Posted on 07/22/2013 2:36:10 PM PDT by whitedog57
I was on Fox Business with Connell McShane and Dagen McDowell talking about the low homeownership rates for Millenials. I mentioned that mortgage rates are expected to rise, hindering a housing recovery.
On that note, Kate Berry at American Banker wrote today about the shrinking of mortgage units at lenders.
“Wells Fargo (WFC) and Citigroup (NYSE:C) are laying off hundreds of employees at their mortgage units, one of the most tangible signs yet of the falloff in refinancings and the painful shift underway in the mortgage market.”
In the latest Mortgage Bankers survey, mortgage purchase applications remain in a rut despite decades of lower rates.
mbaprchlt071713
And mortgage refinancings are slip slidin’ away with mortgage rate increases.
mbarefi071713
So, you can see why some lenders are trimming their mortgage staffs, particularly with Treasury rates expected to rise.
10yrforcasst
Refi’s will slow down dramatically as rates go up. DUH!
This Sanders putz really posts some moronic stuff in an effort to sensationalize things that are very normal.
There is some hope for rates to decline, since they have done so after Bernanke’s most recent foray in the news when he said he wasn’t changing anything.
The 15 year fixed went from about 3.6 to 3.4. And if the 85 billion purchases each month continue, as he said they would, and if construction starts to dry up, and more jobs start being lost, and the mid-term elections take front and center on the news, then the democrats will have a come-to-Jesus meeting with Bernanke and get him to relent even more.
I see a real possibility that 15 year fixed could be back at 2.9 by winter.
The artificial low rates caused prices of homes to rise too quickly. Home prices rose 11 to 12 percent in 2012 and 2013. Problem is incomes did not rise at that rate. It was a matter of time home prices are too high for many at the low rates, imagine what happen to affordability as mortgages rose by 1 perent from under 4 to now 4.5 percent. Those who just brought houses face future price reduction of other homes being sold in their neighborhoods because of income limits and rising interest rates. Wonder what will happen to those prices if mortgage rates rise to historical norms of 5 to 6 percent???
Basically the Fed engineered an artificial rebound in home prices, in order to soak up the excess supply from before the last crash. Having accomplished this, they are going to tighten credit, very gradually, to try to prevent a new round of bubble in the market. I hope they succeed, but if they make an error I am very sure it will be on the side of being too loose with credit, not too tight.
Basically the Fed engineered an artificial rebound in home prices, in order to soak up the excess supply from before the last crash. Having accomplished this, they are going to tighten credit, very gradually, to try to prevent a new round of bubble in the market. I hope they succeed, but if they make an error I am very sure it will be on the side of being too loose with credit, not too tight.
Banks hold huge number of underwater/foreclosed properties. Some were sold in portfolios to investors, but many were held off the market. We still have excess inventory but the banks will not put it on the market. MSM and NAR never talks about this excess inventory when they tell the audience that there is a shortage of homes for sale.
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