Fannie Mae economists are projecting that demand for home loans will more than double in the next two years. This is in large part due to their prediction that mortgage rates will stay well below 5 percent through 2013. This is certainly welcome news for the real estate market following another tough year this year.
According to the Mortgage Bankers Association demand for home purchase loans is down 12.1 percent from a year ago. Many homeowners and would-be homeowners stated that they are unwilling or unable to get a new loan despite the fact that rates on 30-year fixed-rate mortgages recently dropped below 4 percent for the first time in history. The slowing economy was cited as the primary reason for not being able to take advantage of the low rates. Nearly eight out of 10 mortgage applications for the week ending September 30 were for refinancing – down 5.2 percent from the week before.
Fannie Mae is projecting that 30-year fixed-rate loans will average 4.2 percent for the rest of this year. The first half of 2012 is expected to have similar rates slowly rising to 4.4 percent during the final quarter of 2012 and continuing to rise to 4.6% in 2013.