The housing market has peaked, top economist says

He said prices “will soften” and make homes more affordable. However, when asked how homeowners who bought a property with a 3.5% rate of interest would react to selling and having to buy again if they shot up to 6%, Kelman was more downbeat.

“So many people are locked into the home they’re living in now by a 30-year, 3.5% mortgage, [that] they’re going to stay in that property forever. Maybe they will rent it out, but if they actually want to move up, they are going to have a hard time affording the next place if you combine interest rates with what’s happened to home prices over the past year… so buyers are saying ‘I’ve had enough’ and sellers are starting to freak out a little bit,” he said.

“But the honest truth is if you’re going to stay in a house for five years, you’re going to do just fine in this market and you’re probably going to get yourself a good deal. If you plan on flipping the property… if you’re trying to make money as an investor, I think that proposition has gotten more dicey.”

Read more: ARMs of mass destruction?

Broker response

Mortgage professionals gave their views on the current market. Daniel Casasnovas, loan Specialist at HQM, told Mortgage Professional America that although the market “is tough”, interest rates “are still in a very good place historically”.