As Rates Continue to Fall, Home Prices Continue to Rise
There’s a direct correlation between mortgage rates and home prices. This is because when the former moves in one direction, the latter is almost always guaranteed to move in the other direction. Interest rates affect how much of a buyer’s median household income can be leveraged to purchase housing. As interest rates fall, buyers can purchase more expensive houses due to lower borrowing costs. The opposite is also true when the rates rise.
With low mortgage rates comes increased buyer activity, and greater demand for housing. This combination results in a seller’s market, which enables sellers to price their homes higher. But falling mortgage rates aren’t the only reason why home prices in the United States are on the rise.
Other Factors Affecting Home Prices
Another factor affecting home prices in the U.S. is consumer buying power, which measures the influence of income and interest rate changes on household spending. Between August and September, consumer buying power increased by 0.2 percent with a year over year increase of 15.8 percent. With more American households having more money to spend, home prices adjust accordingly as a result.
The third factor that affects home prices is the unadjusted house price index. The rise and fall of incomes and mortgage rates inflate or deflate unadjusted house prices to better reflect consumers' purchasing power, and to capture the true cost of housing.
Mortgage Rate Expectations for 2020
According to Freddie Mac, the mortgage rates are currently 3.73 percent for a 30-year fixed-rate mortgage, which is down by 0.89 percent from a year ago. Forecasts from Freddie Mac and the Mortgage Bankers Association suggest mortgage rates through 2020 will continue to hover around 3.7 percent, while Fannie Mae predicts rates will drop even lower, averaging between 3.5 percent and 3.6 percent over the next 12 months.
Take Advantage of Growing Demand – Get Better Mortgage Leads From RGR Marketing
With rates dropping to historically low levels, housing will be in high demand in 2020. Get ready now by purchasing high-quality mortgage leads from a reliable lead provider, like RGR Marketing. We have been helping mortgage companies boost their closing percentages for over 20 years and we can help your business, too.
If you’re looking for an affordable and effective way to keep your sales funnel filled with viable mortgage prospects, then contact RGR Marketing today. We can provide you with exclusive access to high-quality leads that can make a difference in your growth and success.
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