Well, it happened. As some have been forecasting a stock market crash, the DOW broke the 20,000 mark on Wednesday, showing continued strength. Whether from the “Trump Bump” or not, things are looking up for the markets.
What does that mean for mortgage rates and mortgage lending? Not all outlooks are so rosy. If rates continue to rise it may push some first-time and repeat buyers out of the market. Rising rates will surely deter refinances as we’ve already seen.
However, fewer buyers may have the effect of stabilizing home prices and, in some areas, have them decline. This, in turn, may aid buyers in home affordability.
So, a drop in home prices may offset the rise in rates. A drop in value, however, may affect an existing homebuyer’s decision to sell, reducing inventory. That again may raise home prices. Around and around we go…
It all depends on how many buyers (demand) and how sellers (supply). If the rise in the DOW is the result of an improving economy everyone should benefit.
Some people will decide to sell and others will decide to buy. It’s the natural order of things. Keep in mind we’ll have new buyers entering the market from the Millennial generation, with Baby Boomers looking for their retirement homes. There will be plenty of opportunity for lending.
All in all, breaking 20,000 isn’t really all that big a deal. It’s like hitting your 30th, 40th, 50th or even your 60th birthday. Just another day in the life and that too passes.
The important thing is what you do to be prepared for whatever comes next.