What's Hot: Podcast Studios, Outdoor Rooms and A Get Down: The 3,500 Units on the Boards For Navy Yard
Supply and Demand: Why Mortgage Rates Aren't Rising
✉️ Want to forward this article? Click here.
Pretty much everyone predicted mortgage rates would climb in 2014.
Lawrence Yun, chief economist at the National Association of Realtors, said in November 2013 that rates would rise this year “due to the anticipation that the Fed will start to raise rates in 2015.” He predicted an end-of-year average rate of 5.4 percent. But it’s mid-2014, and rates are actually lower than they were a year ago. MarketWatch’s Amy Hoak says that’s thanks to a supply and demand problem.
While the Federal Reserve did taper purchases of mortgage-backed securities through quantitative easing, Hoak notes that the tapering happened to occur at the exact same time that the volume of new mortgages started dropping. Freddie Mac’s Leonard Kiefer and Frank Nothaft said that was causing rates to stagnate.
“The Fed’s acquisitions, as a ratio to new issuance, are slightly higher than a year ago. In other words, the Fed’s ‘demand’ for new MBS has declined less than has new ‘supply’, thus keeping the Fed’s share of MBS issuance above year-ago levels,’” Kiefer and Nothaft recently wrote.
The decline in mortgages, Kiefer and Nothaft pointed out, is also because people are refinancing less, and first-time homebuyers aren’t purchasing at their normal levels. Rates will rise again soon, probably accompanied by rosier job figures and rising inflation, Guaranteed Rate’s Ted Ahern told MarketWatch.
See other articles related to: mortgage rates
This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/supply_and_demand_why_mortgage_rates_arent_rising/8737.
Most Popular... This Week • Last 30 Days • Ever
The home, located just blocks from the Capitol Building, is nearly two centuries old ... read »
While homeowners must typically appeal by April 1st, new owners can also appeal.... read »
On his first day in office, President Trump signed a number of Executive Orders aimed... read »
This week’s Best New Listings includes a four-bedroom Capitol Hill rowhome and a si... read »
On Thursday, Freddie Mac reported 6.96% as the average on a 30-year mortgage, down 8 ... read »
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Start browsing below!
First-Timer Primers
Intro guides for first-time home buyers
Unique Spaces
Awesome and unusual real estate from across the DC Metro