MBANow: MBA Chief Economist Mike Fratantoni on Fed Moves, Housing

The Mortgage Bankers Association released a new MBANow video featuring MBA Chief Economist Mike Fratantoni, who provides an update on the housing market and recent actions by the Federal Reserve.  

The video can be viewed at https://www.youtube.com/watch?v=kvRewejkTNs&feature=em-uploademail.  

Fratantoni said the Federal Open Market Committee sent a “clear signal” at its July meeting that it intended to begin shrinking its balance sheet of mortgage bond purchases.  

“They’re the largest single investor of mortgage-backed securities in the world,” Fratantoni said. “It’s a big change in direction and policy; it’s suggestive that the Fed is confident about the state of the economy, in particular the strong job market.”  

Fratantoni added the MBA expects the Fed to raise the federal funds rate at least one more time this year, most likely in December. Mortgage rates, he said, should rise modestly by the end of the year, to around 4.5 percent.  

Fratantoni noted home sales, particularly new home sales, have looked “quite strong” lately. “We remained really constrained by the lack of inventory in the market,” he said. “With that we are seeing rapid growth in home prices.”  

Other videos in the MBANow series can be viewed at the MBA YouTube channel, https://www.youtube.com/watch?v=Swk2VUJeZFI&feature=em-uploademail. The videos are also available on the MBA Insights landing page, https://www.mba.org/publications/insights/insights-publication##SubscriberID####RND##&PageID=21109.