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Industry experts have varying forecasts and projections about where mortgage rates, home prices, buyer competition, housing supply, sales activity, and home affordability are headed over the course of the rest of the year. Last year wasn’t a good year for the roses but will 2023 look any different? Local mortgage expert with Louisiana Mortgage Associates, Jennifer Spees, says that in Southwest Louisiana, homebuying is still the more cost-effective housing option and we may be within a good window.
“The Fed has been raising short-term rates which impacts the economy directly, but not necessarily mortgage rates,” Spees says. “Mortgage rates are determined by long-term bonds or Mortgage-Backed Securities (MBS). As inflation goes up, people buying these bonds or MBS expect the rate of return to go up as well. Thus, making mortgage rates go up.” If the Fed accomplishes their mission of lowering inflation, it could drive mortgage rates down.
Spees says we could see more leveled-out rates this summer but warns of unrealistic expectations. “It is highly unlikely that we will see 2% and 3% rates again in our lifetime. Whoever is holding out for that is going to be waiting a long time,” she says. “A 7% interest rate is still historically low.”
As we’ve seen in past years, the homebuying climate can change from month to month and those considering a move are wrestling to stay on top of the best time to sell or buy. So, curious minds often ask, is it a buyer’s market or a seller’s market? Spees says we are currently teetering between what is considered to be a neutral market and a buyer’s market. “While nationally there seems to be a housing shortage, Southwest Louisiana is a bit of an anomaly because of our recent weather situations,” she explains. “Locally, people are still enjoying their newly improved homes due to hurricane alterations. Therefore, causing the percentage of home purchases in the area to be lower than that of the past few years.”
However, the change from a buyer’s market to a seller’s market is not a far leap. “Indicators of the market flipping include buyers having to offer list price for the right house due to competitive offers and builders cutting back on new construction, lowering supply and increasing demand,” Spees says. “We have already begun to see both recently. Anyone who is on the fence about buying because they believe housing prices are going to come down is missing their opportunity right now.”
Even with interest rates north of five percent, buying a home remains the easiest way to build wealth. And in Southwest Louisiana, it’s cheaper than renting. “The good news is, there are still competitive mortgage loan products available,” Spees says. “For the first-time homebuyer, there is down payment assistance.
Even if you have owned a home before, you could still qualify for 100% financing or low-down payment loans, if that is what you are looking for. Conventional, FHA, VA and Rural Development loans are all still available, with great options for self-employed.”
Whether you’re a first-time homebuyer, refinancing an existing loan, or consolidating debt, don’t let national headlines discourage you. Reaching out to a licensed, local expert will help you determine what’s happening in your area and how you can leverage the market to make the best decision.
Louisiana Mortgage Associates is located at 2915 Ryan Street in Lake Charles and services customers throughout Louisiana.
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or call 337-312-1320.