“Low mortgage rates are not pulling buyers into the house market like they used to,” according to economists at Wells Fargo Securities
The WFS economists point out that a Federal Reserve survey found little change in lending standards since October despite rising demand for prime loans.
“Notwithstanding favorable market conditions, tight lending standards are confining many potential homebuyers to the rental market,” says a new WFS housing report.
CoreLogic chief economist Mark Fleming expects refinancings will slowly decline over the next two years and many borrowers that have locked into historically low rates will have little incentive to sell, move or refinance again.
“Therefore, it is reasonable to assume that turnover of the mortgage stock will slow and the importance of purchase mortgages will rise,” Fleming says in a CoreLogic publication released Tuesday morning.
“In the intermediate term, this will likely stimulate competitive pressure among lenders to squeeze profits and relax credit standards,” he says in a “Market Pulse” article.