AccessMyLibrary provides FREE access to over 30 million articles from top publications available through your library.
Create a link to this page
Copy and paste this link tag into your Web page or blog:
Rate Forecast Calls for Cautious Optimism: Core inflation 'is likely above' the Fed's target range.
For portfolio managers, the present economic environment is a lot more reassuring than the meltdown in mortgage rates that generated huge volumes of refinancing between 2002 and 2004. But that doesn't mean people responsible for hedging mortgage portfolios can take their eye off the ball.
A number of factors point toward elevated levels of refinancing - and portfolio runoff - even as interest rates edge upward. The rise in popularity of hybrid fixed-adjustable products, plus the latest innovations in option ARM products and interest-only loans, mean that many borrowers are facing upward adjustments in their monthly mortgage bills. In some cases, those adjustments could lead to dramatically higher payments. Some of those borrowers will respond by refinancing into a new loan product, creating new challenges for hedge managers as they study the prepayment characteristics of these new loans.
And even for more traditional fixed-rate products, hedging may gradually be growing more complicated. Borrowers enter the next rate cycle with more experience and knowledge about refinancing than ever before, and that may mean that they'll be quicker to pull the trigger when a rate incentive to refinance emerges. In addition, cash-out refinancing reached its highest level since 1990 in the second quarter of this year, with 88% of refinanced loans resulting in new loans at least 5% higher than the original balance, according to Freddie Mac. While home price growth may be slowing, many homeowners still are sitting on substantial equity, which may prod them to refinance to consolidate debt or access cash.
On the bright side, interest rates seem to be stabilizing with a bias on the upward side, suggesting that rate-induced refinancing should cool down. Freddie Mac chief economist Frank Nothaft predicts that rates will fluctuate within the 6.5% to 7% range for the rest of this year. He believes that cooling housing markets and weaker consumer confidence have raised hopes that inflation will remain in check, ...
- Bankrate: Mortgage Rates Slide Back.
- Press release article from: PR Newswire June 21, 2007 700+ words
...PRNewswire-FirstCall/ -- Mortgage rates broke a 7-week streak...preceding three weeks, mortgage rates responded to signs that core inflation was moderating as the Fed...pushed both bond yields and mortgage rates lower. Mortgage rates...
- U.S. mortgage rates rise to November levels.
- News wire article from: The America's Intelligence Wire January 18, 2007 700+ words
...KER MUNTHIT CHICAGO (MarketWatch) -- Mortgage rates were at their highest levels since November...sector, but concerns over the level of core inflation will continue to cause mortgage rates to fluctuate," Nothaft said. To obtain...
- Bankrate: Mortgage Rates Reach 3-Month High.
- Magazine article from: DubaiPhotoMedia February 2, 2007 700+ words
...move inversely and mortgage rates are closely related...positive development for mortgage rates is the Federal Open...s admission that "core inflation readings have improved...pressure being felt by mortgage rates. Fixed mortgage rates...
- Despite rate hikes, mortgage rates hold steady.
- Newspaper article from: St. Charles County Business Record, MO March 10, 2006 700+ words
...s no push to hike mortgage rates in anticipation of...uncertainty and boosts in mortgage rates, he adds, but there...combined with the low core inflation rates, currently is helping to keep mortgage rates in check," Merski...
- After a year and a half of Fed rate hikes, mortgage rates hold steady.
- Magazine article from: Long Island Business News January 27, 2006 700+ words
...s no push to hike mortgage rates in anticipation of...uncertainty and boosts in mortgage rates, he adds, but there...combined with the low core inflation rates, currently is helping to keep mortgage rates in check," Merski...
- U.S. mortgage rates drop for second straight week.
- News wire article from: The America's Intelligence Wire September 18, 2003 700+ words
...not raise rates anytime soon. Add to that the fact that recent economic data shows core inflation is less than the market expects, and we see mortgage rates drop once again," said Frank Nothaft, Freddie Mac chief economist. "And although...
- Bankrate: Softer Home Sales Lead Mortgage Rates Lower.
- Press release article from: PR Newswire March 2, 2006 700+ words
...FirstCall/ -- Mortgage rates fell, aided by a...last week. Fixed mortgage rates declined for the second...appeasing themselves that core inflation was not at troublesome...the movement in mortgage rates was dominated by reports...
- U.S. mortgage rates fall in latest week.
- News wire article from: The America's Intelligence Wire February 19, 2004 700+ words
...MW) -- U.S. mortgage rates dropped in the week...the loan amount. "Mortgage rates this week are at seven...a matter of fact, core inflation is at a generational...for housing, as low mortgage rates make home ownership...
- U.S. mortgage rates inch lower; 30-year at 6.26%.
- News wire article from: The America's Intelligence Wire February 23, 2006 700+ words
...MarketWatch) -- Mortgage rates inched lower in the...Freddie Mac , said tame core-inflation figures and market...inflation low kept mortgage rates in check this week...term, we expect mortgage rates will bounce back...
- Rate Forecast Calls for Cautious Optimism: Core inflation 'is likely above' the...
- News wire article from: Mortgage Line Cornwell, Ted November 1, 2006 700+ words
...and slightly higher mortgage rates in the near future...contributed to lower mortgage rates last month. But not...thinks that lower mortgage rates will last. In fact...has been cooling, core inflation increased by 2.5...
Source: HighBeam Research, Rate Forecast Calls for Cautious Optimism: Core inflation 'is likely...