Mortgage Market Update
Finally, we are drawing to the end of the election madness that has consumed us for so many months. Come Tuesday, we will know the outcome of the Presidential election. One thing to keep in mind is that the outcome of the election may have an impact on the mortgage markets. There are two potential scenarios that could possibly change mortgage rates in the very near future.
(1) Romney win: In the event that come Tuesday we have President Romney instead of Governor Romney, the chances of a Bernake replacement are 100 percent. The catch-22 will be who replaces him and what their policies will be. It is likely that QE-continuous will come to a screeching halt under a President Romney unless there is a way to convince him (through his economic advisors) that this is the right path. Expect short-term rates to increase in this event.
(2) Obama win: While Ben Bernake’s appointment continues through January of 2014, he has clearly indicated that he does not plan to stay for another term even if President Obama wins re-election. Once his term ends, that will mean President Obama will have to decide on who replaces him. There is a good possibilty that Obama will replace Bernake with someone who shares the same views as Bernake meaning little (if any) change in short-term rates.
DeMarco: The unknown factor
Another potential factor that could have a long-term impact on housing rates is Ed DeMarco. There has been a great deal of discussion and speculation regarding his future as the acting Federal Housing Finance Agency director. If the rumors are to be believed, in December Mr. DeMarco will be replaced and this could mean big things in the housing market. DeMarco has taken blistering criticism for his unwillingness to help homeowners who are currently underwater by encouraging a reduction in principal for those homeowner’s who have FNMA and FMAC loans. If in fact Demarco is replaced (by a winning Obama) we might see two things: a principal reduction for responsible homeowners and a remarkable change in the overall housing market. Stay tuned for more on this.
This week in review
This weeks mortgage rates ticked slightly lower than last weeks by almost two-tenths of a percent for most mortgages. In fact, even the hybrid mortgages, which are growing in popularity saw a slight downtick. On an interesting note, refinances continue to make up at least 80 percent of the current mortgages that we are seeing in new applications.
Consumer confidence continues to grow steadily and housing starts are up modestly. This upcoming week there is likely to be a slight tick downwards in loan approvals in the mid-east states where hurricane Sandy decimated so much property. Lenders in this area will likely request statements and confirmation that properties under agreement were not damaged in any way by the storm.
There was plenty of good news in this weeks jobs reports even though unemployment rates ticked up one tenth of a percent. This increase was largely due to the fact that we had more people coming BACK to the job market which is a sign that people are feeling more optimistic about finding work.
Keep in mind that while mortgage rates are continuing their modest downward trend, that this is still a great time to refinance. Watch out for this weeks election returns and make a decision about whether or not you should consider locking in your rate. Contact Core Mortgage Financial if you have any questions about your current rates or to determine if this is a good time to consider refinancing.
Dislaimer: This article is for informational purposes only. We are not giving mortgage market rate lock guidance. NMLS #849597