Fannie Mae’s official forecast was written during the shut-down, so in a sense is obsolete. However, they based their prediction on the assumption that the shut-down would end as it did.
Based on a lowered estimate of growth in the 4th quarter, forecasters lowered their estimate of economic growth for 2013 by 0.1% – bringing it to 1.9%.
The Federal Reserve’s decision to maintain the pace of asset purchases for now brought long-term interest rates back down, but momentum is still weakened due to the threat of tapering in 2014. They expect to end the asset purchase program in the second half of 2014, but predict that funds rate hikes won’t happen until third quarter 2015 – when unemployment rates are expected to fall to 6.5%.
Economists have lowered their mortgage rate hike predictions and now think that rates will average 4.4% in the 4th quarter and rise to 5% a year from now.
The refinancing boom appears to be over, in spite of the dip in interest rates. However, existing home sales in 2013 are, so far, averaging 12% above 2012. Pending home sales did decline In August, but even with a dip, 2013 should finish at 10% above last year. Home sales are now at the highest level in six years.
Did the shutdown have an effect? Yes, but since it lasted less than a month, the impact was limited. The primary problem was delays, as FHA and VA were operating on reduced staff. In addition, government employees who were furloughed had their home purchase loans put on hold – causing problems for both them and sellers who expected to close their home sales in early October.
While they’re back to work, they may still experience delays as the backlog is addressed.
Due to revised estimates of total mortgage originations in 2012, predictions for 2013 loan originations were revised downward by 15% – to $1.83 trillion.
Loan originations are expected to drop further in 2014 due to the rising mortgage interest rates and the subsequent decline in refinancing activity. The prediction is $1.36 trillion in 2014.
Although total mortgage debt has been dropping for 5 years, forecasters expected an increase this year. Instead, total outstanding single-family mortgage debt fell by 1.8% in the second quarter, leading them to predict an overall drop again in 2013.
So what’s the effect on you as a consumer?
You can still get a home mortgage loan at a low, low interest rate, compared to the averages over the past 40 years. And when you call on the Mike Clover Group at Homewood Mortgage LLC, you’ll also pay low fees.
Remember, no matter where you are in Texas, we can help.
Texas Mortgage Banker