While Friday’s jobs report was bad and the 10-year Treasury fell to 1.69%, a spike in refinancings may be short lived, according to a Mortgage Bankers Association economist.
MBA’s vice president of research and economics Michael Fratantoni expects to see improving economic growth with job creation averaging 170,000 a month. (The March report showed only 88,000 new jobs.)
He expects gradual rising interest rates as the economy and the housing market improves, which will not be good for refis.
However, there will be a “fair amount of volatility” in rates, the MBA economist said, particularly if the Federal Reserve begins to vary its asset purchases in the second half of the year.
Meanwhile,
Existing home sales should increase 5% this year and new homes sales may be up 10%, Fratantoni told NMN.
While inventories are tight, rising home prices may entice more owners to put their properties up for sale. And sellers may “dive in if we get a couple of strong job reports,” he said.
At the same time, REO cash sales may decline as it gets harder for large-scale investors to find deals that make renting profitable. That would open up more opportunities for purchase financing.
Overall, MBA’s forecast calls for mortgage purchase loans to comprise 42% of originations in 2013, up from 29% last year.
