As the new year approaches, it’s time to look forward and see what 2018 has in store for the mortgage industry. According to Freddie Mac’s economic and housing research report, there are three crucial factors that will drive mortgage markets.
- An Increase in Purchase Mortgage Volume
It may not come as a surprise, but home sales are the highest they have been since 2007. It is predicted that the upcoming year will follow a similar pattern, and that home sales will largely be driven by the increase of single-family home construction. As we head into 2018, we will likely see about a 2 percent increase in total home sales, with an average U.S. house price growth of 4.9 percent.
- Rate Refinance Mortgage Activity Cooling
In the past, homeowners have taken advantage of low mortgage rates by refinancing their existing mortgages. Now, according to Freddie Mac, there is potential for a decline in mortgage refinance volume due to rates moving up. However, even if rates do remain relatively flat this upcoming year, refinance volumes are still likely to decline.
- Increase of Borrowers Tapping into Home Equity
The rise of home prices is also helping current homeowners increase their home equity. Through cash-out-refinance, owners can refinance an existing mortgage to a new one with higher principal balance and receive money back. This means that borrowers could take a second lien through a Home Equity Line of Credit. So far in 2017, homeowner equity has increased to roughly 40% in the first quarter. While prices of homes keep rising, cash-out activity may rise as well.
If you are considering transitioning into the New Year with a purchase or refinance, be sure to stay connected with Axia Home Loans. Our high tech, high touch, high trust approach will leave you more confident and informed throughout the homebuying experience.
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