Freddie Mac’s outlook for 2012 was released Wednesday and indicates that mortgage interest rates should remain very low through at least mid-2012. The outlook indicated that there will be fewer single family home loans originated but an increase in multi-family lending. It doesn’t take a rocket scientist to predict this, since logically with all the foreclosures pushed through the pipeline in the past year there needs to be housing for those that lost their homes and have now shifted to tenants as opposed to homeowners. This in itself will prove to be a profitable outlook for investors and landlords that are in a position to rent out their investments to people requiring rental property, but that’s another story for another time.
The outlook doesn’t specify what type of mortgage loans the attractive low rates will cater to, history reflects that those that could handle a traditional conventional mortgage with attractive credit scores were the winners of the best rates and rightfully so, however, the FHA and VA loans are still at historically low rates and have become extremely popular loans in the past few years due to the low down payment requirements and less than perfect credit scores allowed.
Frank Nothaft, Freddie Mac’s chief economist stated that “While the headwinds remain strong in 2012, there are indications that the housing market and economy are gaining ground, albeit slowly.” Freddie Mac also predicted that the U.S. economy will grow by about 2.5% next year. The question is, is it enough for us to feel any difference?
Recent news of scrutiny of the big banks and how they are handling their paperwork during the foreclosure process will no doubt hold up the foreclosure process again. Looks are very deceiving, and the inevitable lull may make it “look” like foreclosure rates are dropping, then suddenly a new onslaught of foreclosures will start up yet again and will start the roller coaster ride of market price chaos.
Now, given the recent track record of Freddie Mac and their “predictions” are we to believe anything Freddie Mac says anymore? After all, let’s rewind the clock shall we? These are the same people that “predicted” the housing market was stable back in 2007, sadly they were wrong.
Fortunately for us, SWFL is still one of the most desirable locations in the country to raise a family or retire in. Macro demographics of baby boomer relocation and Florida’s relative solvency compared to many states keeps us bullish in this market for the long term. According to John Carney, “Any time you can buy a house in paradise for a fraction of build cost, you know it’s a market in equity and you should take full advantage”.
