Soaring Mortgage Rates Sink in with Homebuyers and Sellers
As average 30-year mortgage rates hover around 7%, a recent survey by Fannie Mae reveals a shift in consumer sentiment. Only 35% of respondents now anticipate rate declines in the next year, a sharp decrease from 42% in December. Conversely, those expecting rate increases surged to 32%.
Economists have cautioned against expecting significant rate drops after the Fed's reduced rate-cutting expectations and uncertainty regarding President Trump's economic agenda's impact on inflation and growth. However, consumers remained optimistic for months that rates would fall.
"Consumers are growing pessimistic about affordability, expecting increases in home prices, rent, and mortgage rates," said Kim Betancourt, Fannie Mae's Vice President of Multifamily Economics.
Despite the mortgage rate pessimism, Fannie Mae's Home Purchase Sentiment Index rose slightly, indicating optimism about buying and selling conditions and home prices. The belief in rising home prices rose to 43%, while the expectation of falling prices decreased to 22%.
Concerns about rising rent also increased, with 65% now expecting higher rental costs.
The Home Purchase Sentiment Index is based on Fannie Mae's monthly National Housing Survey of over 1,000 adults.