Sociable

Wednesday, October 27, 2010

Record-low mortgage rates will be gone in 2011: MBA

I think nobody expected these rates to this low for this long of a period.  However, this government influence, since they now own Fannie Mae and Freddie Mac.

There are two big unknowns in regards to the direction of mortgage rates: 1) QE2, printing of money by the Fed 2) De-investing of the government from Fannie Mae and Freddie Mac.
The group predicts rates on the 30-year fixed-rate mortgage will average 4.4% in the fourth quarter of 2010, increasing to a 4.7% average in the first quarter of 2011, and climbing to 5.1% by the end of next year. That’s barring any “blockbuster” announcement from the Federal Reserve next month, said Jay Brinkmann, chief economist of the MBA.
Refinancing right now is about 83% of the mortgage market, so any large increase in mortgage rates will greatly slow down this market.

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