And it’s good news for originators, who can expect continued recovery throughout the rest of the year.
“Home sales are at multi-year highs in response to low mortgage rates, easier lending standards and increased household formation,” a recent economic outlook from the Bank of Montreal (BMO) states. “We expect growth to stay near 3 percent in the second half of the year, led by consumer spending. Households are in good financial shape, benefitting from rising wealth, improved job prospects and low borrowing costs.”
According to the bank, households are financially healthy, with wealth rising, job prospects improving, and low interest rates.
Real disposable income rose by about four percent in the past 12 months and banks continue to post growth in their commercial loans portfolios, including mortgages.
The overall economy, meanwhile, is expected to continue to rebound and grow by three percent to close out the year.
BMO also expects the Fed to maintain its benchmark rate once again in July before hiking it in September – meaning originators have a great opportunity to entice buyers to purchase now under the current low rate environment.
“The economic soft patch delayed Fed tightening in June, and uncertainty about the strong dollar’s impact and Greece’s bailout talks will likely sideline it in July, too,” the report states. “However, expected stronger growth should give policy makers confidence that unemployment (and underemployment) will fall further and that inflation will eventually return to the 2 percent target, paving the way for rate lift-off in September.”
One major Canadian bank has likened the American housing market to Rocky Balboa, believing the market is currently “punching above its weight.”