Freddie Mac sees Brightest Housing Year in Decade

Julie C. Nichols General

Reblogged from Mortgage News Daily – Jann Swanson

Freddie Mac predicted in its monthly Outlook on Thursday that 2016 might be the best year for housing in a decade with most sectors, sales, construction, and prices, set to reach new recent highs. They base this on several factors, mortgage rates, employment, household formation, rising home inventories and increasing prices.

Mortgage Rates

Rates so far this year have remained lower than the average for last year and Freddie Mac, while admitting that a rapid increase in rates would mean all bets would be off, remains convinced they will increase gradually and then only in the second half of the year, helping support homebuyer affordability in the face of rising house prices and stagnant income.

One factor that will probably serve to keep down interest rates in this county are the negative rates in many other countries. Japan’s 10-year government bond, for example, reached a negative 0.1 percent this month and across Europe many countries’ sovereign bond yields are also negative. These rates should keep the lid on long-term rates in this country although the outlook for global growth will improve or at least stabilize through the year lessening downward pressure. Further, Freddie Mac’s economists say, "More good news on the domestic U.S. economy, and a return to tightening by the Federal Reserve, will push rates higher later this year. The Fed is likely to only raise rates twice this year, which will slow the pace of interest rate increases."

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