2014 ushers in 5% mortgage rates
By Brena Swanson
The housing market is just around the corner from the new year, and besides an onslaught of new regulations, the year 2014 is also estimated to bring a new high: 5% mortgage rates.
By the end of 2014, Frank Nothaft, chief economist with Freddie Mac, predicts that mortgage rates will approach and perhaps touch 5%, mostly due to the Federal Reserve’s quantitative easing.
At some point the Fed will scale back their bond purchases, Nothaft said, but when they will start and how gradual it will be, is very unclear.
“I do think in the first half of the year they will announce something on tapering, and they will start to pull back. But when you have a big investor like the Fed scale back their purchases, it will lead back to an uptick in yields, which will translate into higher mortgage rates,” Nothaft said.
Personally, Nothaft said he believes that if Janet Yellen is nominated as chairman, one of her first acts will be to get a consensus statement from the Federal Open Market Committee that is as transparent as possible as to what the Fed will do about tapering. full story
Mortgage rates continue upward momentum
Fixed mortgage rates edged higher for the second week in a row on stronger than expected economic data, specifically the jobs report that shocked the market. More importantly, the 30-year fixed-rate mortgage reached its highest level since September, when it averaged 4.32%. The 30-year FRM came in at 4.35%, up from 4.16% last week, and also up from 3.34% last year, Freddie Mac said in its Primary Mortgage Market Survey. “Fixed mortgage rates increased this week following stronger than expected economic data releases,” said Freddie Mac vice president and chief economist Frank Nothaft. He added, “Nonfarm payrolls increased by 204,000 in October, above the consensus forecast. In addition, revisions added 60,000 additional jobs to the prior two-month releases. Preliminary estimates indicate real GDP growth in the third quarter was 2.8 percent, also above consensus.”
The 15-year, FRM increased 3.35%, up from 3.27% last week and a steep rebound from 2.65% last year. Meanwhile, the 5-year Treasury-index adjustable-rate mortgage averaged 3.01%, up from 2.96% last week, and an increase from 2.55% a year ago. Additionally, the 1-year Treasury-index ARM came in at 2.61%, unchanged from last week, dropping from 2.55% a year earlier. …full story