Supply and Demand: Why Mortgage Rates Aren't Rising
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 https://dc.urbanturf.com/articles/blog/supply_and_demand_why_mortgage_rates_arent_rising/8737.
Most Popular... This Week • Last 30 Days • Ever
The big news in the development pipeline east of DC's H Street Corridor is the resur... read »
In this article, UrbanTurf looks at the estimated annual maintenance costs associated... read »
Today, UrbanTurf is examining one of our favorite metrics regarding competition in th... read »
Another concept has been unveiled for one of DC's most contentious development sites,... read »
The residential development in the works along Florida Avenue NE is looking to increa... read »
- The 4 Projects In The Works Near DC's Starburst Intersection
- What Are the Annual Maintenance Costs When You Own a Home?
- The 6 Places In The DC Area Where You Aren't The Only One Bidding On a Home
- A First Look At The New Plans For Adams Morgan's SunTrust Plaza
- 46 to 48: The Biggest Project In Trinidad Looks To Get Bigger
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