Until recently, the vast majority of lender’s home mortgage application volume has come from home loan mortgage refinances due to the low mortgage rates. Now, lenders are seeing a rise in purchase mortgage applications despite the mortgage interest rates still being at historic lows. Mortgage lenders are choosing to offer higher mortgage rates for refinances because of their inability to sell home mortgage refinance loans to Fannie Mae and Freddie Mac. When it comes to home mortgage purchase applications it’s a different story. For the third straight week the volume of home mortgage purchase loans has increased showing how ready the American public is to re-enter the housing market.

With this year’s rise, the loan limit has increased for the fourth year in a row after ten years of stagnation between 2006-2016. Despite no movement in the ten year period prior, the loan limit has risen $93,400 since 2016.

In 2016, the FHFA increased the conforming loan limits from $417,000 to $424,100. Then, the following year, the FHFA increased the loan limits from $424,100 to $453,100 starting in 2018. The year after that, the FHFA increased the loan limit from $453,100 to $484,350 for 2019. Mortgages originated in 2020 will have a limit of $510,400. Year-over-year this marks the 3rd highest raise since 2016.

2016-2017: 1.70% increase ; 2017-2018: 6.84% increase ; 2018-2019: 6.90% increase ; 2019-2020: 5.38% increase

There are many reasons why consumers decide to buy their own home instead of renting. Of course many factors such as housing market, whether you have a high or low interest rate, and personal timing go into account, but below are a few financial positives of being a home owner.

1. Owning your home forces you to save. Paying your mortgage and building equity in your home forces you to save money.
2. Owning your home allows you to save on taxes.
3. If you own your home, your monthly housing expenses are locked in through a consistent monthly payment based on your interest rate. If you were to rent, depending on your agreement your payment could be raised by a landlord.
4. In most parts of the country renting is more costly than owning your own home. Getting a low interest rate allows your mortgage payments to cost less than what some landlords would be charging. Local real estate markets in Lee County and Collier County are part of this trend.
5. This is the only investment you can make financially that will have increased personal connection. What other investment will you make that you will live inside of other than your primary residence? Building equity in your home while creating life long memories doubles the benefits.

According to Zillow, the rate in price increase among Florida homes will beat the nation’s average over the next year. Home values in Florida are up 4.64% this year with an expected increase of 4.09% next year. Nationally, Zillow expects the value of homes to rise 2.2% over the next 12 months. Low interest rates are causing the local real estate market to heat up substantially. Understanding the affect of  increasing home prices and low mortgage rates will allow informed investors to make sound decisions in this hot housing market.