sunny.png
Thursday January 27th, 2022 11:59AM

Red-hot housing market to fuel record borrowing in '22

By The Associated Press

LOS ANGELES (AP) — The fierce competition, low mortgage rates and soaring prices that helped raise mortgage borrowing to record heights last year is expected to drive lending even higher this year, experts say.

Banks lent an estimated $1.61 trillion for home purchases last year, up about 9% from 2020, according to the Mortgage Bankers Association. That tops the $1.51 trillion lent at the peak of the housing bubble in 2005, the highest on records going back to 1990.

Lenders issued 4.74 million loans to borrowers buying a home last year, down from 4.92 million in 2020, according to the MBA. Even so, the dollar value of for-purchase loans increased last year as home prices surged, often as homebuyers agreed to pay well above a seller’s asking price to outbid competing offers.

“Strong housing demand, persistent increase in housing demand, constrained supply, increase in prices — that’s what led to that record purchase level last year,” said Mike Fratantoni, the MBA’s chief economist.

The housing market has strengthened during the pandemic as many Americans transitioned to working at home, which put additional living space at a premium. Steady job growth, a stock market at all-time highs, rising rents and expectations of higher mortgage rates have also spurred homebuyers, even as skyrocketing prices and a historically low level of homes for sale have shut out many others.

Median U.S. home prices in October were nearly 20% higher than a year earlier, according to the most recent S&P CoreLogic Case-Shiller home price index.

The housing market is expected to continue to sizzle this year, which is why the MBA projects that the dollar value of for-purchase home loans will climb to a new high of $1.74 trillion.

While the for-sale inventory may end up being a little better than in 2021 as homebuilders crank out more homes, it still won’t be enough to give the upper hand to buyers, Fratantoni said.

“2022 is still going to be a seller’s market,” he said. “There’s more demand than supply, and that’s why we’re very confident that prices are going to keep going up.”

Meanwhile, homebuyers are likely going to have less buying power this year to cope with rising home prices.

The extraordinarily low mortgage rates that have helped intensify housing market demand are expected to continue creeping higher in 2022 as the Federal Reserve phases out the monthly bond purchases it has been making since the early days of the pandemic. The central bank has already signaled that it expects to start raising interest rates as early as this spring to check sharply rising inflation.

The average rate on the benchmark 30-year fixed-rate mortgage stuck around 3% in 2021. The MBA’s forecast calls for that average rate to rise to 4% this year.

That’s close to other housing economists’ forecasts. The National Association of Realtors projects the average rate will rise to 3.7% by the end of this year. Greg McBride, chief financial analyst at Bankrate, forecasts rates will peak at 4%, but end the year at 3.5%.

“It will be a bit of a roller coaster ride,” McBride said. “The higher rates we expect in 2022 won’t take the winds out of the sails of the housing market, but it will change the refinancing equation significantly.”

Homeowners borrowed some $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 amounted to nearly $5 trillion.

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

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Industries, AP Business - Financial Services, AP Business - Personal Finance, AP Business - Real Estate
© Copyright 2022 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Stocks wobble as traders weigh outlook for rates, inflation
Stocks are wobbling in morning trading on Wall Street Thursday as investors consider the outlook for rising interest rates and inflation
10:42AM ( 20 minutes ago )
A year after Jan. 6, Congress more deeply divided than ever
A year after the Jan. 6 attack, Congress is more deeply divided than ever, and it shows in how lawmakers are choosing to mark the day
10:30AM ( 31 minutes ago )
Cause undetermined in Philadelphia house fire that killed 12
Investigators are working to determine the cause of a fire that tore through a Philadelphia rowhome, killing 12 people, including two sisters and several of their children
10:24AM ( 37 minutes ago )
Associated Press (AP)
Portugal adds virus booster jab incentives, cuts isolation
Portugal’s government has announced new incentives for people to get COVID-19 booster shots
10:11AM ( 50 minutes ago )
US service industry grows more slowly in December
Growth in the U.S. service industry, where most Americans work, pulled back in December after expanding at a record pace the previous two months
10:08AM ( 53 minutes ago )
Dozens of protesters, 12 police dead in Kazakhstan protests
Authorities say security forces have killed dozens of protesters and 12 police have died during extraordinarily violent demonstrations in Kazakhstan
9:46AM ( 1 hour ago )
AP Business
Global stocks tumble after Fed signals faster rate hikes
Global stocks and Wall Street futures have tumbled after investors saw minutes from a Federal Reserve meeting as a sign the U.S. central bank might hike interest rates faster to cool inflation
4:05AM ( 6 hours ago )
Asian stocks follow Wall St lower after Fed rates signal
Asian stock markets have followed Wall Street lower after investors saw minutes from a Federal Reserve meeting as a sign the U.S. central bank might hike interest rates faster to cool inflation
11:33PM ( 11 hours ago )
Anticipation that Fed will raise rates sends stocks lower
Stocks closed lower on Wall Street Wednesday after minutes from the Federal Reserve’s last meeting raised expectations that the central bank will move faster to raise interest rates to fight inflation
4:55PM ( 18 hours ago )
AP Business - Economy
Scholz's party wants vaccine mandate decision this quarter
Germany’s biggest governing party says it aims for a final decision by the end of March on the introduction of a universal vaccine mandate against COVID-19
7:34AM ( 3 hours ago )
EXPLAINER: What's behind unrest rocking oil-rich Kazakhstan
Kazakhstan is experiencing the fiercest street protests since the oil-rich Central Asian nation gained independence three decades ago
7:20AM ( 3 hours ago )
Xi'an hospital punished for refusing entry to pregnant woman
Hospital officials in the northern Chinese city of Xi'an have been punished after a pregnant woman miscarried after being refused entry, reportedly for not having current COVID-19 test results
6:26AM ( 4 hours ago )
AP Business - Industries
AP Business - Financial Services
Chinese developer asking bondholders to postpone repayment
A troubled Chinese real estate developer with $310 billion of debt is asking investors in one of its bonds to postpone when they will be repaid
4:29AM ( 1 day ago )
AP Business - Personal Finance
AP Business - Real Estate
Stocks wobble as traders weigh outlook for rates, inflation
Stocks are wobbling in morning trading on Wall Street Thursday as investors consider the outlook for rising interest rates and inflation
10:42AM ( 20 minutes ago )
A year after Jan. 6, Congress more deeply divided than ever
A year after the Jan. 6 attack, Congress is more deeply divided than ever, and it shows in how lawmakers are choosing to mark the day
10:30AM ( 31 minutes ago )
Cause undetermined in Philadelphia house fire that killed 12
Investigators are working to determine the cause of a fire that tore through a Philadelphia rowhome, killing 12 people, including two sisters and several of their children
10:24AM ( 37 minutes ago )
Djokovic in limbo as he fights deportation from Australia
Locked in a dispute over his COVID-19 vaccination status, Novak Djokovic is confined to an immigration detention hotel in Australia as he awaits a ruling on whether can compete in the Australian Open later this month
10:23AM ( 39 minutes ago )
A weak quarter at Bed Bath & Beyond, and shares soar
Bed Bath & Beyond’s fiscal third-quarter loss widened, with the home goods retailer saying supply chain issues are continuing to squeeze its business
10:22AM ( 40 minutes ago )