Mortgage Market Update – Rates Trending Downward but NO Guarantees for Future Moves

By Douglas Katz – 01/13/23

From Freddie Mac:

While mortgage rates have resumed their decline, the market remains hypersensitive to rate movements, with purchase demand experiencing large swings relative to small changes in rates. Over the last few weeks latent demand has been on display with buyers jumping in and out of the market as rates move.

Highlights and Commentary

  • At least for no, mortgage rates are moving to a better place.  I say for now because although it feels like we are emerging from a tough market, the recover, if it is a recovery, could reverse if overall economic conditions and markets worsen.  The saying about a bird in the hand applies here.
  • Refinances are picking up as people are realizing that the refinance opportunity could be fleeting.  The market saw roughly 5% increase in refinance activity, so the spike is not insignificant.  I do recommend that all divorcing or recently divorced look seriously at executing any court ordered transactions before the market turns.
  • Buying activity also seems to be picking up.  Anecdotally, I am seeing a bump in activity with buyers much more willing to jump back into the market.
  • Housing inventory is definitely still a problem so the increased activity on the part of buyers is not necessarily going to fix the anemic market completely.  I am assuming that there will be a nice wave of properties that will hit the market in line with the normal seasonality.  The market for sellers will assuredly be more competitive so preparation is more important than the fish in a barrel that we saw in the recent past.
  • Lenders and other lending entities are adjusting their credit requirements and guidelines to align with the risk that they are seeing with recessionary concerns.  Most requirements are tightening, so buyers need to keep up-to-date on how changes impact them.  Surprise is rarely a good thing o hear when you’re under contract.
  • Expect a lot of changes and consolidation in the lending industry as weak players die or get absorbed.  This is not a huge deal on the surface, but lenders vary in their process, offerings and risk tolerance.  If you get an announcement from your loan officer or broker that they are moving or where they work is changing, make absolutely sure that nothing about your deal needs to change to fit the standards and offerings of the new entity.

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