Market Commentary for the Week of December 9th

 

This week has only two pieces of monthly economic data scheduled for release in addition to a couple of Treasury auctions that have the potential to influence mortgage rates. Both of the economic releases are considered highly important though and the Treasury auctions are the more important set of auctions we regularly deal with, so despite the lack of a busy calendar we still should see noticeable movement in rates this week.

Monday has no relevant economic data scheduled, but does have several afternoon speaking engagements by Federal Reserve members. The topics of a couple of the speeches are related to the economy, so analysts and traders will be watching them for any surprises or tidbits that could alter forecasts of what future moves the Fed may make and when they will be made. Often these appearances are non-factors because they are related to banking rules or other boring topics. Since some of Monday’s look to be directly related to current and future economic conditions, we could see one or more of them affect afternoon trading and mortgage pricing.

There are Treasury auctions scheduled for several days this week, but the two we need to watch are the 10-year Note sale Wednesday and the 30-year Bond sale Thursday. Wednesday’s auction is the more important one and will likely have a bigger influence on mortgage rates. Results of the sales will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, particularly international buyers, we should see strength in the broader bond market and improvements to mortgage pricing during afternoon hours those days. On the other hand, a weak interest in the auctions could lead to upward revisions to mortgage rates.

November’s Retail Sales report is scheduled for release Thursday at 8:30 AM ET. This report will give us a key measurement of consumer spending by tracking sales at retail level establishments. This data is highly important to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rapidly rising consumer spending raises the possibility of seeing solid economic growth. Since long-term securities such as mortgage bonds are usually more appealing to investors during weaker economic conditions, a large increase in retail sales will likely drive bond prices lower and mortgage rates higher Thursday. Current forecasts are calling for an increase of 0.6% in November’s sales.

The second and final relevant report of the week will be November’s Producer Price Index (PPI) early Friday morning. It measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. If Friday’s release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should respond well and mortgage rates could fall. Current forecasts are showing a 0.1% decline in the overall index and a 0.1% rise in the core data.

Overall, I suspect Thursday will be the most active day of the week with the consumer spending data and 30-year Bond auction, but Friday’s data can also cause movement in rates. The calmest day will likely be Tuesday. It will probably be a calmer week than last week in terms of mortgage rate movement although we still should see rate changes multiple days. The benchmark 10-year Treasury yield closed the week at 2.88% after touching 2.92% immediately after November’s stronger than forecasted Employment report was posted. I believe this week will help determine if that yield will break above 2.90% again or retreat towards 2.62%. Since mortgage rates tend to follow bond yields, the latter would be preferred by mortgage shoppers. Because the 2.92% on Friday was momentarily, I am hesitant to rely on it as a basis in switching to Float recommendations. Therefore, I am maintaining the conservative stance towards locking or floating an interest rate for the time being.

Mortgage News Roundup - Qualified Mortgage Update

 

Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, sank 12.8 percent in the week ended November 29, even with adjustments for the Thanksgiving holiday weekend.

That is the fifth straight week applications have dropped.

In today’s post, we’ll look at the idea of refinancing without changing the remaining time left on the loan, and how mortgage offerings may start to change in 2014.

Mortgage Refinancing Without Resetting the Clock

Have you wanted to refinance but you’ve already paid a number of years down and don’t really want to have a 30 year mortgage again? Some mortgage lenders are now offering refinancing options that lower the interest rate while keeping the remainder of the term intact.

From AOL’s Real Estate Blog:

The original loan amount taken out in January 2009 is for $300,000 on a 30-year fixed-rate mortgage, with a 5.5 percent current balance of $282,000 and a mortgage payment of $1,703.37. The new loan on a 30-year mortgage at 4.375 percent on same principal balance of $282,000 means a new mortgage payment of $1,407.98. That’s a savings potential of $296 per month on a new 30-year mortgage. 

