Housing Predictions for 2018 – Industry Outlook

By October 6, 2017Industry Outlook

Borrowers May Find It Easier to Get a Mortgage – According to Fannie Mae’s third-quarter 2017 Mortgage Lender Sentiment Survey, lenders have reportedly loosened their standards to qualify for a mortgage over the last three months. The main reason behind the easing of credit has been the increased competition that lenders are feeling. Additionally, the net share of lenders who say they expect to ease credit over the next three months reached a survey high of 18 percent.

Housing Predictions for 2018 – Based on Freddie Mac’s September Outlook report, new homes are expected to be a “primary driver of sales in 2018,” as 1.33 million housing starts are predicted next year which is up from 1.22 million in 2017. “The economic environment remains favorable for housing and mortgage markets,” says Freddie Mac chief economist Sean Becketti. “For several years, we have had moderate economic growth of about two percent a year, solid job gains, and low mortgage interest rates. We forecast those conditions to persist into next year.”

Fed Hints at Looming December Rate Hike – The Federal Reserve has indicated that a rise to its short-term interest rates is likely on track for later this year. The Fed kept its key rates near zero for seven years. But since 2015, it has gradually raised rates by a quarter of a percentage point 4 times. Mortgage rates are only loosely tied to the Fed’s short-term rates, but the Fed’s actions do have some influence. Mortgage rates for example, have benefited from the Fed’s purchases of more than $1.7 trillion in mortgage-backed securities and rates have been near their lowest levels of the year, according to the Mortgage Bankers Association.

Consumers Say This Is the Ideal Down Payment – According to American Financing’s 2017 Mortgages in America Survey, more than half of Americans say they would prefer to put 10 percent down on a home purchase rather than 15 percent, 20 percent, or 30 percent. The 10 percent down payment option was the lowest among the choices respondents were given in the survey. It also was the most popular choice across generational divides, including millennials, Generation Xers, and baby boomers. The average down payment on a home purchase in 2016 was 11 percent, according to the National Association of REALTORS® 2017 Aspiring Home Buyers Profile. Borrowers under the age of 35 put down an average of 8 percent, according to NAR’s report.

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