Much higher mortgage rates will lower mortgage prices in “juicy” markets such as Phoenix and Tucson in Arizona, Boise in northeastern Florida, and Boise in Idaho, but prices will plummet overall. Nothing to do, top economists predicted this week.
Bloomberg reports that Moody’s Chief Economist Mark Zandy predicted that prices wouldn’t fall too low at the Housing Policy Summit in Washington, DC, as there were no mortgage defaults and sales were sluggish. increase.
“That’s when you crash, when you have a lot of foreclosures and a lot of distressed sales,” Zandy said at the event. “It won’t happen.”
Zandy said the mortgage underwriting quality was high, with most of the mortgage underwritings being the lowest ever, reaching historic highs before the financial crisis that led to the catastrophe more than a decade ago. A 30-year or 15-year fixed-rate product of “Plain Vanilla” that states that it has a loan. Therefore, there are no signs of subprime or negative amortization that came before the last foreclosure crisis.
On top of that, the predominance of speculation and reversal is relatively low nationwide, alleviating concerns.
House prices have skyrocketed in the last few years due to low mortgage rates and lack of housing inventories during the COVID-19 blockade. This trend should slow as the Fed tightens its policies and mortgage rates approach 6%. Central banks have raised interest rates over the past few months to reduce inflation, which has reached its highest level in decades.
Mortgage rates on 30-year fixed loans reached 5.81% this week, up from 3.02% the same week a year ago, according to Freddie Mac data reported by the New York Post.
Rising interest rates have already caused a slowdown in the housing market, according to Jacob Channel, senior economist at Lending Tree.
“Few people are taking out mortgages, homes are on the market longer, and some sellers are cutting prices,” Channel said. Told the post..
Still, the price hasn’t been affected yet. According to the National Association of Real Estate Agents, the median home sales price in May was $ 407,600, up 14.8% from a year ago.
[Bloomberg] — — Vince Dimisseri