A prudent consumer will stand to benefit by taking out the new 30-year mortgage over one full percentage point lower in interest in exchange for the savings just shy of $300 per month. By making the $1,703 monthly payment, rather than the payment of $1,407.98 that would actually be due each month, the loan would be paid off in 21.3 years instead of the current 26 years remaining with the higher interest rate. Moreover, this homeowner could always revert back to the lower monthly payment in case of financial hardship. As long as the same payment that was being made on the previous loan is made on the new loan that contains a lower monthly payment, the loan can be paid off much sooner.

Talk with your loan officer to understand the interest rates so you can compare apples to apples.

AOL listed some helpful tips for your refinance. Here are three of them:

• Verify that the total new loan amount is lower than your original balance (unless you’re cashing out or increasing the amount of the loan)
• The interest rate should be the same or lower than the rate on the loan currently being paid off.
• If pmi exists on the loan being paid off and the new loan contains a higher interest rate, the removal of the mortgage insurance greatly offsets even a slightly higher interest rate on the new refinance.

New mortgage rules may mean less choice

Beginning Jan. 10, banks have to ensure that monthly mortgage payments are affordable defined by the Dodd Frank law passed in 2010. The failure to do so carries strict penalties. Many small lenders may drop out of the business of providing mortgages due to the increased regulation and the overhead it carries.

Lenders will need to carefully determine that borrowers have the ability to repay their loans. Banks can no longer lend to anyone whose total debt payments would exceed 43% of their income. Lenders must carefully check pay statements, bank records, tax returns and other documents provided by the borrower.

Banks will need to:

1. Update their their underwriting policies and procedures
2. Change their technology
3. Retrain staff

Some analysts feel that small banks are overstating the problem and shouldn’t have any difficulties staying competitive even with the new regulations.

Contact a reputable loan officer before 2014 to understand what you may be eligible for and how the changes may impact you if you choose to wait. The loan officers are diligent in staying on top of regulations and market offerings to help you get the best options for your situation.

Market Commentary for the Week of December 2nd

 

This week is packed with economic data with 10 pieces set for release, including two that are considered to be highly important to the markets and mortgage rates. November’s manufacturing index from the Institute for Supply Management (ISM) reports were released. This index measures manufacturer sentiment and can have a considerable impact on the financial markets and mortgage rates. The ISM report came in higher than expectations at 57.3, higher than the expected 55.5, triggering a sell-off in the bond market.

There is nothing of importance scheduled for Today, but tomorrow has three reports starting with October’s Goods and Services Trade Balance at 8:30 AM ET. This report gives us the size of the U.S. trade deficit, but it is considered to be of low importance to mortgage rates. It is actually the week’s least important monthly report. It is expected to show a $40.5 billion trade deficit, which would be a decline from September. Unless it varies greatly from forecasts, I don’t expect this data to affect mortgage pricing tomorrow.

Next on tap is two months’ worth of new home sales data from the Commerce Department. At 10:00 AM ET Wednesday we will get September’s and October’s New Home Sales reports that will give us an indication of housing sector strength. September’s data was delayed during the government shutdown, so we will get both reports this week. This data is not considered to be highly important because new home sales make up only a small portion of all home sold in the U.S. Analysts are expecting to see an increase in September’s sales but a decline in October’s sales. Ideally, bond traders prefer to see declining sales as it would point towards weakness in the housing sector. However, unless there is a significant surprise in the results, the data will probably have only a modest impact on Wednesday’s mortgage rates.

Also tomorrow, the Federal Reserve will release their Beige Book at 2:00 PM ET. This report, which is named simply after the color of its cover, details economic conditions by Fed region. That information is relied upon heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any noticeable changes from the last update. More times than not though, this report will not influence the markets enough to cause intra-day changes to mortgage rates, but the potential to do so does exist.

The first of two revisions to the 3rd Quarter Gross Domestic Product (GDP) will be posted early Thursday morning. It is expected to show an upward revision from last month’s preliminary reading of a 2.8% annual rate of growth. The GDP measures the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic activity. Current forecasts call for a 3.0% rate of growth, meaning that there was a little more economic activity during the third quarter than previously thought. This would be bad news for mortgage rates because solid economic growth makes long-term securities such as mortgage-related bonds less appealing to investors. A modest increase shouldn’t be too detrimental to rates since it is expected. On the other hand, a sizable revision upward or downward could significantly influence the financial and mortgage markets.

