Expected Mortgage Rates
Expected mortgage rates will likely rise above 5 % in 2014 and average 5.3 % by the end of the following year, according to the Mortgage Bankers Association’s forecast.
The MBA expects that the Federal Reserve will decide to taper its $85-billion per month bond-purchasing program in early 2014 and end it altogether in September 2014. The Fed’s bond buying program has been keeping mortgage rates low. The Fed has hinted in recent months that it will soon be winding down the program.
“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 said that it expects home purchase applications for mortgages to rise 9 percent in 2014, following expected continued home sales and price increases.
However, the MBA projects that overall mortgage originations will drop 32 %in 2014, as the number of refinancing applications post a large drop in the new year due to expected 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 percent of originations next year compared to about 38 % this year.
Read more Mortgage Rates with FlatFee.com: Purchase loans expected to buck rising mortgage rates
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Source: InmanNews 10/29/2013