SOURCE: Freddie Mac

Freddie Mac

February 18, 2014 10:18 ET

Will Housing Take Gold?

February 2014 U.S. Economic and Housing Market Outlook

MCLEAN, VA--(Marketwired - Feb 18, 2014) - Freddie Mac (OTCQB: FMCC) released today its U.S. Economic and Housing Market Outlook for February showing that despite the Federal Reserve's taper activity, long term rates have eased over the past month, providing a chance for some borrowers who are holding older mortgages an opportunity to refinance. A short preview video, and the complete February 2014 U.S. Economic and Housing Market Outlook are available here.

Outlook Highlights and First Quarter Projections

  • The lackluster labor market report for January resulted in a slow start for the residential sector. Only 113,000 jobs were created, less than the 194,000 per month the U.S. averaged for 2013.
  • Despite the Federal Reserve tapering activities, 10-year Treasury yields and fixed mortgage rates dipped about 0.3 percentage points between early January and early February, breathing a bit more life into refinance activity in the mortgage market.
  • Based on 30-year mortgage-backed securities outstanding for Fannie Mae, Freddie Mac, and Ginnie Mae in January 2014, we estimate more than $800 billion in securities with a coupon of at least 5.0 percent are in the money and would benefit by refinancing.
  • Approximately half of the borrowers who refinanced held their previous loan for seven years or longer, according to the Freddie Mac fourth quarter refinance report.

Quote
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist.

"It appears mortgage rates may have given the market a reprieve for a month or so and provided some borrowers another chance at refinancing, especially those folks that may be holding older mortgages. However, if rates continue their upward trend, it will be difficult for many families to purchase a home without seeing some income growth. Rising home prices and interest rates along with little to no income growth has resulted in a substantial erosion of homebuyer affordability over the past year. Therefore, jobs and income growth are necessary for 2014 to turn in another gold-medal performance for the housing recovery."

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. For more information please visit www.FreddieMac.com. Twitter: @FreddieMac