Mortgage and Housing Outlook for 2014

It may seem a little late to be talking about the real estate industry outlook for this year, as we’re already more than half way through it. However, over at NuwireInvestor.com, there is an interesting article this week doing just that.
It begins by stating that things are certainly getting better, but also predicting that there will be no quick snap back to normal market conditions anytime soon. HSH.com, a mortgage and housing research company provides some data:
• Mid-year analysis shows 30-year fixed mortgage rates could move up to 5% to 5.25% before the year is over.
• That’s a significant factor, as the current rate is around 4.233%.
• With the Fed attempting to keep interest rates down, it is expected that entry level ARM rates will remain low.
• This will create a widening gap between ARM and fixed rate loans, moving more borrowers to ARMs.
• Qualifying for a mortgage is easier now, but still more difficult than in “normal” times. Tougher Federal regulations are one reason.
It seems like a “same old song” situation covering the previous year and moving forward. It’s tough to get a mortgage even with low rates, and prices have been rising. This combination is continuing to dampen retail buying demand.
Lenders aren’t getting the refinances they were, which has helped to shore up the mortgage market with so few buyers out there. There is even some movement back into subprime loans, though they’ll never go back to the practices that fueled the crash. Today’s sub prime loans require significant equity in the home and often charge rates of double or more what good credit borrowers can get.
It seems that without a nice kick to the upside for the economy, with more and better jobs, there is going to be only lackluster improvement in the housing market the remainder of the year and even longer.