Affordability still present in housing market
Posted on Wednesday, November 20, 2013 at 9:54:58 AM
Nationwide, rising residential financing rates, shifting economic conditions and increasing home prices might indicate that the housing market will suffer.
On the contrary, a recent report by Freddie Mac asserts that the segment will remain generally affordable. The government-sponsored enterprise explained that economic growth will continue into 2014, and mortgage rates near 5 percent will keep homebuying reasonable in most markets.
"With the close of 2013 will also come a major transition in the housing finance industry," said Frank Nothaft, vice president and chief economist for Freddie Mac. "For the first time since 2000, we're going to see the mortgage market dominated by purchase activity as the refinance share drops below 50 percent. And with mortgage rates rising, we're also going to see the home-sales gains as well as the impressive house price growth begin to moderate to more sustainable levels."
Even as residential financing rates rise, they are still historically low. In addition, home value increases are expected to moderate over the coming year.
According to the Mortgage Bankers Association, the total share of refinance activity continues to decline. For the week ending Nov. 15, it accounted for only 64 percent of total activity, down from the previous week's 66 percent.
On the other hand, the MBA reported that the purchase index increased 6 percent on a weekly basis.