Real Estate Insider Blog

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Mortgage rates may be trending down at the moment — but what comes down will go up as the year progresses, according to several key housing economists who spoke at the recent International Builders Conference in Orlando.

The forecast by Robert Dietz, chief economist at the National Association of Home Builders, was the worst of the bunch. He expects rates to hit 4.8 percent on average by the end of the year and jump to over 5 percent in 2018.

The forecast offered by Frank Nothaft, Dietz’s counterpart at CoreLogic, is a bit less pessimistic. The former chief economist at Freddie Mac sees rates at 4.6 percent by the end of the year.

And though ex-Fannie Mae Chief Economist David Berson didn’t put any numbers to his forecast, he said three adjustments in the Fed Funds rate this year and four or more next year are certain to drive loan costs higher.

But Berson, who now hangs his shingle at insurance provider Nationwide, said rising rates “won’t have much an impact on housing demand” because strong wage gains and job growth “will give people the wherewithal to offset” the higher monthly costs.

Will inventory improve?

Dietz also sees better years ahead, despite higher rates. He is looking for a 10-percent increase in single-family housing starts this year, to 855,000 units, and a 12 percent jump in 2018, to 961,000 units.

Even at that, though, builders won’t be producing houses at what...

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What will post-election mortgage rate increases mean for the Clearwater area housing market?

The bond market started going haywire after the election -- here's the result

Immediately after the election, the bond market was splattered all over the windshield, taking mortgage rates up with it.

  • Once you have destabilized the bond market, re-stabilization takes time. Often a long time.
  • Our election surprise has unpleasant consequences for mortgages and housing. Not just sometime in the future, it starts right now and if history shows the rates can spike considerably. Change is always a certainty and rates always change.

The most immediate concern right now is that the 10-year T-note has soared to 2.07 percent, the first time so high since last January and wiping out six months of chart support near 1.80 percent — and the next support is near 2.50 percent, mortgages 4.25 percent-4.50 percent.

“Mortgage rates have spiked more than 20 basis points following the results of the presidential election on Tuesday, as we assess the degree of political and economic uncertainty that Trump’s win introduced to the market and as investors move away from U.S government assets, including U.S. mortgage-backed securities, in favor of relatively safer investments,” said Erin Lantz, Zillow Group vice president of mortgages, in a statement.

“As we continue to learn more about shape of the new administration, their policies, and the global reaction, we expect more volatility as markets try to put a price on the political...

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