Mortgage News

Freddie Mac analysts point to five features that they believe will likely characterize the 2011 real estate markets:

 Advantageous home loan rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0% to 0.25% for most or all of 2011, advantageous rates will be a feature of the 2011 market. Thirty-year fixed-rate loans are likely to remain below 5.0% throughout the year, and initial rates of 5/1 hybrid adjustable-rate loans will likely remain below 4.0% in 2011.

 House prices have hit bottom. Prices are likely to begin a gradual, but sustained recovery in the second half of 2011.

 Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market next year, likely translating into more home sales in 2011 than in 2010.

 Refinances will dwindle. Many eligible borrowers have already refinanced. While fixed-rates are likely to remain low, they will move up gradually.

 Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings generally crests within a year of the start of the recovery in payroll employment. Payrolls began to rise last January, and by the spring delinquency rates had begun to fall...

 Source: Freddie Mac