In the News Presented by Prairie Title
December 8, 2016
Bye-Bye Refis. What’s Next?
I’ve been thinking about the state of our industry as 2017 nears. Actions to be taken by the new Congress and new administration in Washington will have an impact on the housing market, of course, but let’s leave speculation about what might happen in Washington for another day. Something that is certainly real now is a decline in refinances as interest rates have climbed since the election, and likely will continue to rise as the Fed meets next week and is almost certain to increase rates.
As Mortgage Daily reports, based on Freddie Mac’s Refinance Outlook refinance originations are expected to go from $228 billion in the current quarter to $105 billion in Q1 of 2017. Black Knight even suggests that the potential total refi pool has shrunk in half already with the interest rate rise.
Where do we look for good news? Home sales, naturally, but with the caveat that higher mortgage rates combined with rising home prices may slow housing market growth in 2017, especially among a key demographic: Millennials.
“Recent spikes in mortgage rates may potentially price some first-time home buyers out of the market,” NAR said recently. “The higher rates mixed with rising home prices will likely cause the housing market to slow in 2017 and see only moderate growth.” NAR’s 2017 “snapshot” does provide some positives:
· Home prices are expected to rise 3.9 percent nationwide.
· Existing-home sales are predicted to increase 1.9 percent to 5.46 million homes.
· The homeownership rate is expected to stabilize at 63.5 percent, after bottoming out at 62.9 percent in 2016.
· New-home sales are expected to increase 10 percent and new home starts to rise 3 percent.
I’m hopeful as 2016 comes to an end. I really believe that the strong movement of Millennials into the real estate market is not far off. There’s a big wave coming, we just can’t be sure exactly when.
Our next issue of In the News will come out right after New Year’s. In the meantime, I hope the coming holiday season is peaceful and relaxing for you and your family.
What’s your point of view? I’d love to start a conversation. Call or email me, or write a comment below.
Other stories we’re following:
2017 U.S. mortgages to exceed $1 trillion
What’s coming for CFPB mortgage policies?
Where will home prices go in 2017?
Battle lines drawn over mortgage interest deduction.