Mortgage rates continue to move higher as potential buyers and sellers face a changing housing market and the affordable housing sector welcomes a well-known new entrant.
The situation of the mortgage: Freddie Mac (OTC: FMCC) reported that the 30-year fixed rate mortgage average was 4.72% for the week ending April 7, up from last week when it averaged 4.72% for the week ending April 7. 4.67%.
The 15-year fixed rate mortgage averaged 3.91%, up from last week when it averaged 3.83%. And the five-year Treasury-indexed hybrid variable-rate mortgage averaged 3.56%, up from last week when it averaged 3.5%.
“Mortgage rates have risen 1.5 percentage points in the past three months alone, the fastest three-month rise since May 1994,” said Sam Khater, chief economist at Freddie Mac. “Rising mortgage rates have slowed buying activity, so the monthly payment for those looking to buy a home is up at least 20% from a year ago.”
As mortgage rates rose, mortgage applications went in the opposite direction. The latest data from the Mortgage Bankers Association (MBA) was down 6.3% for the week ending April 1 from the previous week.
“As higher rates reduce the incentive to refinance, the volume of applications has fallen to its lowest level since the spring of 2019,” said Joel Can, associate vice president of MBA economic and industrial forecasting. “The refinance share of all applications fell to 38.8% from 51% a year ago. The buoyant labor market and rapid wage growth continue to support housing demand, despite soaring rates and the rapid appreciation of house prices.
“However,” Kan continued, “insufficient inventory to sell is limiting buying activity. FHA both indicate that first-time buyers are disproportionately affected by supply and affordability issues.”
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Another imbalance: Shortage of homes for sale may ease later this year, data from real estate agent.coma unit of News Corp’s (NASDAQ: NWS) (NASDAQ: NWSA) subsidiary Move.
In a new survey, 64% of potential sellers planned to put the property on the market within the next six months, and with high expectations of turning a profit.
“While sellers are expected to hold the upper hand in 2022, navigating the listing process remains a challenge – especially for those also buying in today’s rapidly changing marketplace,” said George Ratiu, senior economist and head of economic research at Realtor.com. “Owners who are ready to move forward with plans delayed by the pandemic will find plenty of opportunities this spring and summer. Although accelerating inflation is driving up housing costs and living expenses, many buyers remain interested in finding a home.
“At the same time,” Ratiu added, “recent housing trends suggest demand is beginning to moderate as higher mortgage rates push monthly payments out of some buyers’ budgets, underscoring the long-term need for ‘more affordable inventory’.
A separate study of the brokerage red fin (NASDAQ: RDFN) finds fewer people starting online home searches and applying for mortgages than this time last year, with year-to-date growth in home visits well below 2021 levels.
“Homebuyers may not feel like the market has gotten any easier – that’s because they’re often competing with investors, cash buyers and migrants from expensive cities who aren’t as sensitive to mortgage rates,” said Redfin’s chief economist. Daryl Fairweather. “But there are early indicators that the market is turning, and we expect the slowdown to become more apparent in the coming weeks, possibly causing house price growth to slow. We will be watching closely to see if the market slows down from 100 miles per hour to 90 or 100 miles per hour to 75.”
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Making Florida Affordable: A leading entertainment company has launched a bold new initiative for the affordable housing sector: The Walt Disney Co. (NYSE: DIS) announced plans for an 80-acre affordable housing development near the Walt Disney World Resort in Orlando.
“The development, which is expected to include more than 1,300 units, will be built by a third-party affordable housing developer and will be located on Disney lands in southwest Orange County, Florida,” said Rena LangleySenior Vice President of Communications and Public Affairs at Walt Disney World.
“It will provide Central Florida residents with a variety of affordable and accessible home choices, in much of the city near schools and the new Flamingo Crossings Town Center retail and dining complex. The development will be available to qualified applicants in our region, including Disney cast members.
Langley did not provide a timeline for the project, although she did note that this endeavor had “been in the works for some time, as we have been focused on finding solutions to this challenge for some time.”
Photo: Lali Masriera/Flickr Creative Commons.
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