The housing market is currently a topic of great interest and discussion, with Allstate’s shares seeing a 4% increase. It’s a pivotal time for potential homebuyers as high-interest rates are making their presence felt in the real estate landscape. The Philadelphia Fed President recently highlighted how elevated interest rates are impacting the housing market. These higher rates are leading to increased costs and limited inventory, resulting in higher home prices and posing challenges for first-time homebuyers. With the average mortgage rate hovering around 7.57%, according to Freddie Mac, it’s at its highest since late 2000 for a 30-year fixed mortgage.
In this article, we’ll investigate the ongoing real estate market elements and talk with industry specialists about the possible effect of these circumstances on imminent homebuyers.
Interview with the Chairman and CEO of UWM
We had the opportunity to speak with the Chairman and CEO of United Wholesale Mortgage (UWM), who also owns the Phoenix Suns and Mercury. He shared valuable insights into the current housing market situation.
Q: Given the high mortgage rates and low inventory, what’s your take on the current state of the housing market?
A: “It’s fascinating to see this multitude of variables meet up. In any case, it’s vital to take note of that individuals are as yet purchasing houses. While costs stay high, there’s no lack of homes ready to move, and many individuals are exploiting what is going on. First-time homebuyers are understanding that trusting that rates will descend or for more stock could prompt much greater costs. This moment is an incredible opportunity to purchase a house. You can secure in your rate, despite the fact that they’re higher than previously. Rates might not be at 3%, but at 7.25%, you can still find the right deal for you. In fact, many young people are actively buying homes.”
Q: It’s interesting to hear your perspective, as last month, mortgage brokers’ associations reported the lowest mortgage demand since 1996. Do you see a different trend?
A: “Definitely, it’s not as bleak as 1996. We had a great second quarter, which was an all-time high for purchases. The third quarter was also strong. It’s not the same as the boom we saw in 2020 and 2021, but people are indeed buying houses, and the demand for mortgages remains significant. While it may slow down a bit in the fourth and first quarters, it’s not as if there’s nothing happening in the market. People might be overstating the situation.”
Q: Traditional lenders and banks have been tightening credit standards. How has this affected your business?
A: “Credit standards are something that doesn’t necessarily benefit us. Contracts are an interesting piece of the monetary scene; individuals need contracts, regardless of whether they essentially need them. Our emphasis is on making the cycle quicker, more straightforward, and less expensive. We work in home loans, and that is the thing we’re focused on. We have a devoted group of 7000 individuals dealing with making the home loan process more productive and shopper cordial.”
Q: The Federal Reserve has been signaling a prolonged period of higher interest rates. How do you foresee this impacting the housing market, especially if inflation decreases in the coming year?
A: “I have a different perspective. I believe that by the next year’s election, rates will drop. This depends on significant information and exploration. Notwithstanding, regardless of whether rates stay high for a lengthy period, individuals will keep on purchasing houses. The silver lining is that when rates in the end drop, individuals who bought homes during this high-rate period will have a valuable chance to renegotiate and set aside more cash. This can decidedly affect the economy. There are numerous positive improvements in the real estate market, notwithstanding the underlying worries of a real estate decline.”
The housing market is facing the challenges of high-interest rates and limited inventory. Despite these hurdles, many potential homebuyers are seizing the opportunity to invest in real estate, locking in their rates before they potentially drop. The housing market is dynamic, and the expertise of mortgage specialists like UWM is crucial in ensuring the process remains fast, easy, and cost-effective for consumers. Regardless of the interest rate scenario, the housing market continues to show resilience and promise for those looking to own their piece of the American dream.