A recent survey indicates that a majority of Americans do not expect to see any significant changes to mortgage rates during the next 12 months.
According to Fannie Mae's January 2012 National Housing Survey, in addition to a shared feeling that rates will remain stable, home price expectations continued to improve for the fourth consecutive month. The report found that 29 percent of respondents anticipate home prices to rise by an average of 1 percent throughout 2012.
Meanwhile, these expectations have prompted a rise in consumer sentiment, the report noted. At the peak of summer in 2011, sentiment reached a low for the year, but as the housing market and economy gained momentum, attitudes in January 2012 spiked back to levels recorded during the same month in 2011.
"Consumer sentiment has continued to rebound to the level witnessed around a year ago since hitting a setback last summer," said Fannie Mae vice president and chief economist Doug Duncan. "The strengthening employment picture last Friday provides encouragement that the improving trend in consumer confidence will continue and will at some point be reflected in a firming up of consumer spending."
While a significant portion of respondents believe home prices will improve, 51 percent expect no change during the course of the year. In addition, 8 percent believe that mortgage rates will continue to drop after an announcement from financial regulators at the Federal Reserve that rates will be held close to all-time lows until at least 2013.
"The Federal Reserve's pledge to keep interest rates low beyond 2014, extending their prior time frame of mid-2013 announced in the summer, appears to have been reflected in the rising share of consumers expecting the rate to remain near record low levels for another year," said Duncan. "At the same time, consumers expect home prices to rise over the next year, extending the streak of rising home price expectations to four months."
Additionally, approximately 30 percent of respondents said that improvement in the housing market will help spur an overall economic rebound. In contrast, 63 percent said the economy is still on the wrong track. However, despite a majority feeling pessimistic about the economy, it was a decrease of 6 percent from the previous month.