Significant Refinance Potential May Help Mortgage Market in 2014
The Federal Reserve seems committed to ratcheting down its acquisition of Treasuries and mortgage-backed securities (MBS) as long as growth remains at least at 2013 levels and also likely to taper down its extra purchases to zero by the end of the year which will put some upward pressure on long-term interest rates. But the effect of Fed actions on MBS yields in the short term are likely to be mitigated by a recent decline in new issuances related to a seasonal slowdown of new purchase mortgages and a drop in refinancing because of higher interest rates.
Also global capital market investors have shifted funds into Treasuries and other fixed-income assets out of concern over emerging market growth. Even as the Fed began to taper at the beginning of the year 10-year Treasury yields and mixed rate mortgage rates generally have eased; down about 0.3 percentage points over January and early February. This has resulted in an increase in mortgage application volume of 20 percent and applications for refinancing rising by 28 percent.
This increase, the economists say, underscores that a significant amount of potential refinancing is out there. Of the outstanding 30-year MBS for Fannie Mae, Freddie Mac, and Ginnie Mae, over $800 billion have a coupon of at least 5.0 percent. Even after accounting for servicing and other fees many of the mortgages underlying these securities should have incentive to refinance, provided borrowers can qualify in the current credit environment.
Posted on February 19, 2014, in Uncategorized and tagged 2014, Low Rates, Mortgage, mortgage expert, Mortgage Rates, mortgage rates on staten Island, Mortgages, refinance, refinance staten island, refinance staten island ny, refinancing in 2014, Staten Island. Bookmark the permalink. Leave a comment.