HSH.com Releases “2010 Outlook for Mortgage Rates and the Mortgage Market”by Tim Manni
HSH.com has compiled the 10 most important factors that will impact 2010’s mortgage market. The ‘2010 Outlook’ is designed to answer some of the biggest questions facing the mortgage and housing markets moving forward.
Will rates increase next year? Will credit conditions ease at all? What about home prices?
The question isn’t whether or not mortgage rates will rise next year, it’s “by how much?”
8. Mortgage Rates Should Remain Favorable. During 2010, the mortgage market will transition from almost-fully-government supported to one again driven by the private market to a much greater degree. As markets return to “normal”, so too will mortgage rates, which should still remain in a range among to the best seen during the past 50 years. However, barring a double dip to the recession, borrowers should have no expectations that rates will remain at multi-generation lows throughout the year. An unsettled and changing marketplace won’t allow for that.
Broadly, we expect interest rates to be lowest in the early part of the year, as support programs remain fully in force, with 30-year fixed-rate mortgages hanging around the 5% mark during the first quarter. After that we’ll start the transitional period described above, and for planning purposes, borrowers should expect figures one-half to even a full percentage point higher than this. We do think perhaps a half-point lift is most likely, but we may flare higher than that during the Spring at times. Any rise in rates would be accompanied by a reduced demand for mortgages, which in turn would serve to somewhat temper any upward rise.
Rates for the rest of the year are likely to be more economy- and inflation-dependent. With continued economic healing expected, pressure will build for the Fed to list rates and/or begin to remove supports, and, absent any resumption of these programs, that rates will nudge closer to 6% than 5% for the final two quarters of 2010.
Be sure to read our entire ‘2010 Outlook‘ to learn more about the changes coming to consumer protection as well as Fannie Mae and Freddie Mac, the expiration of Federal programs and incentives, changes in lending standards, and more.
Looking for a more immediate forecast? Click here to view our “Two Month Forecast for Mortgage Rates.”