Just when economists were projecting record annual sales for the US housing market, changes in the mortgage rates have sent it on a downward spiral. Both sales and applications for home mortgage have seen a decline since the week of April 14, 2014.
According to Reuters, both refinancing and purchase mortgage applications in the United States dropped during the week of April 14, 2014. In a statement, the Mortgage Bankers Association (MBA) reported that its seasonally adjusted index of mortgage applications for both home purchase and refinancing, fell 3.3% for the week ended April 18. While refinancing mortgage applications dipped 3.7%, home purchase loan applications fell 2.6%.
Here’s a look at what experts believe we should expect in terms of mortgage rates by the end of 2104:
Mortgage Rate Projections for 2014
Projected Mortgage Rate by Q4, 2014
|Mortgage Bankers Association||
|National Association of Realtors||
Implications of Rising Mortgage Rates
Mortgage interest rates witnessed an increase with the Fed withdrawing its stimulus, while investors who had helped the housing prices surge over the past two years have been retreating from the market. This only goes to reflect the “underlying fragility” of the housing market, reported Bloomberg.
“I hadn’t expected this type of flat-lining in the housing market for this long,” said Mark Zandi, Chief Economist at Moody’s Analytics Inc. “Investors have driven the market since the turn, back in early 2012, and investor demand is petering out,” Zandi added.
San Francisco’s Bay Area witnessed a home sales decline of 13% in March 2014, as compared to a year ago, while prices rose 23%, according to statistics released by DataQuick, the research arm of CoreLogic. While the median sales price in the Bay Area was the highest since 2007, the past month was the slowest in terms of sales in March in six years, DataQuick reported. The statistics also showed that FHA home loans, a popular option for first-time home buyers, saw a decline to 9.0%, from 10.2% of home purchases in February 2014 and 11.5 in March 2013.