Mortgage News
Last week, the Federal Reserve did as promised and discontinued its policy of buying mortgage-backed securities as of March 31. By purchasing housing loans, the Fed has provided much-needed capital for distressed lenders and investors. The policy was in effect to help subsidize the housing market and keep mortgages rates abnormally low.
So what do the experts predict will happen to the mortgage rates? The leader of Freddie Mac, one of the two government-run mortgage financing companies, does not foresee an upswing in the rates in the immediate future. “There’s not going to be, at least in the short term, a major dislocation and a major move up in mortgage rates,” said Freddie Mac CEO Ed Haldeman in a recent Forbes.com article.
But stay tuned, because if rates do start to inch skyward, the Fed has left the door open to return to the business of buying mortgage-backed securities.
There was some good news on the mortgage front last week. For the week ending March 26, U.S. mortgage applications were up 1.3 percent, according to the Mortgage Bankers Association. Seasonally adjusted that figure is an increase of 6.8 percent – the highest increase in mortgage applications since the week ending October 30.
In a Reuters report on March 31, the Mortgage Bankers Association’s Michael Fratantoni said that he suspects that the mortgage activity is tied to the pending expiration of the government’s home buyer’s tax credit. To take advantage of the tax credit of $8,000 for first time home buyers and $6,500 for resale home buyers, contracts must be signed by April 30 and the closing must take place by June 30.
In any case, the mortgage gains are good sign because home purchase loans are a precursor to home sales. We will have to wait until next week when the Houston Association of Realtors releases the home sales results for March to see what kind of impact these events are having on our local market. Watch the KWNE Blog for an update!
