Though, not a 2014 prospectus in the truest sense, a recent report from the Federal Savings Bank’s talked about what the coming year may bring for consumers vis-à-vis the broader mortgage lending market.
In terms of mortgage rates, the Federal Savings Bank predicted that interest rates may be higher in 2014, especially if the Federal Reserve starts its so-called “taper” of its bond-buying stimulus by early 2014. If it does so, interest rates may scrape the 5 percent threshold, though the Federal Savings Bank believes that higher rates may not be as detrimental to the housing market as one may think.
Quantitative easing (colloquially known as “QE”), after all, is an ersatz way of keeping mortgage rates at historical lows, while higher mortgage rates could result in more long-term upside by way of steadier housing growth.
The Federal Savings Bank also postulated on how recent lending reforms may manifest on the housing market next year. Many of these reforms were instituted pursuant to avoid another housing bubble, and the Federal Savings Bank quoted the Home Buying Institute in saying that home buyers may need to furnish additional documentation to prove their capability to repay their mortgages.
Finally, the congruent increase in pricing and in housing inventory could mean more homes may be placed on the market. This would be a win-win situation for first-time home buyers and sellers alike, as it would mean more chances for home buyers to purchase their new home, and more homes for sellers to offer to their clients.