By Douglas Katz – 1/20/23
Per Freddie Mac:
As inflation continues to moderate, mortgage rates declined again this week. Rates are at their lowest level since September of last year, boosting both homebuyer demand and homebuilder sentiment. Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern.
- This week is when the loan level price adjustments from Fannie Mae and Freddie Mac become official. This is amazing news for anyone looking for a mortgage as this pricing reduction coupled with the recent decreasing trend mean that there is cumulative reduction possible for certain borrowers. Anybody considering a mortgage application, currently applying or in a deal/pre-approval should get an assessment whether this will help them and by how much.
- Regarding the downward trend, the recent drop in rates has been persistent which is encouraging. I have had to temper my more bearish predictions as I thought it would be more temporary. That said, market conditions are fleeting and the trend could reverse. There are still some economic headwinds what could push rates back into an upward trend. I always recommend taking advantage of good opportunities when they arise and that has been my advice for many borrowers.
- Final pricing note. We are starting to also see tighter pricing in from wholesalers and other lending institutions. Sometimes in straight out pricing, but other times in the form of limited per deal incentive systems. Either way, there is more to the pricing than the national rate. This is an additional reason why borrowers should not hedge if they have an imminent transaction as this could change.
- Housing inventory remains a stubborn challenge to a market recovery. There are indicators that there could be some help here as foreclosures are expected to rise. The rise is n0t expected to be a 2008 size tsunami, but there will be more than previous years. I wrote an article on this for my investment lending business, Redleg Funding, that you can read for more detailed information.
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.