Mortgage Rates Aren’t Going Back Down: Fannie Mae Economist

By Qiong (June) ZhangNo Comments

http://finance.yahoo.com/blogs/daily-ticker/mortgage-rates-aren-t-going-back-down-fannie-174009047.html?vp=1

Freddie Mac reports rates for home financing are just shy of 4% this week, the highest since the week of April 12, 2012.

What’s different this time around, according to Doug Duncan, chief economist at Fannie Mae, is that mortgage rates aren’t going back down.

Duncan says he does think the Fed will work hard to try to prevent rates from going further up from here and may try to hold them here through the end of the year.

Fannie Mae just released its mid-year economic outlook and sees a strengthening housing market pushing the economy forward at a lethargic 2.1% rate in 2013.

One interesting change Duncan says they’ve found through a survey Fannie Mae conducts is a jump in home sellers’ confidence. Forty percent now say it’s a good time to sell a home – a huge jump over last month and last year. This matters, according to Duncan, because five of eight people who are going to buy a house have to sell one first.

Tight housing supply has helped to fuel recent price gains in housing. One concern is that if people do start selling their homes, supply will increase and home price gains could slow down.

Duncan says this dynamic “will eventually slow the pace of price increase, but not until next year.”

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