Freddie expects refi demand to grow, mortgage rates at 4.1 per cent
Refinance mortgages will continue to see strong demand in 2016 according to Freddie Mac. In its latest monthly Insight & Outlook the corporation says that low mortgage rates and increases in home equity
will boost demand for refinancing and that this sector will reach a 40 per cent share of all originations this year.
Freddie expects the average 30-year mortgage rate to be 4.1 per cent in 2016 and 4.8 per cent in 2017. It says that 95 per cent of refinancing borrowers choose a fixed rate loan regardless of the type of the original mortgage.
On the housing market, chief economist Sean Becketti commented: "Housing was one of the few bright spots in the economy last year, and we expect continued improvement in 2016. The imbalance between demand for housing and the supply of both houses and apartments has supported rapid growth in both house prices and rents. The gap between demand and supply will not be closed any time soon, thus we project continued house price appreciation in 2016."
Pending home sales cooled in January
Pending home sales have showed some decline at the start of 2016 but remain above the level of a year ago. The Pending Home Sales Index from the National Association of Realtors shows a dip to 106.0 in January, down 2.5 per cent from December but it still 1.4 per cent above January 2015.
Existing-home sales increased last month and were considerably higher than the start of 2015 but price growth quickened to 8.2 per cent – the largest annual gain since April 2015.
Affordability remains an issue for many buyers especially those trying to enter the market: “First-time buyers in high demand areas continue to encounter instances where their offer is trumped by cash buyers and investors,” adds Yun. “Without a much-needed boost in new and existing-homes for sale in their price range, their path to homeownership will remain an uphill climb,” commented NAR chief economist Lawrence Yun.
Investors back US commercial real estate
A new report shows that investors are far more confident in US commercial real estate than the global average. Altus Group in association with he National Association of Real Estate Investment Trusts and the National Council of Real Estate Investment Fiduciaries found confidence in the US economy was ranked 63.3 among senior executives at real estate investment companies, compared to 45.4 per cent for the global economy. For the real estate industry, the US was considered a healthy 68.5 with the global industry at 58.9.