Mortgage Activity Estimated to Hit Lowest Level in 14 Years

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Economists have been forced to downgrade their forecasts for the housing market in 2014 after its weak performance in the first quarter. The situation is similar with mortgage loans whose volume is falling. It is projected that the mortgage origination volume is the lowest in 14 years.

Using the data which has been compiled so far, Fannie Mae expects the mortgage origination volume for the first quarter of 2014 to be around $237 billion. The volume has not been lower in 14 years. During the first quarter of the year the house sales fell by 6.6% on an annual basis. These negative trends are expected to remain as there has not been major improvement despite the fact that we are in the peak of the house buying season.

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The new forecasts for 2014 based on the data from the first quarter indicate that the home sales will decline by 2.1% on an annual basis from 2013. While previously economists forecasted over 5 million home sales in 2014, now they are predicting 4.98 million sales. The annual mortgage origin volume is expected to decrease by 3% to $710 billion. There are various factors which will affect both mortgages and the housing market.

Despite the fall in mortgage rates, the affordability of houses and home loans is declining. House prices increase at a faster pace compared to the income of prospect buyers. While the rates on conventional home loans are lower, the down payments required by lenders are still very high. The FHA loans which require a down payment of just 3.5%, on the other hand, are becoming more expensive due to the higher insurance fees. The tighter credit standards have a major negative impact on the mortgage applications made by home buyers as well.

The mortgage activity is expected to remain fairly low even with further decreases in the mortgage rates.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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