October’s Factory Orders will be posted late Thursday morning. This report is similar to the Durable Goods Orders report that was released last week, except this one includes manufacturing orders for both durable and non-durable goods. This data usually isn’t a major influence on bond trading, but it does carry enough importance to impact mortgage rates if it shows a sizable variance from forecasts. Analysts are expecting to see a 1.0% decline in new orders. The larger decline, the better the news for bond prices and mortgage rates because it would signal manufacturing sector weakness. If we do see a much larger drop in new orders, the bond market could thrive, improving mortgage rates Thursday morning.

The biggest news of the week comes Friday morning when the Labor Department posts November’s Employment figures. This is arguably the most important monthly report we see, so its impact on the markets and mortgage rates is often significant. It is comprised of many statistics and readings, but the most watched ones are the unemployment rate, the number of news jobs added or lost during the month and average hourly earnings. Current forecasts call for a 0.1% decline in the unemployment rate to 7.2% while 185,000 new jobs were added to the economy. The income reading is forecasted to show an increase of 0.2%. An ideal scenario for mortgage shoppers would be a higher unemployment rate than October’s 7.3%, a smaller increase in payrolls (or a decline) and no change in the earnings reading. If we are fortunate enough to hit the trifecta with all three, we should see the stock markets fall, bond prices rise and mortgage rates move much lower Friday. However, stronger than expected readings would likely fuel a stock rally and bond sell-off that would lead to higher mortgage rates.

October’s Personal Income and Outlays data is scheduled for early Friday morning also. This data measures consumers’ ability to spend and their current spending habits. This is important because consumer spending makes up over two-thirds of the U.S. economy. It is expected to show that income rose 0.3% and that spending increased 0.3%. Weaker than expected readings would mean consumers had less money to spend and were spending less than thought. That would be theoretically favorable news for bonds and mortgage pricing, although the Employment data will be the focus of Friday’s morning trading.

The final report of the week is the release of December’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are about their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up over two-thirds of the economy, any related data is watched closely. Friday’s release is expected to show a reading of 75.4, which would be a small rise from last month’s final reading of 75.1. A large decline in confidence would be considered good news for the bond market and mortgage rates.

Overall, look for Friday to be the most active day of the week but we should see noticeable movement in rates Monday also. And in between those days there is plenty of data being posted that may move mortgage rates. The best candidate for calmest day is Tuesday with nothing in terms of relevant economic data set for release. With so much on tap this week, there is plenty of opportunity to see large swings in the major market indexes and mortgage rates. Accordingly, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Mortgage News Roundup

 

It’s been an interesting week with interest rates slowly creeping up, refinancing numbers continuing down, and JP Morgan settling with the Department of Justice.

Mortgage Applications in U.S. Retreated for Third Straight Week

Has refinancing bottomed out? Bloomberg is reporting that mortgage applications have decreased to a two month low.

The Mortgage Bankers Association’s index fell 2.3 percent in the period ending Nov. 15 after a 1.8 percent loss compared to the week prior. The group’s purchases measure increased 5.8% to the highest since September. However, the refinancing gauge dropped 6.5% to the lowest since mid-September.

Reuters is reporting that the Fed has announced it would begin to slow its policy of buying $85 billion per month in Treasuries and mortgage-backed securities when economic growth meets its targets. Strong data recently has reinforced concerns that the tapering could come soon. Previously, it was expected that those accommodating monetary policies would last into 2014.

JP Morgan Settles With Government

The JP Morgan mortgage settlement was announced this week with a whopping $13 billion made up of $7 billion in civil securities settlements, $2 billion for “a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA),” and $4 billion is “in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual.”

This is the largest settlement in U.S. history. JP Morgan, the nation’s largest bank, admitted to knowingly peddling the toxic securities that helped lead to the housing bubble and the worst financial meltdown since the Great Depression.

It was unclear yet how the $4-billion relief program would be apportioned to struggling homeowners, but that it would distributed over the next four years. Government officials said California would receive a large share as the state was hit hard by 1 million foreclosures.

