Spring will be arriving soon, and homebuyers are expected to come out of hibernation to look for new homes. Those who sleep in too late will be paying top dollar for the house they want.
Lawrence Yun, chief economist for the National Association of Realtors, said that buyers will outnumber sellers this spring, creating a shortage in inventory that will drive up asking prices.
He continued by saying that more people will be pushed to the borderline of conventional limits and may need a huge down payment or mortgage. Jumbo mortgages will have limits higher than conforming loan limits of $417,000 and up to $625,500 in some higher-priced areas.
According to Biz Beat Blog, the nation's median price for a single-family home was $213,800 in January, which is an 8.2 percent increase from a year ago. Price appreciation was at the highest since April 2015 and was part of an upward trend of gains,
Spring will also see lenders having a busy borrowing season. Bob Walters, chief economist of Quicken Loans, said that there was a decade of pent-up demand. Furthermore, he said that with loans volume for purchases at its highest in four months, and low interest rates driving a mini-refinance boom, buyers will seek the best mortgage deals they can find in the market.
On the other hand, borrowers got a surprise when mortgage rates fell this year despite the Federal Reserve's short-term rates increase last December. The Wallstreet Journal shared that the median interest rate for a fixed-rate jumbo mortgage was 3.75% for the week ending March 4.
Spring rates will aldo not go above 4 percent before May, according to Keith Gumbinger, vice president of HSH.com. With a weakened economy, the Fed is not expected to increase short-term rates at its March meeting, with the next opportunity being in June, he adds.