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Survey: Americans Expect Mortgage Rates Will Stay Low

Doug Whiteman
Survey: Americans Expect Mortgage Rates Will Stay Low

December could be a merry month for the housing market, because large percentages of Americans say now is a good time to buy a home and that mortgage rates are likely to stay at their current low levels or maybe go even lower, according to a new survey.

The country's mood when it comes to housing is close to an all-time high, says mortgage company Fannie Mae. Its monthly Home Purchase Sentiment Index, released Monday, is close to the record level seen in August.

To gauge how Americans feel about homebuying, Fannie Mae asks consumers: if they think it's good time to buy or sell; where they think home prices and mortgage rates are heading; whether they're concerned about their jobs; and how they feel about their household income.

A great time to buy — or sell

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Homebuyers talking with a real estate agent.

More than 6 in 10 Americans (61%) say if you want to buy a home, this is the right time. On the flip side, fewer than 3 out of 10 (29%) say the current market is a poor one for homebuyers.

Consumers also say — by 66% to 26% — that it's a good time, not a bad time, if you want to sell a house.

Americans are responding to "low inflation, low interest rates, low unemployment, rising wages, job security, stock market highs and strong consumer confidence and spending," says Corey Burr, senior vice president with Sotheby's International Realty in Chevy Chase, Maryland.

"Couple this with younger buyers wanting to form households and real estate price appreciation since the meltdown in 2008 to 2012, and now is an ideal time to either buy or sell real estate," Burr says.

Feeling good about mortgage rates

Andrii Yalanskyi / Shutterstock
Mortgage rates have been going down in 2019.

Mortgage rates have been exceptionally low this fall, and most consumers expect rates will stay down over the next year.

Fannie Mae says 44% believe mortgage rates will remain the same, and 11% think they'll go lower still. Just 39% say rates are likely to climb during the next 12 months.

"Over the past year, a growing share of consumers say that they expect mortgage rates to remain steady," says Doug Duncan, Fannie Mae's chief economist, in a statement.

Earlier this fall, rates were the lowest since just before the election in 2016. Current mortgage rates are more than a full percentage point below where they were last year at this time and are the best for December in seven years, MoneyWise.com found.

The Federal Reserve has helped, by cutting interest rates three times during the second half of this year. Fed policymakers meet this week but are expected to maintain the status quo.

Check out today's best mortgage rates where you live.

Many expect home prices will rise

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Home prices have been climbing because of a lack of homes for sale.

Home prices have been going up and have even set records in some markets, including Phoenix and Salt Lake City. The share of Americans who believe housing prices are headed even higher increased in November to 44%, from 41% a month earlier, Fannie Mae says.

Another 40% say prices will stay the same, while only 10% think they'll go down.

Prices are going up because in many parts of the U.S. there aren't enough homes on the market, particularly not for first-time buyers.

"That lean supply means the recent mortgage rate decline — holding payment size constant — allows borrowers to increase bid prices for homes," says Duncan. "As a result, home prices are propelled higher, mitigating the benefit of lower borrowing costs for many borrowers."

Upbeat about jobs, OK with incomes

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Americans feel confident about keeping their jobs.

In the survey, an overwhelming 86% of Americans say they're not worried about losing their jobs in the next 12 months. Just 14% say they are concerned about being laid off.

Fannie Mae's report comes days after the government reported that the U.S. job market crushed it in November. Employers added 266,000 new jobs during the month, way above analysts' expectations.

The nation's unemployment rate slipped back from 3.6% to 3.5% — and tied a 50-year low.

The last part of the survey finds most Americans (60%) say their household incomes haven't changed over the last year. More than a quarter (28%) say what they're earning is now "significantly higher," while only 1 in 10 say it's much lower than it was in the fall of 2018.

Taken together, all of the results spell good things for the nation's homebuying market, Duncan says

"Looking ahead, we continue to expect a steady but modest pace of growth in home purchase activity," he says.

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