HSH’s Latest Two-Month Forecastby Tim Manni
Every two months, the mortgage-market analysts at HSH recap the events of the past two months, and make a prediction on the future direction of mortgage rates.
“Since our last forecast, significant portions of the residential mortgage market have been reshaped due to government intervention and — in some ways — due to a lack of government action. We’ve come through an election cycle, seen hundreds of billions of dollars spent trying to comfort financial markets, and heard the promise of hundreds of billions more dollars in various forms of ’stimulus’ that may be on the way. For mortgages and real estate, at least one important support is in place; others may arrive under a new administration.”
Forecast: “It’s widely agreed that without the government’s influence, the mortgage market would be an even messier place than it already has become. That durable support is crucial to stabilizing the market, at least until private capital again develops an appetite for investments with greater-than-zero risks. With a new administration coming in, any number of plans may come to manipulate interest rates still lower, but that could delay any resumption of private interest, since that paper would feature very low yields. In this way, we find ourselves in a tenuous situation, with one overarching question: Does the good-credit-quality mortgage market need more incentives than the near-50-year-low interest rates already in the market… and if so, who deserves that additional support? (If you’ve read this far, you already know our answer.)”
Click here to read the entire Two-Month Forecast for Mortgage Rates.