More Consumers Expect Higher Mortgage Rates, Fannie Mae Says

More Consumers Expect Higher Mortgage Rates, Fannie Mae SaysWith average mortgage rates spiking in recent weeks, more consumers expect higher rates for the rest of the year, but they also see home prices staying strong, according to Fannie Mae’s latest housing survey released Monday.
“Potential homebuyers may enter the purchase market sooner rather than later” as respondents who say mortgage rates will go up during the next 12 months jumped 11 percentage points to 57 percent in June, the highest level in the survey’s three-year history, Fannie Mae said.
However, the share of respondents who believe home prices will go up in the next year also hit a survey high of 57 percent, while those who say prices will go down stayed steady at 7 percent.
Although the outlook on current home buying and selling retreated slightly, it remains near the survey highs of last month, with 72 percent saying it is a good time to buy and 36 percent saying it is a good time to sell.
“The spike in mortgage rate expectations this month seems to have had an impact on a number of the survey’s indicators and may increase housing activity in the near term by driving urgency to buy,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
Consumers realize that today’s favorable mortgage rates and homeownership affordability will recede over time, Duncan said.
“Given rising home and rental price expectations and improving personal financial attitudes, more prospective homebuyers may be deciding that now is the time to get off the fence,” Duncan said.
Among those surveyed, 56 percent say rental prices will go up during the next year – an 8 percentage point increase and the highest level since the survey’s inception.
Americans’ outlook on their personal finances also increased significantly in June. The share who expect their personal financial situation to improve during the next year climbed to 46 percent, the highest level since June 2010. The share who say their household income is significantly higher than it was 12 months ago jumped 6 percentage points to a survey high 26 percent.

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