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The recent drop in mortgage rates has given some hope that borrowers may develop a greater appetite for home loans.
But even if the rate falls between 6s, the market is still far from “normal” and as a result, industry experts predict a long cold season for loan officers.
Shampa Bhattacharya, head of US non-banking finance at credit rating agency Fitch, said: face at least the next two.” last week looking for the public market started.
Bhattacharya added that in terms of volume, “2023 is looking at least better than 2022 in the first half, but we will see what happens in the second half.”
Demand remains near historic lows, although rates have eased in recent weeks. The average 30-year mortgage rate stood at 6.41% on Tuesday, according to the HousingWire Mortgage Rates Center, down 8 basis points from last week and a significant increase from a peak of 7.16% in October. Jumbo loan rates fell 27 basis points this week to 6.08%.
Meanwhile, according to data from the Mortgage Bankers Association, mortgage applications fell 1.9% this week compared to results adjusted for the Thanksgiving holiday last week.
Joel Kan, vice president of MBA and vice president of economics, gave his opinion on the sluggishness in employment despite some increase in rates.
While mortgage rates have fallen across the board, they are still “more than three percent higher than December 2021,” Kan said.
A lower move in mortgage rates has moved the needle a bit for refi seekers, with overall volatility up 4.7% last week. A sign of stability
According to HousingWire industry analyst Logan Mohtashami, the housing market has shown signs of life since mortgage rates fell following the report of weak consumer price data in October.
The real cause for excitement should come when mortgage application data shows a year-over-year decline.
“In this case, the peak of the year-year is 46%, so the data is better if the number is going down. And that is from 40.5% in the latest report. The market is improving here.
MBA data shows that overall mortgage applications are down 66.8% this week compared to the same time last year. Refinancing fell 86% and loans to buy fell 40.5% this week.
“However, the data of the transmission system has deteriorated this year, so it is working from a very low bar,” Mohtashami said.
Can the Fed provide loan relief?
On the macro front, analysts at Fitch said the Federal Reserve has signaled a possible rate cut starting in December, which could bring some relief to mortgage rates.
However, Fitch analysts also said that Chairman Jerome Powell emphasized that borrowing costs will need to continue to rise and remain stable for some time to overcome inflation.
“This is somewhat in line with Fitch’s global economic outlook released in September, that the rate remains high through 2023 and inflation prevails but is still relatively high,” said Johann Juan, Fitch’s senior director of non-banking corporate income. America.
The rating agency predicts that inflation will be 3.6% and interest rates will be 4% by the end of 2023.
Housing prices, which have greatly appreciated since 2020, will continue to moderate in 2023, due to mortgage rates and capacity.
“Growth in the labor market and an increase in rents are providing a floor for prices,” Juan said.
Reference Source: Housing Wire
