Optimism in the Air: Mortgage Rates Starting to Shows Signs of Growth in 2023

Mortgage rates this week declined 15 bps to 6.33%, according to Freddie Mac

First Community Mortgage (FCM), a Tennessee-based company, is investing in training its sales team on tactics to help grow the business again after reducing its size in the tough mortgage market. However, the current market landscape is helping to drive growth for the company. According to CEO Keith Canter, there is optimism in the air as mortgage applications have started to pick up due to lower rates and more houses becoming available in inventory.

Data from the Mortgage Bankers Association (MBA) supports this, showing that demand for home loans has quickly increased and mortgage rates are now at their lowest level since September 2022. Borrowers are also taking advantage of refinancing opportunities amid lower rates. However, the market is still not “out of the woods” as there is interest rate risk and the demand for housing may not be enough to support current home prices.

Despite the uncertainty, FCM is optimistic about the future and is positioning itself to take advantage of the current market conditions. The company is investing in training its sales team on new tactics to help grow the business again, and is poised to capitalize on the increased demand for home loans. The lower mortgage rates and the increase in available houses in inventory are helping to make home buying more affordable for first-time home buyers, which is expected to drive the market further.

Additionally, the MBA data shows that refinance activity is recovering and borrowers are taking advantage of refinancing opportunities amid lower rates. The refinance share of mortgage activity increased to 31.2% of total applications this week from 30.7% the previous week. This suggests that borrowers are looking to secure better cash flow and may refinance again if rates fall further.

However, the market is not without its challenges. The Federal Reserve may take the pressure off of raising short-term rates, but there is no guarantee that rates will stay at the current level, which creates interest rate risk. Additionally, the demand for housing may not be enough to support current home prices, and builders are slowing down the number of homes they’re building, which adds more pressure to inventory.

In conclusion, while the mortgage market is not yet “out of the woods”, there is certainly optimism in the air as mortgage applications have started to pick up, and more and more houses are building up in inventory. Companies like First Community Mortgage are positioning themselves to take advantage of these conditions, and with interest rates remaining low, the market is expected to continue to grow in the coming months.

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