Tag: Chair Yellen

Where Are Mortgage Rates Headed Next Year?

Last week, average mortgage rates fell across

most loan categories, according to the latest survey from the Mortgage Bankers Association. In fact, rates for 30-year fixed-rate loans with both conforming and jumbo balances fell, as did interest rates on 15-year fixed-rate loans. Loans backed by the Federal Housing Administration rose slightly. For most of this year, mortgage rates have hovered near historic lows, providing incentive to buyers who may have otherwise been scared off by higher home prices and increased buyer competition. So what does the future hold for mortgage rates? Well, Michael Fratantoni, MBA’s chief economist and senior vice president for research and industry technology, says any increases over the next few years should be gradual. “Rate increases through 2017 and 2018 will likely be gradual, as Chair Yellen and the Fed have indicated that they are going to be cautious going forward,” Fratantoni said. “Historically low, and in some cases negative, rates around the world continue to put downward pressure on longer-term U.S.

rates … We expect that the 10-year Treasury rate will stay below three percent through the end of 2018, and 30-year mortgage rates will stay below 5 percent over the same period.”


Mortgage Rate Drop Stirs Demand

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates dropped sharply last week from the week before. Rates were down across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, mortgages backed by the Federal Housing Administration, and 15-year fixed-rate loans. MBA economist Joel Kan told CNBC the decline was brought on by recent comments from Fed Chair Janet Yellen. “Rates fell last week as a more cautious message from Chair Yellen about the economic outlook and continuing concerns about weaker growth abroad kept demand for U.S. Treasurys high,” Kan said. “The 30-year fixed mortgage rate dropped 8 basis points, the largest single week decline in eight weeks.” Falling rates spurred demand for mortgage applications. In fact, overall demand was up 2.7 percent over the week before – driven by a 7 percent surge in refinance activity. And though purchase demand was down 2 percent from one week earlier, it remains 11 percent higher than at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

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