Half of the program is intended to go toward writing down the balance of mortgages and waiving certain payments on home loans. Most of that would be achieved through outright forgiveness of first-mortgage debt.

The remaining $2 billion is to be allocated for various other uses, including aid to help low-income people buy homes, reduction of the interest rate on mortgages and efforts to reduce blight in neighborhoods most affected by foreclosures.

California’s public pension plans will also get some cash. The California Public Employees’ Retirement System will receive $221.6 million, while the California State Teachers’ Retirement System will receive $19.5 million. Smaller state-run pension plans will receive lesser amounts.
Yahoo! Finance posted a blog pondering if the punishment was a good idea or if it would make the economy worse:

Specifically, Whalen says the combination of the Fed’s ultra-low interest rates and a much more stringent regulatory environment are going to have a “chilling effect on credit creation.” (While the Fed’s zero-interest rate policy was initially good for banks, it is hurting all ‘savers,’ including banks, who are being forced to sit on higher levels of capital, he notes. “The cheap funding actually enhanced net interest margin, but the point where the ‘net’ benefit for banks went negative has long since passed.”)
That, in turn, will hurt economic growth and limit job creation, he says, creating a cruel circle of irony.

If you have any questions on mortgage interest rates, applications or refinancing, please contact a reputable loan officer who diligently studies the market trends to find the best answers for you and your situation.

Market Commentary for the Week of November 18th

This week has five economic reports scheduled for release that are relevant to mortgage rates in addition to the minutes from last month’s FOMC meeting. A couple of the reports are considered highly important to the markets, meaning we could see noticeable movement in rates more than one day. There is nothing scheduled to be posted Monday or Friday, so the middle part of the week will likely be the most active.

The 3rd Quarter Employment Cost Index (ECI) will be released at 8:30 AM ET Tuesday. This data tracks employer costs for salaries and benefits, giving us an indication of wage inflation pressures. Rapidly rising costs raises wage inflation concerns and may hurt bond prices. It is expected to show an increase in costs of 0.5%. A smaller than expected increase would be good news for mortgage rates, but this is not one of the more important reports of the week. Therefore, it will likely take a large variance from forecasts for this report of have a noticeable influence on mortgage pricing.

Wednesday has four events scheduled that we need to watch, including two of the week’s more important economic reports. The Commerce Department will give us October’s Retail Sales figures early Wednesday morning. This data measures consumer level or retail spending. It is considered extremely important to the markets because it makes up over two-thirds of the U.S. economy. It is expected to show a 0.1% increase in retail-level spending, meaning consumers spent just a bit more last month than they did in September. A larger increase in spending would be considered negative news for bonds because rising spending fuels economic growth and raises inflation concerns in the bond market. If Wednesday’s report reveals a decline in spending that indicates consumers spent less than thought, bonds should react favorably, pushing mortgage rates lower. If it shows an unexpected increase, mortgage rates will likely move higher.

The second report of the morning will be the release of October’s Consumer Price Index (CPI) from the Labor Department, which is one of the two key inflation readings on tap this week. The CPI measures inflationary pressures at the consumer level of the economy and is one of the most important reports the bond market sees each month. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. If it reveals stronger than expected readings, indicating that inflationary pressures are rising at the consumer level, the bond market will probably react negatively and cause mortgage rates to move higher. Analysts are expecting to see no change in the overall reading and a 0.2% increase in the core data.

October’s Existing Home Sales data will be posted by the National Association of Realtors late Wednesday morning. It gives us a measurement of housing sector strength and mortgage credit demand by tracking home resales in the U.S. This report is expected to show a small decline in sales, meaning the housing sector weakened slightly last month. That would be good news for the bond market and mortgage pricing, but unless it shows a significant surprise, it will likely not have a major impact on mortgage rates.

Also worth noting is the release of the minutes from the last FOMC meeting Wednesday afternoon. Traders will be looking for any indication of the Fed’s next move regarding monetary policy or potential tapering of their current bond purchases. They will be released at 2:00 PM ET, so any reaction will come during afternoon trading. This release is one of those that may cause some volatility in the markets after they are posted, or could be a non-factor. If they show anything surprising, we may see some movement in rates Wednesday afternoon, but it is more likely there will be little reaction.

