NerdWallet’s Holden Lewis on the latest mortgage rates

Victoria Jones: Hello, HousingWire listeners. Today, I’m joined by NerdWallet Home and Mortgage Expert Holden Lewis. Listeners today, Holden will be speaking to us today about the latest mortgage rate numbers. Holden, thanks for joining us today.

Holden Lewis: Hey, thank you.

Victoria Jones: Yeah, absolutely. Well, I’d like to get started by discussing the most recent mortgage rates in the week ending on June 3rd, 2021. Freddie Mac claims the average U.S. mortgage rate was 4 basis points to an average of 2.99% after sitting at 2.95% the week prior. In your perspective, how has fluctuating mortgage rates impacted potential home buyers at this time?

Holden Lewis: You know, they just haven’t really been fluctuating very much. I mean, they’ve been pretty steady since about the middle of April, the 30-year fixed to spin in a small range of like one 8-point range, so fairly stable. And for homeowners, that’s good news. You know, they’ve been stressed by rapidly rising house prices, and if rates have been moving up or down a whole lot, that’s just another variable they would have had to consider. So, you know, it’s kind of a blessing that rates have been steady. I mean, if they’ve been falling, you can imagine kind of getting to mind space of a homebuyer, like if rates are falling and prices are rising really fast, then you get into this thing like, “Oh, well, should I wait two weeks? Should I wait a month?” And, of course, if rates have been rising a lot, then they would have been just freaking out and buying even more homes. So, you know what I’m saying? You know, it’s been a pretty good thing for buyers.

Victoria Jones: All right. Well, let’s dive a little deeper on the current state of the housing market and talk about home prices. The latest S&P CoreLogic Case-Shiller Home Price Index report show the 12% annual gain in February which was up 11.2% in January. With historically low mortgage rates and an increase in home buyer demand, can we expect to see home prices continue going climbing going forward?

Holden Lewis: Yes, and I expect home prices to keep rising indefinitely. I mean, I think home prices would still be going up pretty strongly even if mortgage rates were rising which, you know, they’re just really not doing much of. And that’s because the demand is just so much higher than the supply. And, you know, that demand is gonna remain strong because there is this boom of people born, like 30 to 35, 37 years ago and they’re entering that kind of prime age to buy your first home. So it’s just gonna take a long time for enough homes to be built to accommodate all the people who want to own one. And meanwhile, you know, it seems like we’ve had back-to-back economic crises. You know, we had the Great Recession, we had the COVID recession and, you know, unfortunately, for people who want to own homes, landlords are often in a position to take advantage of those recessions and so, you know, they buy homes. So what you end up with is a lot of people who are renting who would prefer to own, but landlords aren’t selling among that kind of limited supply of houses. So, you know, there’s a lot of people who are unwillingly renting.

Victoria Jones: True and, well, although low mortgage rates had been a contributing factor to the incredibly hot housing market that we’ve seen over this last year, you know, I’d like to know what your thoughts are on what opportunities and obstacles there have been for homebuyers in this year’s housing market.

Holden Lewis: As far as opportunities, there really hasn’t been. I mean, even with the low mortgage rates, there’s just not enough houses for sale. I mean, it’s just super frustrating for buyers just having to compete, so, you know, that’s also the main obstacle, just not enough homes for sale. You’ve got competitive bidding, sellers who like to accept cash offers, you have that pressure to wave inspection, and financing, and appraisal contingencies, just a lot more obstacles than opportunities for homebuyers, unfortunately.

Victoria Jones: All right. Well, looking at the month ahead, should we anticipate seeing mortgage rates rise or continue to fall?

Holden Lewis: I think that mortgage rates are gonna rise in June, especially in the second half of the month. The Federal Reserve Monetary Policy Committee is meeting June 15th and 16th and I expect them this time to say in their statement, but even more so in the news conference afterward, to start talking about talking about making plans to taper the purchases of mortgage bonds and treasuries. And, you know, even though that is fully expected, even though they’ve actually started kind of talking about talking about it in May, I think as that time draws more near, it starts to look more certain, the timing starts to look a little bit more firm, we’re gonna see upward pressure on mortgage bond yields and therefore, mortgage rates. Don’t expect a ton of increase in this month but a little bit.

Victoria Jones: Okay. Well, we’ll definitely be keeping an eye on that but lastly before we go, is there anything else that you’d like to add today or anything else our listeners should know?

Holden Lewis: You know, I think that there’s an opportunity in these streamlined refinance programs for the lower-income borrowers. You know, FHFA says that there are 2 million lower-income homeowners who didn’t refinance, you know, even though they could have in the last year. And so, you know, you have this Fannie Mae RefiNow that I think is starting Saturday and Refi Possible from Freddie that starts in August. And, you know, among other things, those are going to subsidize appraisal costs for refinances. And we’re talking about people who make 80% or less than the area median income. So, you know, refinances are kind of dying down because most people who’ve been able to refi have done it. You know, there’s a low inventory of homes for sale so now, there’s a lot of competition to find borrowers, you know, to buy homes. So I think that these programs might be worthwhile for both the lenders and the refinancing homeowners because hey, you know, this is just kind of a new market that you can tap into, people who now can afford to refinance because they’re having those appraisal costs subsidized.

Victoria Jones: All right. Well, a lot of great insight here today, Holden. We appreciate your time and thanks for joining us on “HousingWire Daily” today.

Holden Lewis: Hey, thank you.

Victoria Jones: Absolutely.