Home purchase mortgages are expected to overtake refinancings in the lending market, which will bring about a steadying of mortgage volumes. CoreLogic staffer Frank Nothaft takes a look at the historic impact of mortgage rates on refinance and home sales and home purchase lending.
He explains how large variations in mortgage rates were caused by waves of so-called “rate-and-term” refinancing. Nothaft then talks about a new normal coming to morgtage lending:
That’s because the historic period of economic disinflation that began in the early 1980s is behind us, and lower inflation expectations have translated into lower interest rates. The Federal Reserve has indicated it would prefer slightly more inflation, with a target of 2 percent inflation per year, and that it expects to increase short-term interest rates in the future. Thus, mortgage rates are expected to rise.