As a result of low liquidity, banks cut back on lending during the 2009 recession. Homeowners wanted low-interest-rate mortgages, but banks kept tightening lending criteria, making it harder to get a mortgage.
The Federal Reserve has the authority to adjust interest rates depending on current economic data at specific times throughout the year, impacting the rates that lenders set for mortgages. An example of this was the Fed’s interest rate hike in December 2018.
Buyers’ Expectation of Housing Prices Being Affordable
Affordability is a top concern for today’s home buyers. According to U.S. News & World Report, nearly half of buyers say affordability is their biggest concern, though most said they expect to buy within the next year.