If you watch the markets, you’ve noticed that global stocks have not been doing so hot. You might have also seen articles saying that they will negatively affect our housing market. However, MarketWatch recently summarized why Americans should not panic:
- Mortgage rates in the US will stay low.
The Federal Reserve raised interest rates for the first time in 10 years this past December. But that hike won’t affect mortgage rates as extremely as some originally thought.
“It would take a lot more than the volatility we’re seeing now for them to get knocked off the current course of raising rates, but will they slow down [coming rate hikes]? Probably,” says Kevin Finkel, senior vice president of Resource America Inc., a real estate investment trust in Philadelphia.
2. There’s more help available for first-time buyers.
Last year, the Federal Housing Administration reduced mortgage insurance premiums on loans. Now, the average is $900 per year.
FHA’s efforts, as well as others like Freddie Mac and Fannie Mae’s 3 percent downpayment loans, may help boost the new-mortgage market this year by up to 10 percent over last year, despite the rise in mortgage rates, says Mike Fratantoni, the chief economist for the Mortgage Bankers Association.
3. Job Growth is Strong
The United States has seen steady job growth over the last five years. Once tallied, 2015 is expected to have been the second best year of the millennium.
“The economy continues to create jobs, and the quality of jobs being created has improved as the economic recovery has progressed, with professional and business services leading the way,” says Greg McBride, chief financial analyst for Bankrate.com. “This is indicative of an economic recovery that is sustainable. … If wage growth materializes in a broader way, this will be the catalyst for many existing homeowners to put their homes on the market and finally look for the move-up buy, boosting housing and alleviating the inventory shortage.”
In summary, just because global stocks are struggling does not mean other parts of the economy are doomed! If you are about to sell your home or looking into buying, don’t panic. The housing market is still doing well. With any more questions, contact RE/MAX Paradise!