Whether or not mortgage rates are up, down, or stable often makes for news — especially to potential homebuyers. The real news, though, remains the lack of inventory and the impact that lack of inventory has on home prices.
Whether a home is affordable has little to do with rates, as rates hover in the mid 4’s. The biggest impact continues to be escalating home prices as supply — mostly of homes the typical American family can afford — remains alarmingly low. Builders unwilling or hesitant to put up entry level homes and those 55+ aging in place at ever increasing numbers will continue to impact inventory for what looks more and more like the long term.
In the mortgage industry, there has been a somewhat dramatic increase in the number of mortgage products made available to consumers in an attempt to address the affordability issue that continues to plague the market, even as rates remain relatively low. For the most part nothing in these new product offerings harkens back to the subprime days that caused the housing crash. Regulation and the market itself are not likely to let that happen. But there is only so much these new mortgage products can do to help maintain a reasonably healthy housing market. Relying on creative, safe, financing options to maintain the housing market is putting too many eggs in one basket.
Product mix and relatively low rates will make it seem like everything is OK in the housing market for the near term, but thinking this is also OK long term is like betting all those eggs on the Easter Bunny being real.