According to Freddie Mac, the average 30-year mortgage rate is around 4.67%, the highest since 2018. The anticipation that the Federal Reserve will continue to hike interest rates is the main reason for the increase.
According to a February 2022 Fannie Mae survey, 70% of consumers believe now is the wrong time to buy a home. Only 43% of respondents believe home values will rise in the coming year, while 58% believe mortgage rates will increase.
Despite the market’s recent weakening, price rises and bidding wars continue to rage across the United States. And, whatever cooling comes next year, the industry consensus is that it will slow, but not stop, the ongoing rise in property prices.
An increase in property prices generates a fear-of-missing-out surge of enthusiasm among new investors and more aggressive speculation among existing investors.The “fear of missing out” (FOMO) drives the stock market to heights.
If lenders relax underwriting standards, higher-risk mortgages can create a housing catastrophe. Lending restrictions can be given in bulk to home buyers who cannot afford homes or for home sales when the houses have higher prices than their market value.