Thursday’s only monthly report is October’s Producer Price Index (PPI) at 8:30 AM ET. This index is similar to Wednesday’s CPI, except it measures inflationary pressures at the manufacturing level of the economy. The overall reading is expected to show a 0.2% decline from September’s level while the core data is expected to rise 0.1%. Weaker than expected readings would be good news for bonds and mortgage rates, while larger than forecasted increases could lead to higher mortgage rates Thursday morning.

Overall, I am expecting Wednesday to be the most active day for mortgage rates with three economic reports and the FOMC minutes set for release, but Thursday could be a little volatile also. The calmest day will probably be Monday while Friday should be a close second unless something unexpected transpires. The yield on the benchmark 10-year Treasury note closed last week just above 2.70%, which appears to be somewhat of a support level for the market. That means there is more of a possibility of it moving higher than breaking below and since mortgage rates tend to follow bond yields we could see higher mortgage rates before getting much of an improvement. Therefore, I strongly recommend proceeding cautiously if still floating an interest rate and closing in the near future.

Market Commentary for the Week of November 4th

 

This week has seven economic reports scheduled for release that may have an impact on mortgage rates. The most important data is scheduled later in the week, but there is data or speeches from Fed members set for every day making it likely that we will see an active week for mortgage rates with a good possibility of intra-day revisions multiple days.

Monday kicks off the week’s schedule with the release of two months of Factory Orders data. We will get results for August and September instead of the traditional single month due to delays caused by the government shutdown. This report is similar to last week’s Durable Goods Orders release except it includes orders for both durable and non-durable goods. It is expected to show a 0.3% rise in August and a 1.8% increase in new orders in September. I don’t believe that August’s data will have much of an impact on Monday’s mortgage rates. This report is normally considered to be only moderately important and August data is a couple months old now. Basically, smaller than forecasted increases would be good news for the bond market and mortgage rates while bigger increases would be bad news and could contribute to higher mortgage pricing since it would indicate economic strength.

There is nothing of relevance scheduled for release Tuesday and Wednesday’s sole report is not considered to be highly important. Wednesday’s data will come from the Conference Board, who will post their Leading Economic Indicators (LEI) for September at 10:00 AM ET. This report attempts to predict economic activity over the next three to six months. It is expected to show a 0.6% rise, indicating that the overall economy is likely to grow in the immediate future. Good news for the bond and mortgage markets will be a much smaller increase than forecasts. However, this data is not known to be highly influential on rates, so it will likely take a large variance from forecasts for it to affect Wednesday’s mortgage pricing.

Thursday starts the big news for the week. The preliminary reading of the 3rd Quarter Gross Domestic Product (GDP) will be released at 8:30 AM ET Thursday morning. The GDP is considered to be the benchmark measurement of economic growth because it is the total of all goods and services produced in the U.S. and therefore is likely to have a major impact on the financial markets and mortgage pricing. There are three versions of this report, each a month apart. Thursday’s release is the first and usually has the biggest impact on the markets. Current forecasts call for an increase of approximately 1.9% in the GDP, which would mean that the economy grew at a noticeably slower pace than the 2nd quarter’s 2.5% rate. If this report shows a much smaller increase, I am expecting to see the bond market rally and mortgage rates fall. However, a larger than expected rise could lead to a rally in stocks, bond selling and a sizable increase in mortgage pricing Thursday morning.

The first of Friday’s three reports is another key release with the Labor Department posting October’s Employment data. It is arguably the single most important monthly report since it is comprised of many statistics and readings, including the unemployment rate, the number of new jobs added or lost during the month and average hourly earnings. Current forecasts call for the unemployment rate to move higher by 0.1% to 7.3%, an increase in payrolls of approximately 100,000 and a 0.2% increase in average earnings. Weaker than expected readings should renew concerns about the labor market and rally bonds enough to improve mortgage rates, especially if the stock markets react poorly to the news. On the other hand, if the report indicates employment sector strength, especially after the government shutdown, we could see mortgage rates spike noticeably higher Friday morning.

