A whopping 64% of consumers reported to the current Fannie Mae Monthly Housing Survey that interest rates on mortgages will rise in the next 12 months. This response, a record high compared with any consumer response to any question by a Fannie Mae Monthly Housing Survey, underlines two realities…One, the vast reach and influence of the 24-hour news cycle and two, how dialed in consumers are to any financial news that may impact their personal lives and financial choices.
Janet Yellen, the chair of the Federal Reserve (the entity that sets interest rates on a quarterly basis for, essentially, the cost of borrowing money) has the name recognition of a rock star in today’s 24-hour news cycle world. Some news and business sites such as NPR radio’s nationally syndicated Market Place, have dedicated sections of their programming called “What is Janet Yellen Thinking?” And Yellen has been clear in her public remarks that she foresees two, if not, three additional hikes to interest rates both this year and next. Consumers hear what Yellen says and they pay attention. No wonder 64% of consumers anticipate that interest rates on mortgages will rise in the next 12 months.
While no one has a crystal ball concerning the trajectory of interest rates, what is most clear is that mortgage rates continue to be a value for today’s mortgage shopper. Currently standing at half their historical average of 8%, good rates are available and deserve attention from consumers who are considering home ownership.
Consumers considering home ownership may also want to explore options that can reduce upfront home buying costs as spelled out in this recent Fannie Mae Housing Survey. Zero-down payment loans are available from USDA lenders, the VA (offers some of the lowest interest rates of any loan product), and FHA lenders IF the borrowers meets certain income requirements. (The consumer MUST check to know the specifics of each lender’s terms!)
Additionally, there are options for the consumer to research that may reduce upfront home buying closing costs such as lender credit, seller credit and a gift from family. Both downpayment options and closing costs options could be instrumental in defining the consumer as a future homeowner.