This week saw mortgage rates drop more than they have in any other one week period in the last ten years.
The timing couldn’t be better, as we also saw the official start of spring and the unofficial start of the home buying season — especially in those areas of the country where winter plays a role. Home sales had already seen an increase in activity as a multi-week trend in declining rates had already intrigued some potential homebuyers. This latest drop can only mean even more homebuyers jumping into the market.
That is a good thing for the mortgage industry and housing — at least in the short term. We will certainly take what we can get. But after the “woohoo’s” and warm summer sun start to fade, we could have another housing market reprieve — manufactured by the Federal Reserve and some not-so-great economic indicators — in which lower rates will make homes more affordable, bringing buyers to the market. Which will inevitably make for some competition for available inventory, pushing home prices higher, eliminating any benefit lower rates might bring to potential homebuyers.
Now that is something we have seen in the past ten years.
And while those “woohoo’s” may echo for a while and that warmth lower rates may bring could last though the change of seasons into 2020, both will fade away.
To paraphrase 70’s rockers Bachman Turner Overdrive, for 2019 we’ll take what we can get. Yes, we’ll take what we can get. But unless something changes that brings long term sustainability to the housing and mortgage markets, we are likely staring into big brown eyes telling us we “ain’t seen nothing yet!” And chances are we won’t like it.