How mortgage rates and housing inventory could affect your finances

Mauro Harto
April 26, 2017
Spring has sprung; the days are longer, the weather is warmer, and the home-buying season is underway. Here’s a snapshot of the current market, the attractive rate environment and a market factor that could affect home prices.
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Homebuilders are busy, but inventory is low in some areas
Builders are finishing new homes in anticipation of the many parade of homes that take place this time of year. If you’re shopping for a new home, it's a great time to compare existing homes with the latest design innovations in the new homes that are hitting the market at parade of homes.
 
However, even though applications to build new single family homes have risen to their strongest level since September 2007, this year there’s an emerging trend that could make buying a home a bit more expensive: in multiple markets, there’s a lack of existing home inventory. Many gulf coast markets have experienced price increases because existing inventory has been absorbed at a faster pace than expected. Low interest rates and increased consumer confidence means more people are feeling better about their ability to purchase a home.
 
The outlook appears to point to sustained inventory shortages in some areas, the likely result being increased home prices.
 
Rising rates take a breather
The Federal Reserve has raised interest rates twice in the last year, but the good news is that in recent weeks interest rates have fallen to a five-month low. According to data released Thursday, April 20 by Freddie Mac, the 30-year fixed-rate average slipped to 3.97%. It was 4.08% a week ago and 3.58% a year ago. The 15-year fixed-rate average slid to 3.23%; it was 3.34% a week ago and 2.86% a year ago.
 
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Why are rates going down? Recent European turmoil, including the upcoming French election and policy changes from “Brexit,” continue to put downward pressure on mortgage rates. The heightened level of rhetoric between the Trump administration and Syria and North Korea is also contributing to uncertainty in the markets. As a result, investors are turning to safer investments such as bonds and U.S. Treasuries. Historically, U.S. treasuries are most likely to perform well when there is global uncertainty, according to Sandi Gumpert, Secondary Market and Post Closing Manager with Hancock and Whitney Bank Mortgage Services.
 
Rates are low; why wait?
While no one can predict rates, the attractive rate environment makes this a good time to purchase your dream home or refinance your current mortgage. Talk with one of our experienced home lending professionals about our full array of home mortgage options. We’ll help you find the right mortgage and will guide you through every step of the home financing process.
 
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