Thursday, October 31, 2013

Where Are Mortgage Interest Rates Headed In 2014

Mortgage rates will likely rise above 5% in 2014 and average 5.3% by the end of 2015, this according to the Mortgage Bankers Association’s forecast. 
This would mark a significant increase over where mortgage rates stand now. The MBA reported this week that the 30-year fixed-rate mortgage averaged 4.33 percent, the lowest average since June. 
The Federal Reserve has decided to taper its $85-billion per month bond-purchasing program in early 2014 and to end it altogether before the start of 2015. The Fed’s bond buying program has held mortgage interest rates low. The Fed has hinted in recent months that it will continue to monitor the economy and has no immediate plans to terminate the program but may soon begin winding it down. This taper will start in January with a $10-billion dollar reduction reducing purchases to $75-billion.  
“As a result, mortgage refinancing will continue to drop, and borrowers seeking to tap the equity in their homes will be more likely to rely on home equity seconds rather than cash-out refinances,” says Jay Brinkmann, the MBA’s chief economist.
The MBA indicated in it's forecast that it expects home purchase applications for mortgages to rise 9% next year, as home sales and prices continue to post gains. 
However, the MBA projects that overall mortgage originations will drop 32% in 2014, this as the number of refinancing applications post a large declines due to rising interest rates. 
While refinancings make up the bulk of home applications today, that trend is expected to reverse next year. Purchase loans are expected to make up 60% of originations next year compared to about 38% this year. 
“We are projecting home purchase originations will increase in 2014 due largely to gains in home sales and home prices,” says Brinkmann. “We expect to see a decline in the share of sales paid for with cash, and higher average LTVs on purchase mortgages, due to the rise in home prices.”
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please contact The Opland Group. We offer professional real estate advice and look forward to helping you achieve your real estate goals!

The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley Columbus Delaware Downtown Dublin Gahanna Grandview Heights Granville Grove City Groveport Hilliard Lewis Center New Albany Pickerington Polaris Powell Upper Arlington Westerville Worthington

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