The current state of banking appears to be full of caution. Two banking CEOs on Wall Street are very bearish, especially with potential of commercial loan losses up to one trillion dollars. Mortgage lending underwriting may get more challenging to homebuyers. What is the bright side? You may see more consolidation, banks being bought, or mergers creating their niches in all banking businesses under their umbrella. The last time we saw this was the collapse of banking in 2008. This time mortgage lending is not the root as subprime loans are no longer available.
The mortgage rates are at highs in the last twenty years. Yet, my buyers have not been disqualified for the higher rates for qualifying purposes. The Fed had intimated that they were pausing any rate hikes for the near future. However, last week economic indicators were released exhibited stronger than expected results drawing attention from the Fed Governors. Comments from them were made insinuating rate hikes could come in their June meeting resulted in mortgage rates increasing by .75% on some programs last week. Imagine strong job growth and low unemployment are working against lower rates-we are living through unprecedented times.
So is this a good time to buy? That’s your decision and many economists are predicting rate cuts within a year which may result in a refinance market. Yet, real estate is still booming with low inventory. Covid has changed many consumer behaviors and bucked many trends. I always believe the environment will improve.
Regards,
John Gouley, Creator