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3 Trends Driving the Mortgage Market

Many things affect the mortgage market, which creates regular fluctuation. It’s hard to predict exact future trends or when the market will be best for buying, selling or refinancing–but one thing that you can do to be aware of market fluctuation and better predict when the time is right to start your projects is to monitor three trends.

There will be, they say, three trends driving the 2018 mortgage market:

  1. an increase in purchase mortgage volume
  2. cooling of rate refinance activity, and
  3. more borrowers tapping their home equity.

With moderate economic growth of about two percent, solid job gains, and low mortgage interest rates it is expected that the economic environment will remain favorable for housing and mortgage markets through the next year.

Monitoring near-term forecasts of key national housing and economic indicators are important in identifying potential changes in the economy and mortgage market trends. These indicators include:

  1. Fannie Mae
  2. Freddie Mac
  3. Mortgage Bankers Association (MBA)

Employment continues to rise slowly, which likely results in increased disposable income. Positive contributions than made to gross domestic product (GDP) by personal consumption expenditures because of this, and nonresidential fixed investment, exports, federal government spending and private inventory investment are also positively affected.

Forecasters also project consumer price increases to remain near 2% on an annual basis over the next couple years, indicating inflation will continue to be held in check. The Personal Consumption Expenditures Price Index has remained low, not hitting the Federal Reserve Board’s 2% annual target in recent years.

The Fed has said it will continue to monitor inflation, hoping for stabilization around their 2% long run objective. This measure could influence when they decide to raise rates.

How does this affect home buyers in California and the Rancho Cucamonga area? Since the recession California has seen home prices rise an astounding 70%, which is nearly 40% above the national average when looking at the last five years of market trends.

This prolonged rise in housing prices raises the question, especially for Californians or those seeking to move to California, “Can I afford to buy a house?”

press has given much attention recently to affordability concerns. How far have prices risen in California exactly? One measurement of house prices, the Federal Housing Finance Agency’s (“FHFA”) House Price Index (“HPI”), is a repeat-sales index that measures average price changes in repeat sales or refinancing on the same properties. This index can be used to measure the direction toward which single-family home prices are trending.

In looking at the FHFA’s seasonally adjusted HPI1, California held an index value of 155 in the first quarter of 2012. (The base quarter for the index is first quarter 1991, assigned a value of 100.) This index has risen all the way to 263 as of second quarter 2017.

Although there are many things that affect the mortgage market fluctuation, and over mortgage trends, you now know what aspects are taken into account and how they affect pricing, and interest rates. To dial down into specifics of your area reach out to a mortgage professional at Choice Lending Corp office at 877-777-1203.

Get prequalified today!

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