The Mortgage Marketing Guide has had pretty good accuracy in their predictions. Read some of their successful predictions for 2009 and those for 2010 by Barry Habib:
Scorecard for 2009 Forecast:
After accurately forecasting a down year for the Stock market in 2008, we hit the nail on the head again by forecasting an up turn in 2009.
Our predicted hot Stock picks – which included a variety of financial companies as well as oil – were on the mark again this past year.
We also predicted that the Federal Reserve would hold the Fed Funds Rate where it was for the year, and sure enough, they did.
On the employment front, we accurately stated that the job market would get worse; with the unemployment rate rising at least into the 8% range…and that turned out to be an understatement as unemployment topped 10% late in 2009.
We saw the US Dollar weakening during 2009 before stabilizing and even strengthening. The Dollar did in fact weaken, and has strengthened a bit at the end of 2009.
In the housing market, we predicted home prices would begin to stabilize and that consumers would start buying again during 2009…and this appears to have been the case.
Most importantly, our home loan rate forecast was on target. We predicted rates would remain in a range of 4.5 - 5.5%, with the lower end of that range coming in the earlier part of the year and then moving toward the higher end of the range later in the year. Rates did remain lower longer than we thought, thanks to additional Fed buying – although they did begin to creep toward the upper end of the range at the end of the year.
What’s Next? What Should You Expect in 2010?
Home prices began to stabilize during 2009, and homes sales showed some signs of encouragement. We expect more of the same in 2010, although there will be some additional headwinds: higher rates and expiring tax incentives will likely create a lull during the summer months. After a modestly good start to the year, home prices could actually decline in some areas by 5% to 7% once the temporary stimulus expires. In the end, however, home prices should eventually and slowly begin to firm up toward the end of the year.
Now for the big question… where will home loan rates go during 2010 and why? We’ve been forecasting rates for a long time, and this is by far the easiest call we have ever had. Rates are going higher in 2010. We do not think that the low rates seen during 2009 will be seen again. There will be more supply coming to the market in the first quarter, while the Fed’s purchases will be winding down. The overall trend for rates during this period will be higher, but as usual, this will never happen in a straight line. There will be waves and cycles moving up and down – but the trend is clearly up for rates.
Once the Fed’s Mortgage Backed Security buying program has expired at the end of March, it is likely that rates will edge higher still towards the summer. Eventually, supply will decline as origination volume slows – and mortgage rates should stabilize. But if there are hints that the Fed will be looking to hike rates, thus signaling the end of the carry trade, mortgage pricing will significantly worsen. The range for rates during 2010 is wide, with the lower end just above 5% toward the very beginning of the year. The upper end of the range could be as high as 6.5%, with rates being very volatile throughout. It is typical to see prices worsen more rapidly than they improve…but 2010 will exaggerate that characteristic, with pricing losses coming far more quickly and sharply than pricing improvements.
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