Housing Demand Strong Despite Highest Mortgage Rates

This article covers Housing Demand Strong Despite Highest Mortgage Rates

Home sales throughout the United States remain strong due to a combination of factors. Rumors of higher mortgage rates in the second half of 2021 have not slowed down demand for homes. The reduction of the FHA annual mortgage insurance premium has made FHA Loans more popular than ever. The comeback of the 3% down payment conventional mortgage loan program for first-time homebuyers has made more home buyers inquiring about conventional loans. Mortgage rates have been increasing and are now at the highest rate since the 2008 Great Recession. The economy under the Trump Administration has sparked unemployment at its lowest level in decades.

Will Home Prices Continue On Increasing?

Both HUD and FHFA has increased FHA Loan Limits and Conforming Loan Limits due to rising home prices:

  • Rates have been increasing for the past 7 consecutive weeks
  • All factors in creating a strong housing market with no signs of a slow down
  • Housing prices hit a 22 month high despite rumors of higher mortgage rates
  • Even the Federal Reserve Board announced they will be increasing mortgage rates again this year
  • This is not the first time that the Federal Reserve Board has been announcing that they will be increasing mortgage rates
  • Economists and industry experts do not feel that this is the right time to increase mortgage rates
  • This is because the economy still has a long way to go
  • Unemployment numbers may be low
  • However, many in the workforce has given up looking for work

Housing Demand Strong Despite Highest Mortgage Rates And Prices Increasing Due To Low Inventory

Good deals are becoming harder to find for home buyers. Housing Demand Strong Despite Highest Mortgage Rates nationwide:

  • Many homes are selling once it hits the market
  • Winter being around the corner, signs show that we will have a hot winter market
  • All signs show a shortage in housing inventory
  • With rising mortgage rates and mortgage rates being at a 22 month high there are no signs of any housing price correction
  • Consumers do not need a real estate expert to tell them where home prices are going
  • Housing demand keeps on outpacing the supply of homes
  • Values throughout the country are increasing
  • Many homes are experiencing bidding wars, especially in Kentucky, Mississippi, New Jersey, Michigan, Colorado, Ohio, Georgia, Pennsylvania, California, Florida, Illinois, Indiana, and Texas.

Housing Demand Strong Causing GSE To Increase Loan Limits

Does strong housing demand increase GSE loan limits?

Housing Demand Strong Despite Highest Mortgage Rates can definitely cause a strong housing market. The Housing Demand Strong will also cause higher home prices. Besides high mortgage rates and rates being at 22 months high, lenders are offering low down payments on home purchases and no closing costs through a lender credit. The comeback of the 3% down payment conventional loan on a home purchase for first-time homebuyers has been a hit. Hundreds of thousands of first-time homebuyers are inquiring about the 3% down payment home purchase program with no closing costs on conventional loans.

FHA Loans For Home Buyers With Low And Bad Credit

FHA loans require a minimum credit score of 580 FICO:

  • Homebuyers with prior bad credit, prior bankruptcy, prior foreclosure, prior deed in lieu of foreclosure, and prior short sale can qualify for home loans
  • Homebuyers with bad credit can now have the opportunity to become homeowners again
  • FHA is promoting homeownership by making home buyers with lenient mortgage guidelines
  • Those who did not qualify due to high debt to income ratios can now qualify with adding non-occupant co-borrowers
  • HUD, the parent of FHA, is also allowing for home buyers with no down payment to be able to get 100% of their down payment gifted by family members
  • HUD also has reduced the FHA annual mortgage insurance premium from 1.35% to 0.85%
  • This is a 0.50% reduction
  • That is a lot more buying power for a home buyer

3% Down Payment Conventional Loan Program

What are the benefits of a conventional loan program of 3% down payment

First-time home buyers or homebuyers who have not owned a home for at least three years with credit scores of 620 FICO or higher can now qualify for a conventional loan with only a 3% down payment. Fannie Mae and Freddie Mac brought back the 3% down payment conventional loan program after it discontinued it in 2014 to promote homeownership. Many renters are now considering becoming homeowners due to the low down payment requirements. Most buyers do not have any closing costs due to the seller’s concessions. If buyers are short on seller’s concessions to cover closing costs, homebuyers can get lender credit in lieu of a higher mortgage rate.

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