By Douglas Katz – 08/30/2022
Fannie Mae predicting mid-4% range by 2023.
Home prices are still high so lower rates could help.
Inventory is increasing but a a slower than hoped pace.
Timing may be on your side but trying to time the market is not recommended.
There is some good news on the rate front for prospective borrowers. While is only a forecast. Fannie Mae has adjusted their mortgage rate outlook and is predicting rates in the mid-4% by mid 2023. If it comes to pass, this would be an amazing opportunity for not only new buyers, but also for those who bought during the recent trend toward higher rates. News like this comes with some considerations an caveats, however.
New buyers should not take this as a reason to further delay. Timing is everything but there is no ability to time things like the mortgage rate market without a huge amount of luck. Anyone looking to buy who is lucky enough to find a well priced property that they can snag likely should. Rate is just one part of the equation and to forego an good opportunity is foolish. For those who think prices are still too high and were waiting anyway, this should be welcome news though. This may end up a great strategy as recent data from Case-Schiller further verified an increase in inventory and a slowing of growth in home prices. Both of these we small as inventory while improving is still low and the rise in home values is slowing but this is a deceleration and not a crash at this point.
Additionally, anyone in a transaction who have to close imminently, such as in a purchase or due court order, and is looking to lock in the next few weeks or months needs to remember that this is a forecast for close to a year from now. There can sometimes be a tendency to selectively process information from forecasts like this and to compare current rates against the potentially lower rate in predictions. As with anything This is just a data point. A lot can happen from now until when this forecast applies. There have not been a large number of major sources of rate information who have been predicting this drop, so until there is some degree of agreement, all of this should be considered but not in a bubble. The best and really only course of action for now is to lock to lock to meet your contractual agreement and keep an eye out for refinance opportunities. If this comes to pass and rates drop, you will surely hear from your lender to improve your situation,
Finally, about those refinances. This one is just a be aware piece of advice. If you have a target rate that you are looking for, let your lender know. This helps them greatly when it comes to striking a balance between bothering you with constant outreach and not reaching out enough because the lender does not want and does not want to bother you. Many systems even have the ability to set up a target rate for a client profile and your lender will be happy to set you up. If you bought at the short-term rate peak and you can save some bucks, you should be ready for when rates hit that range because you could miss the opportunity. one cautionary thing to remember, however, is that appreciation has slowed and valuation plays a key part in the structure and terms of a deal. In short, you may be surprised that the significant double digit growth has all but subsided and some transactions may not work.