Judging from the big jump in mortgage applications since the beginning of January, it seems like a lot of people made a New Year’s resolution to buy a new home. Applications for mortgages rose 8.3{459c3f97d3807641e44bb01632b2f91916cef314d016c0f749c2f3d2b32b4e27} during the first week of this year from the previous week, according to the seasonally adjusted Mortgage Bankers Association report.
What’s Fueling the Surge?
According to a report from CNBC, “pent-up demand from the holidays likely fueled the solid jump in mortgage applications.” Once people got out of the holiday mode, interest in buying a new home apparently resurged. Here are a few other reasons why so many more people are applying for mortgages this year:
- Low mortgage rates: Rates continue to remain below levels from a year ago. Buyers may be concerned that rates will not remain this low for much longer.
- Refinancing: Refinancing led the surge in applications, indicating that existing homeowners may also be taking advantage of low rates while they last.
What’s It Mean for You?
Buy Before the Rates Go Up
Most experts predict that mortgage rates will go up at some point this year. Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have hovered around 4{459c3f97d3807641e44bb01632b2f91916cef314d016c0f749c2f3d2b32b4e27}. But groups like the Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors all project that rates will increase by this time next year. If you are thinking about buying a new home, keep in mind that an increase in rates will impact your monthly mortgage payment. The longer you wait, your housing expense will increase if you have a mortgage.
Buy Before Inventory Goes Down
The increase in mortgage applications means there is an increased demand for homes. So, if you’re in the market, the competition for supply of new homes may get tougher as the year goes on.
Buy Before Prices Go Up
An increase in demand for homes typically also means an increase in prices. According to the Case-Shiller Index, prices have been rising about 5{459c3f97d3807641e44bb01632b2f91916cef314d016c0f749c2f3d2b32b4e27} to 6{459c3f97d3807641e44bb01632b2f91916cef314d016c0f749c2f3d2b32b4e27} per year on average over the last two years. Most pundits believe prices will continue to rise. Forbes stated, in a recent article titled 5 Things to Know About the 2018 Housing Market, “While no one can predict the future, we think it’s quite likely that home prices will continue to rise gradually in 2018.” While this is good for the market and good for sellers, it may benefit those who are planning to buy this year to make a move sooner rather than later. As home values and prices continue to rise, it may not be wise to wait to buy.
Act Now
If you’re ready to buy a new home, why not make this your year? We have plenty of homes available right now with nine communities in East Louisville, including a variety of home choices for all types of buyers. Visit our website or one of our Elite Homes’ neighborhoods and take a tour through our models. We would love to talk to you about your needs and desires and help you find the home of your dreams this year!