Will the hot housing market record loans in year 22? – Orange County Register

Fierce competition, low mortgage rates and soaring prices helped lift mortgage rates to record highs last year, experts say, which is expected to boost lending even even higher this year.

The Mortgage Bankers Association forecasts the dollar value of home loans will rise to a new high of $1.74 trillion this year after lenders estimate $1.61 trillion. dollars last year, up about 9% from 2020, according to the Mortgage Bankers Association. Last year topped $1.51 trillion in loans at the height of the housing bubble in 2005, the highest on records since 1990.

Lenders issued 4.74 million loans to homebuyers last year, down from 4.92 million in 2020, according to MBA. Even so, the dollar value of home loans increased last year as home prices soared, often because homebuyers agreed to pay more than the seller’s asking price to outperform competitive offers. painting.

“Strong housing demand, persistent housing demand, limited supply, rising prices – that’s what led to record buying last year,” said Mike Fratantoni, chief economist at MBA. ,” said Mike Fratantoni, chief economist at the MBA.

The housing market has strengthened during the pandemic as more Americans move to work from home, which has kept additional living space at a premium. Steady job growth, the stock market at an all-time high, rising rents and expectations of higher mortgage rates have also boosted homebuyers, even as home prices soar and home levels rise. Historically low selling has prompted many others to close.

The median US home price in October was nearly 20% higher than a year earlier, according to the most recent S&P CoreLogic Case-Shiller home price index. While inventory for sale may end up slightly better than in 2021 as homebuilders build more homes, it’s still not enough to give buyers an edge, Fratantoni said.

“The year 2022 will still be a seller’s market,” he said. “There is more demand than supply, and that is why we are very confident that prices will continue to rise.”

Meanwhile, homebuyers are likely to have less purchasing power this year to deal with rising home prices.

Ultra-low mortgage rates have helped bolster housing market demand that is expected to continue moving higher into 2022 as the Federal Reserve scraps the monthly bond purchases it has made since from the early days of the pandemic. The central bank has signaled that it expects to start raising interest rates as early as this spring to check surging inflation.

The average rate on 30-year fixed-rate mortgages is set to be stuck at 3% in 2021. MBA forecasts call for that average rate to rise to 4% this year.

This figure is close to the forecasts of other housing economists. The National Association of Realtors forecasts the average rate will rise to 3.7% by the end of the year. Greg McBride, director of financial analysis at Bankrate, forecasts interest rates will peak at 4%, but end the year at 3.5%.

“It’s going to be a bit like a roller coaster ride,” says McBride. “The higher interest rates we expect in 2022 won’t blow the housing market’s sails, but it will dramatically change the refinancing equation.”

Homeowners borrowed about $2.32 trillion in 2021 to refinance their mortgage, down about 12% from 2020, when refinancing hit a record high, according to the MBA. Taken together, mortgage refinancing in 2021 and 2020 amounts to nearly $5 trillion.

MBA forecasts mortgage refinancing will fall to $870 billion this year, the lowest since 2018 at $467 billion.