Understanding the mortgage market

 May was another robust month for local real estate with both condo and single family home sales up 20% and 89% respectively according to MAR. However, demand continues to outpace supply. With COVID restrictions easing and vaccination rates rising it is hoped that labor, material and supply chain issues will dissipate clearing the way for increased new construction. If you are considering listing your house in this seller’s market, get in touch so we can discuss your options.

The economy continues to rebound post-COVID, and the Fed is keeping an eye on the job market and inflation. Last Wednesday, the Federal Open Market Committee (FOMC) released a statement regarding the economy. We share what that means for housing courtesy of Mike Fratantoni, MBA SVP and Chief Economist:|

“In their statement, the Fed noted that inflation has moved further and faster than expected, even as the job market has not yet fully recovered. This poses a challenge, as any move to slow inflation would at least somewhat slow the path back to full employment. Although the statement noted that the increase in inflation is “largely” due to transitory factors, this recognizes that some of the price increases are likely to persist for a longer period. 

“FOMC participants show in their forecasts that they now anticipate faster growth and higher inflation in the near-term, and an increase in short-term rates in 2023, consistent with MBA’s forecast.

“Longer-term interest rates, including mortgage rates, jumped earlier this year as vaccinations began and the government pushed more fiscal stimulus into the economy. In the past few months, refinance mortgage rates have moved within a very narrow range. While the Fed has not yet laid out specific plans with respect to tapering their Treasury and MBS purchases, the changes in their forecasts for the economy, and for their rate target, suggests that tapering is close at hand. As a result, mortgage rates are likely primed to move at least somewhat higher.”

Home prices may stabilize in response to a minor increase in rates, minor being the key term (some of us still remember rates in the teens!) but demand should remain robust in our competitive market.

Reach out if you have questions about the market or Fairway Mortgage.



Source By: https://www.fairway-newengland.com/understanding-the-market/

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