Mortgage interest rates have begun to rise, and as a result January saw the first decrease in mortgage refinance volume since November 2020. The long running record of historically low rates may be news of the past after several weeks of rising rates.
Home sales were strong throughout 2020, with purchase applications up 42% in December 2020 compared to same period in 2019. These results are much better than many projected in early 2020, when the Covid Pandemic brought our nation to a standstill for months. The historically low mortgage interest rates in 2020 is the clear reason for the stellar home sales market performance.
The National Association of Home Builders (NAHB) coupled with Wells Fargo 35 years ago to create the Housing Market Index (HMI). NAHB.org defines the NAHB/Wells Fargo Housing Market Index (HMI) as based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes.
There is a lot of talk and prediction about the future of mortgage interest rates and home sales prices. The variables that lie in the future for both of these topics will happen. What does this mean for those of us who are considering refinancing or purchasing a home? It means that interest rates and home prices may go up or may go down.
With many changes happening throughout 2020, one thing has remained consistent; the growth of home purchase demand. The combination of historic low mortgage interest rates and lowering available homes for sale, the pressure has created home purchase demand.
A recent article on CNBC.com, written by Jeff Cox, and Titled: Fed holds rates steady near zero and indicates it will stay there for years, includes the following statement “Projections from individual members also indicated that rates could stay anchored near zero through 2023. All but four members indicated they see zero rates through then. This was the first time the committee forecast its outlook for 2023.” The article details the projections and expectations of the policymaking Federal Open Market Committee.
The year of 2020 will be remembered by many people and for many reasons. The year was rocked by a pandemic with a ripple effect that created an economic recession; complex social unrest; and a highly polarized presidential election. Oh, and let’s not forget it was also a year of historically damaging wildfires and hurricanes!