A return to a more traditional market? Last week, Fannie Mae predicted that 2022 will be a transitional year for markets as pre-COVID economic trends gradually return. And with rent prices and mortgage rates rising across the board, now is an important time to evaluate your options and act quickly. Let’s cover the latest news and more in this week’s Mortgage Monday update.
Rates Update
For the week ending Thursday, January 20, Freddie Mac reported general mortgage rate increases in their Primary Mortgage Market Survey. Since the start of this dramatic upward trend, mortgage rates have seen increases of nearly half of a percent – a rise that is only projected to continue throughout 2022. They may have leveled out by the end of last week, but the current rates likely won’t remain the same for long.
With rates at their highest in the past two years and experts commonly predicting a return to a “new normal,” the window to finance a home with long-term savings is closing. Contact your Total Mortgage loan officer now before the increase continues!
Refinance Opportunities are Down; Rent Prices High
January’s mortgage rate increases have not come without consequences. With spikes to 30-year fixed loan options, the number of refinance candidates has been cut nearly in half since the start of the year. The volume of applications to refinance has also been subsequently halved, illustrating fewer opportunities to save by securing a lower rate. Should mortgage rates continue to rise, we’ll likely see further declines in overall refinance volumes as a result.
On the other hand, Redfin reported a 14 percent increase in average rent prices since December 2021 (with some US cities reaching upwards of 40 percent increases!). These are some of the highest numbers recorded in over two years and should serve as a warning to any prospective homebuyers. If you’re in the market for a new home, act now; buyers everywhere are now faced with the choice of securing a low rate (before they continue to increase) or settling for ever-increasing rent prices. Contact your Total Mortgage loan officer to begin your path to homeownership quickly.
Older, but Still Important News
The Federal Housing Finance Agency (FHFA) announced upcoming fee increases for certain Fannie Mae and Freddie Mac home loans. Effective April 1, 2022, upfront fees for these options will have the following increases:
- Upfront fees for high-balance loans will increase between 0.25 and 0.75 percent.
- Upfront costs for second home loans (non-primary residence) will increase between 1.125 and 3.875 percent.
These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1 – more information on that below.
At the start of January, the borrowing limits for Conventional and Federal Housing Administration (FHA) loan options saw significant increases to help buyers combat rising market prices. The conforming limit for single-unit home loans is now $647,200 – an 18.05 percent increase from last year’s limit. To learn more about these changes and your new borrowing options, get in touch with your Total Mortgage loan officer.
In Closing
With continued rate increases, it’s only a matter of time until this projected “new normal” arrives. Of course, the rate at which the market transitions to pre-pandemic levels will likely be determined by the pandemic itself; how it develops, how we react, and (most importantly) how the markets react. For now, our best recommendation is to review your options and act quickly. Our team of experienced loan officers is ready to help you secure your home financing before the rate increase continues – contact us at any time to get started!
In the meantime, we’ll continue to monitor our industry news and provide updates as they come. The Federal Reserve is set to meet later this week, which will likely result in some form of a market reaction. Follow us online to stay informed with the next weekly update!
Source: totalmortgage.com