Mortgages, Home Prices Keep Housing Activity Limited – Fannie Mae Says So!

Mortgages, Home Prices Keep Housing Activity Limited – Fannie Mae Says So!

The housing market has been in a state of flux for some time now, and experts are predicting that the current trends are likely to continue into the foreseeable future. According to a recent report from the Federal National Mortgage Association (Fannie Mae), mortgage rates and home prices are both playing a role in limiting housing activity.

Mortgage Rates

Mortgage rates have been on the rise since late 2018, and are currently hovering at near-record highs. This has caused a slowdown in refinancing activity, as well as a decrease in new home purchases. According to Fannie Mae’s Economic and Strategic Research Group, the 30-year fixed-rate mortgage rate is expected to remain above 4% for the remainder of the year.

This could have a significant impact on the housing market, as potential buyers may be unable to afford the higher payments associated with higher mortgage rates. Additionally, the rise in mortgage rates could reduce the number of refinancing transactions, as homeowners may not be able to take advantage of the lower rates they might have initially been expecting.

Home Prices

Home prices have been on the rise as well, as a result of a limited supply of available housing. This has caused an increase in home prices, as buyers are willing to pay more for the limited number of homes available. According to Fannie Mae, the median home price is expected to rise by 6.1% in 2019.

This could have a major impact on the housing market, as potential buyers may be priced out of the market altogether. Additionally, existing homeowners may not be able to take advantage of the higher home values due to the inability to secure a loan with the higher mortgage rates.

What Does This Mean?

The combination of higher mortgage rates and higher home prices could lead to a decrease in housing activity in the near future. Potential buyers may be unable to afford the higher payments associated with higher mortgage rates, while existing homeowners may be unable to take advantage of the higher home values due to the inability to secure a loan.

However, this may not be all bad news. The higher home prices could lead to an increase in home equity, as homeowners could use the higher values to take cash out of their homes. Additionally, the higher mortgage rates could lead to an increase in savings, as homeowners could put their savings into higher-yielding investments.

Conclusion

The housing market is in a state of flux, and experts are predicting that the current trends are likely to continue into the foreseeable future. Mortgage rates and home prices are both playing a role in limiting housing activity, as potential buyers may be unable to afford the higher payments associated with higher mortgage rates, while existing homeowners may not be able to take advantage of the higher home values due to the inability to secure a loan. However, the higher home prices could lead to an increase in home equity, as homeowners could use the higher values to take cash out of their homes, and the higher mortgage rates could lead to an increase in savings.

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