Greenbook: A Local Guide to Chesapeake Living - Issue 3 | Page 49

Fannie Predicts

Cheap Rates to Remain

DAILY REAL ESTATE NEWS | TUES., DEC. 02, 2014

Mortgage financing giant Fannie
Mae dropped its mortgage rate
forecast for next year about
two-tenths of a percentage points
from its prior forecast, projecting
30-year fixed rates will remain
lower than initially thought, at
about 4.3 percent next year.

market continues to grind its way
upward, but we don’t expect a
breakout performance in 2015 as
the fundamentals remain somewhat
muted,” says Doug Duncan, Fannie’s
chief economist. “We believe that
mortgage activity in 2015 will be
very similar to 2014.”

This will cheapen the borrowing
costs for home buyers and
refinancers, helping to make
home ownership more affordable.
However, with the forecasted rate
drop, Fannie Mae economists didn’t
adjust the forecast for total home
sales for 2015.

Last week, the 30-year fixed-rate
mortgage averaged 3.99 percent
nationwide, marking the sixth
consecutive week of near 4 percent
averages, Freddie Mac reported in
its weekly mortgage market survey.

Learn why life doesn't rise or fall
with interest rates. “The housing

spikes of the early 80s did stimulate
buying,” says David Crowe, chief
economist at the National Association
of Home Builders. “This time around,
the low rates are still not as low as
they [recently] were so the relative
advantage is not as great. ... [Also]
the current situation is much more
driven by the availability of
mortgage credit than the cost.”

But will another year of low rates
spur more home buying?
“The relatively lower rates after the

GREENBOOK | SEPTEMBER - OCTOBER 2014

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