WASHINGTON (11/24/14)--Fannie Mae has dimmed its forecast for home-loan rates in 2015, according to MarketWatch (Nov. 21), however the lower monthly payments may fail to stir up residential sales.
The government's secondary-mortgage market giant dropped its estimate for the 30-year fixed-rate mortgage to about 4.3%, which is a drop of two-tenths of a percentage point from its most recent estimate for next year.
Still, Fannie Mae officials aren't encouraged by the prospects for the 2015 housing market.
"The housing market continues to grind its way upward, but we don't expect a breakout performance in 2015 as the fundamentals remain somewhat muted," Doug Duncan, chief economist for Fannie Mae, told MarketWatch. "We believe that mortgage activity in 2015 will be very similar to 2014."
Rates also continue to remain flat through the end of the year.
Freddie Mac's most recent reading for the 30-year fixed-rate mortgage came in below 4%, the sixth straight week of readings hovering near 4%. The mortgage rate has averaged 7% over the last three decades.
Home sales have not picked up despite the persistent low rates on the market, and analysts believe that if rates continue to remain flat through 2015, there's no reason to believe the housing market will drastically improve.
New single-family homes are selling at a pace 34% below levels seen on average over the past three decades, MarketWatch reported, while existing-home sales have reached a pace about 12% faster than the average of the past 30 years.
Many analysts believe it's the credit standards that are pressing down on sales, not necessarily the price tags on the homes.
"The current situation is much more driven by the availability of mortgage credit than the cost," said David Crowe, chief economist for the National Association of Home Builders.