September’s Personal Income and Outlays report will also be posted early Friday morning. This data gives us an indication of consumer ability to spend and current spending habits. It is important to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. Analysts are expecting to see a 0.2% increase in income and a 0.2% rise in spending. Smaller than expected increases in both readings would be good news for the bond market and mortgage pricing, but the Employment report will take center stage Friday morning.

The week’s economic calendar closes late Friday morning when November’s preliminary reading of the University of Michigan’s Index of Consumer Sentiment is posted. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 75.3, up from October’s final reading of 73.2. That would be considered negative news for bonds because rising sentiment means consumers are more optimistic about their own financial situations and are more likely to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watched closely. The lower the reading, the better the news it is for mortgage shoppers.

There are also quite a few speaking engagements by Fed members this week that are worth watching, including Chairman Bernanke. The topics of some of these speeches, which are scheduled each day this week, appear to be directly related to the economy and monetary policy. This means that their words will be watched closely by market participants and can be highly influential on the financial and mortgage markets.

Overall, I believe the most important days of the week for mortgage rates are Thursday and Friday. This is when we will likely see the most movement in rates due to the importance of the data those days. Tuesday appears to be the best candidate for lightest day with nothing scheduled, but we should be alert each day for unexpected news or swings in trading that could cause mortgage rates to jump. The benchmark 10-year Treasury Note yield closed at 2.62% Friday, which could mean there is more room for it to rise before coming down if it does not fall below 2.60% right away. Therefore, please proceed cautiously if still floating an interest rate and closing in the next month or so.

Mortgage News Roundup

 

In today’s mortgage news roundup, we look at another bank that had to settle lawsuits, the idea of test-driving a home before you buy, and more reasons to buy or refinance before 2014 hits.

Ally settles U.S. regulators’ mortgage securities claims

Residential Capital LLC, the former mortgage unit of Ally Bank, has agreed to settle lawsuits by two U.S. regulators over alleged misstatements about its residential mortgage-backed securities.

Residential Capital is under Chapter 11 Bankruptcy protection right now, and will have their bankruptcy exit plan reviewed in a hearing on November 19th.

Alfred Pollard, general counsel for FHFA, said in a statement that details will be released after the end of the current fiscal quarter, as both sides continue to hash out final terms. Ally was one of 18 financial institutions sued by the FHFA in 2011. FHFA targeted companies that they felt made false or misleading statements relating to some $200 billion in residential mortgage-backed securities bought by Fannie Mae or Freddie Mac. FHFA is the conservator organization for Fannie Mae and Freddie Mac.

David Barr, a spokesman for the FDIC, said that agency’s settlement was worth $55.3 million, and resolves four lawsuits against Ally related to mortgage-backed securities.

Quirky Trend Could Save You From Buying The Wrong House.

Try before you buy works well with automobiles, but what about houses?

There is a new trend that allows serious potential home buyers to spend some time alone in the property without the pressure of anyone else. It allows the buyer to pretend that they are living there. You suddenly see things that you might not have just doing a walk through. You could pretend to cook and discover that you don’t like the way the oven door opens into the doorway.

Or that you thought you’d enjoy living next to a park, but weren’t expecting the crush of cars with people who exercise at 5:30am or 6:30pm.

Mortgage refinancing projected to plunge in 2014 as rates rise

Is this the end of bargain mortgage rates?

Home lending will fall by a third next year as interest rates rise, a mortgage industry group says in a new forecast.

The Mortgage Bankers Assn. said Tuesday that it expects to see $1.19 trillion in new mortgages written during 2014, down 32% from $1.75 trillion this year.

Jay Brinkmann, the group’s chief economist, said all-cash home purchases by bargain-hunting investors – a huge driver of home sales the past few years – are expected to taper off next year.

He also expects mortgage rates to rise above 5% in 2014 and to increase further to 5.3% by the end of 2015.

As we’ve reported in prior posts, now is the time to get a mortgage…new or refinance. Contact your local mortgage broker and discuss your goals and current situation to find the best solution for you.