Freddie Mac Predicts Recovery in the Housing Market for 2011

Freddie Mac's chief economist, Frank Nothaft, predicts that we should see gradual economic recovery throughout 2011.

Nothaft forecasts that low mortgage rates, which dropped to their lowest levels in 60 years, are likely to continue through 2011. The Federal Reserve is expected to keep rates low, though a small rise is predicted, "30 year fixed-rate loans are likely to remain below 5 percent throughout the year," with a gradual recovery in house prices near year-end.

Homebuyer affordability is at the highest level in decades with home prices nearly bottomed out. This will attract many first time buyers to the market, which, in turn, should lead to more sales in 2011. However, many borrowers have already refinanced in the past year, or are in the process of refinancing, so this, coupled with the likelihood of fixed mortgage rates to increase slowly over 2011, will lead to lower total lending in 2011.

Although single-family mortgage delinquency rates are extremely high, they have begun to decline in 2010 and will continue through 2011 due to employment and economic recovery and foreclosure alternatives.

Nothaft sees the economy showing improvements which is good news for the recovery of the 2011 housing and mortgage markets.

Posted on December 15, 2010 09:29:57 by Blog Author