The mortgage market has changed. Back in April we were enjoying historically low interest rates and many mortgage companies were leaning on the easy picking of re-financing loans to make money. Then May 3rd came and the unemployment rate dropped to 7.5, which is still overwhelmingly high, but it is at it's lowest since 12/08. The market reacted to this news coupled with the idea that the FED would begin tapering off the purchasing of MBS and rates began to climb, and climb and climb. Rates have stayed higher than they have been in over a year. This has all but dried up the refinance market and lenders now must find a way to make up for the lost loans. The easiest answer is probably to loosen the lender overlays that sit on top of the FNMA guidelines to allow more people to qualify for mortgages. Another step is to start participating in more programs, the more options that you have for people the more likely you are to get business right? We can see an example of this in the company I work for. Freedom mortgage has recently announced that they are lowering the minimum Credit Score requirements on FHA and VA loans, and also has started to participate in the manufactured housing program through FHA.
What does this mean for you?
What this means is that more people are going to be able to qualify for mortgages, which will create a higher demand for the already limited inventory that is out there, which means that after several years of being a buyers market the housing market is rapidly changing to a sellers market, this will lead to further increasing in home prices, which will ultimately lead to more people trying to sell their houses, once the values of the homes catch up to the remaining balance on their mortgages.
The bottom line is that now is likely to be the best time to purchase a new house for the foreseeable future, especially if you are in the situation where previously tight underwriting guidelines left you unable to obtain a mortgage.
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