interest on a Home Loan in 2016?
Rates still remain near historically low levels. Mortgage buyer Freddie Mac said Thursday the average rate for the 30-year loan increased to 4.37% from 4.33% last week. The average for the 15-year mortgage rose to 3.39% from 3.35%. Distress sales will no longer be playing a huge role, new construction is returning to more traditional levels, and prices rise at more normal rates consistent with a more balanced market.
The housing crisis that politicians are ignoring is that the cost of rental housing has become crushing in most of the country. More than 85% of U.S. markets have rents that exceed 30% of the income of renting households.
Housing Sales Brighter in the Short Term
New US single-family home sales jumped 16.6 percent to a seasonally adjusted annual rate of 619,000 in April of 2016, much higher than an upwardly revised 531,000 in the previous month and compared to market expectations of 523,000. It is the highest reading since January of 2008 and the biggest gain since 1992. Check out the housing outlook for 2016.