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April 1st, 2010

Predictions Abound as Mortgage Market Enters Uncharted Territory

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Today, April 1, is day one in the mortgage market’s expedition into uncharted territory — uncharted in the sense that mortgage rates have been corralled by the Fed’s MBS-purchase program for well over a year now.

The big question — the 800-pound gorilla in the room, if you will — has been, “what will happen to mortgage rates now that the Fed has stepped out of the picture?”

The answer to that question largely depends on several factors, but mainly hinges on if private investors are willing to once-again invest their money into mortgages.

Our friend Jamie Smith Hopkins at the Baltimore Sun asked the readers of her blog, The Real Estate Wonk, for their predictions. Here are some of the responses:

“…mortgage interest rates are going to rise and may do so quickly, like .50% to 1% in a matter of a weeks.”

“I predict mortgage rates will go up to 6.0% to 6.5% by the end of the year.”

“Bottom, bottom line, rates don’t move much, but its due to more smoke and mirrors, central planning tricks, not fundamental market forces. Absent trickery and manipulation we’d quickly be north of 6.5%, about where we were before the trickery began.”

What Do We Say?

In our latest Two-Month Forecast for Mortgage Rates we wrote that, “If everything works as planned, we think that the next nine-week period will see HSH’s overall FRMI trend between an average rate of 5.25% to perhaps 5.60%. At the same time, the overall 5/1 ARM will likely wander from perhaps 5.25% to 5.60%. Although we don’t usually provide an outlook for conforming 30-year fixed rates by themselves, we’ll wing it a little this time, and call for a 5% to 5.40% range over the next couple of months.”

Only Time Will Tell

It’s going to take more than a few hours into the first day of the Fed’s absence to see where rates are headed. The problem with all the predictions you have read is that they’re all based on things that haven’t happened yet. All you can do is examine the past trends, look at the present factors and make an educated guess. In the words of our VP Keith Gumbinger, “Forecasting is more of an art than a science.”

You can follow mortgage rates daily or weekly at HSH.com.

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5 Responses to “Predictions Abound as Mortgage Market Enters Uncharted Territory”

  1. uberVU - social comments Says: April 1st, 2010 at 1:59 pm

    Social comments and analytics for this post…

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  2. Baltimore MD Mortgage Rates Rise as Fed Leaves MBS Market | Maryland Mortgage Loans Says: April 1st, 2010 at 3:37 pm

    [...] Predictions Abound as Mortgage Market Enters Uncharted Territory (hsh.com) [...]

  3. mortgagetwitts (mortgagetwitts) Says: April 1st, 2010 at 4:39 pm

    Mortgage: Predictions Abound as Mortgage Market Enters Uncharted Territory: Today, April 1, is day one in th… http://tinyurl.com/yc6dgtq

  4. Baltimore MD Mortgage Rates for April 2, 2010 | Maryland Mortgage Loans Says: April 2nd, 2010 at 12:04 pm

    [...] Predictions Abound as Mortgage Market Enters Uncharted Territory (hsh.com) [...]

  5. Link it Up | Better Austin Living – Ryan France, REALTOR Says: September 16th, 2010 at 2:57 pm

    [...] been, “what will happen to mortgage rates now that the Fed has stepped out of the picture?”  (Predictions abound as Mortgage Market Enters Uncharted Territory) Share and [...]

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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