Market Shift is Happening Now.
Watch the original video: Market Shift is Happening Now.
Here is your Mid-Month Mortgage Update for July 2022. In this month’s video I will discuss current market trends, where the market is headed, the benefits for buyers and how recessions effect rates. Watch my video to learn more.
🏠 Current Market Trends
We are beginning to see that the Fed’s policies of raising rates and instituting quantitative tightening is starting to have an impact on the market. As rates continue to rise, there are more homes being added to the market nationwide. We are beginning to see less homes receive multiple offers. Although, what we are NOT seeing is home prices drop or foreclosures.
🤔 What Will Happen Next?
The question everyone is asking, where do things go from here? First off, July inflation is the highest it has ever been in the past 41 years. Then, if we look at the actions of the Fed’s, which truly dictate what will happen from here, we are almost certain that they will continue this path of trying to bring down inflation through increasing the cost of credit in efforts to slow down the demand of consumers.
We expect to see 2 or 3 more rate hikes between now and the end of the year. Keep in mind this does not mean mortgage rates will automatically go up as a result, but there is a chance we could see mortgage rates continue to climb.
👍🏼 The Benefits for Buyers
In the past 60 days we have seen multiple clients have offers accepted on a home that they never would have had accepted just three months ago. In fact, we have had several buyers receive up to 3% of their closing costs from the seller. Even though buyers are locking in at higher rates, there are many benefits for those currently in the market.
⁉️ Are We Entering a Recession?
Referencing the graphic above, since the 1980’s we have had 6 recessions including the great recession of 2008. If you focus on the corresponding mortgage rates for each recession, interest rates as they went up ended at a lower rate by the time the recession was ending. On top of that each recession only lasted an average 6 months, apart from 1982 and 2008. I am not an economist; however, I follow market experts on this topic and believe that we may be headed into a recession.
🔭 Looking Forward
As we look forward, it is quite possible that we will see the Fed’s lower rates in the next 6-24 months. The election in 2024 will certainly influence this as well. What we are telling our clients is to be very careful when paying points to buy the rates down, since the likelihood is super high that you will be able to lock in at a lower rate in the future.
👋🏼 Let’s Chat
If you have any questions or concerns on this new update please feel free to reach out at any time. I hope you are having a great day. Talk to you soon.