Is This Your Last Chance To Refinance? Just 4% Of Americans Expect Lower Mortgage Rates In 2014.

An overwhelming majority of U.S. consumers expect mortgage rates to rise next year.

The data comes from Fannie Mae’s National Housing Survey, a survey of 1,000 households which reflects changing American attitudes toward housing and mortgages. The negative outlook on mortgage rates may help to explain why — despite the lowest mortgage rates in 4 months — today’s national refinance volume remains so low.

The next great Refinance Boom may have started but many U.S. homeowners have yet to figure it out. 

30-Year Fixed Rate Mortgage Drops Again

For the third straight week last week, mortgage rates dropped. Nationwide, the 30-year fixed rate mortgage rate averages 4.22% for borrowers willing to pay 0.7 discount points at closing; and the 15-year fixed rate mortgage averages 3.29%.

October 2013 mortgage rates are already lower than those which were available in July, August and September of this year. Home buyers from this summer, who faced rapidly rising rates at their time of locking, are suddenly eligible for refinance.

Few homeowners have taken notice, however.

Even as rates slip to multi-month lows, the Fannie Mae survey of American households shows that two-thirds expect mortgage rates to rise between now and next year — double the rate from just 12 months ago.

Consumers appear affected by stories from this summer which detailed how rising mortgage rates could slow the U.S. housing market; and how Big Bank lenders made massive layoffs in expectation of lower loan volume.

At today’s mortgage rates, the typical HARP refinance saves more than 27% annually.

Americans Predict Higher Home Prices In 2014

The Fannie Mae National Housing Survey shows that Americans expect more than just rising mortgage rates in 2014 — they expect to experience rising home prices, too.

According to the survey, more than half of polled Americans expect home prices to climb next year with an average appreciation of 3.1 percent. This is nearly twice as much appreciation as consumers predicted last year at this time — a prediction which grossly underestimated this year’s housing market.

Since last year, values are up 9 percent nationwide with prices in previously hard-hit cities such as San Francisco, California; Phoenix, Arizona; and Los Angeles climbing by more than one-fifth.

It’s no wonder more Americans believe it’s a “good time to buy a home”. Home values are rising and mortgage rates may, too. It’s a combination which results in reduced purchasing power and higher, long-term homeownership costs. Rents are expected to rise, too.

This may be why nearly 70% of Americans said they would buy a home as opposed to renting one if they were going to move. Today’s market appears better than tomorrow’s.

Interestingly, home sellers may be thinking the same thing. 

In another of its questions, Fannie Mae asked respondents whether now was “a good time to sell”. 38% responded that “Yes, it’s a good time to sell”.

This may not seem like a big number but 38% is double the rate from just one year ago, suggesting two possibilities. One, that home sellers believe home valuations are more “fair” today. Or, two, that fewer home sellers are underwater on their mortgages which makes it easier to sell a property. 

Both possibilities are good for the health of next year’s housing market. With more homes available for sale, buyers and sellers may have an easier time negotiating for price, and values may climb at a more stable overall rate.

Among the other findings of the survey : 47% of Americans believe it’s “easy” to get a mortgage today.


Realtor with Greg Garrett Realty, actively licensed in the state of Virginia

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