The most recent National Housing Survey from Fannie Mae reveals a slight yet significant decrease in the number of consumers who believe mortgage rates will increase in the next twelve months. Following a record-high 64% last month, the number dropped to 62%.
What makes this dip noteworthy is that it indicates that consumers are rapidly gaining hope for more affordable mortgage rates in 2018. After mortgage rates fell below 4% for the first time in 2017, homebuyers and refinancing homeowners indicated hope that the trend will continue into the next year.
To put things into perspective, Freddie Mac reports that mortgage rates have averaged about 8.25% over the past 45 years, making today’s rates nothing to grumble about as they linger in the low 4’s.
While consumer concerns over mortgage rates decrease, their worries increase about housing availability. Fears are mounting particularly for renters who are getting priced out of their rented spaces.
The latest Fannie Mae survey showed consumers fully anticipate rent increases of 4.0% over the next year. Rising rental prices – along with fees associated with a move into a rental unit – are lowering the relative cost of homeowner ownership every day.
In addition, savvy renters are attracted by the equity they would build as a homeowner versus simply renting. According to Fannie Mae, 53% of consumers think home values will increase this year. In fact, consumers reported they expect values to rise at least 3% over the next twelve months. Still 67% of consumers say they would buy instead of rent, if they had to move today.
That could prove to be a shrewd decision based on where trends are heading. Home sales remain close to their strongest levels in eight years and homes-for sale inventory is in short supply. Moreover, mortgage rates are still at historical lows, and demand is expected to remain strong.