Fitch: Taper Hold to Boost U.S. Mortgage Near-Term Volume

Business Wire

NEW YORK & CHICAGO--(BUSINESS WIRE)--

The unexpected decision by The U.S. Federal Reserve (Fed) to maintain its bond purchases will likely spur increased mortgage volume over the near term, Fitch Ratings says. In recent months, mortgage rates have increased sharply in response to concerns over a Fed pull-back, and the average 30-year mortgage rate stood at 4.46% according to the Freddie Mac Primary Mortgage Survey published June 28, 2013. This rise in rates had also begun to weigh on mortgage application volume with a sharp decline in refinancing activity.

We believe yesterday's Fed announcement will reverse some of these recent trends. We expect mortgage interest rates to decline and give a short-term boost to mortgage volume as borrowers look to take advantage of the temporary reprieve. While still representing a very modest part of the mortgage market, a short-term boost in mortgage volume may also result in a modest increase in RMBS volume later this year.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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Rui Pereira, +1 212-908-0766
Managing Director
U.S. Structured Finance
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New York, NY
or
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Senior Director
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