With mortgage rates holding steady near three-year lows for several weeks, some observers began suggesting that there could be a surge in mortgage lending industry driven by a combination of new buyers finding homeownership to be more affordable and homeowners refinancing their existing mortgages.
And while recent data suggests refinances are rising as expected, could low interest rates not be the cure-all that many believed they would be for a mortgage market that was expecting a down year?
One observer certainly thinks so.
In a report published this week, Fitch Ratings suggests that the current low rate environment will not be enough to “meaningfully spur” housing market activity for the rest of this year.
Why? Well, Fitch suggests there are three reasons: One, not enough new homes being built to satisfy first-time homebuyers and others who want a new home; two, lenders may be unable to properly handle the increase in refinances due to cutbacks made in anticipation of 2019 being a lackluster year; and three, the likelihood that many borrowers already refinanced a few years ago when rates were previously as low as they are now.
As for things on the home sales front, Fitch said that it is now projecting housing starts to rise by 1% in 2019, with new home sales expected to increase by more than 2% over last year.
Existing home sales, on the other hand, are expected to “decline modestly” this year, due in part to a lack of inventory, particularly…