Mortgage markets are waiting for changeby Tim Manni
The mortgage markets are due for some change. About the only certainty in today’s marketplace is uncertainty. Will tomorrow’s mid-term elections bring the change the mortgage and housing markets so desperately need?
To take a deeper look into the possible change tomorrow’s elections may bring, here’s an excerpt from HSH.com’s latest Market Trends Newsletter:
It is commonplace that the party in power will lose seats during mid-term elections. If the pollsters and pundits are correct, Tuesday might bring a fair sea change to Washington.
The first two years of the present administration have featured sweeping changes to a number of areas near and dear to the mortgage and housing markets, from the distorting effects of homebuying incentives to financial market and regulatory reform. In the midst of crisis, unique steps were taken by central banks to support the economy and we seem likely to continue on this path. Huge stimulus packages have come and gone. Millions have lost their jobs, and a few more folks will join their ranks on Tuesday.
At this point, mortgage markets are waiting for change.
Mortgage rates remain low
Interest rates remain low, of course. HSH’s overall mortgage tracker — our weekly Fixed-Rate Mortgage Indicator (FRMI) — found that the average rate for 30-year fixed-rate mortgages rose by six basis points (.06%), ending HSH.com’s national survey at 4.64%. Important for first-time homebuyers and low-equity-stake refinances, FHA-backed loans are available at an average rate of 4.28%, while the overall average rate for hybrid 5/1 ARMs was 3.53% for the period. HSH.com’s public data series include rates for conforming, jumbo, and most recently the GSE’s “high-limit” conforming products and so covers much of the mortgage-borrowing public.
Uncertainty is holding back recovery
It might be said that uncertainty is holding back recovery in the housing market and the broader economy. Old, well-understood processes have been replaced by murk, whether it’s how much risk someone might take by buying a home or investing in a mortgage, or even what happens when a loan fails. These all used to have certain resolutions, or at least their risks were known and could be planned around, but today, there is no clarity.
The entirety of the secondary mortgage market remains unresolved, with reform kicked down the road repeatedly. Tax policy is up in the air, too; at this moment no one knows what their obligations to the Federal government will be come January. Reform of consumer finance regulations is in its nascent stage, with an unclear way forward. The entire health industry is also in upheaval, and there are plenty more examples.
Although we are no longer in crisis nor panic, the lack of a clear path forward is keeping the recovery at bay, or at least in a muted pattern…
CLICK HERE to continue reading the latest issue of our Market Trends Newsletter, “Mortgage Market Awaits Change.”
HSH.com’s free Market Trends Newsletter, an in-depth analysis of various financial markets from the week prior, is published every Monday. Email subscribers receive it in their inbox Friday night, so sign up today! Also, be sure to check in with our Market Trends blog for all news relating to any weekly shift in mortgage rates.