Real Estate Predictions for 2011

5 Predictions for 2011

Freddie Mac points out five features that will characterize the housing and mortgage markets next year

1. Low Mortgage Rates:  Relatively low mortgage rates will be a feature of the 2011 mortgage market.  Those watching the Fed expect the central bank to keep the federal funds rate at 0 percent to .25 percent.  30-year fixed rate loans will more than likely stay below 5% throughout the year.

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

3. Housing will remain affordable: Many first-time homebuyers will hit the housing market in 2011 because of the affodability of homes being high.  This will mean more home sales in 2011 than in 2010.

4. Refinances will dwindle: With the Making Home Affordable refinance program expiring in June of 2011, many of the eligible borrowers have already re-financed.  Refinancing will be less of an option to most home owners because although fixed-rate loans are likely to remain low, they will gradually move up.

5. 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 — known as the “seriously delinquent rate” — generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.

Source: Freddie Mac (12/09/10)

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