In the short term, there could be some volatility in the agency MBS market as investors adjust to the Fed’s moves. Longer term, volatility is expected to recede, helping investors in agency MBS.
FHA Commissioner Julia Gordon spoke Tuesday at an online housing counseling conference hosted by the Department of Housing and Urban Development’s Office of Housing Counseling.
The outlook for Fed action is largely positive for MBS investors, with interest rate volatility expected to decline. Still, rate cuts will introduce a risk that has been limited for years: prepayments.
Interest rates continue to be the top priority for borrowers when choosing a mortgage lender, according to a study by Corporate Insight, but borrowers also value interest rate locking options and rate matching.
Interest rates on mortgages declined as the traditional homebuying season nears an end. Demand for purchase mortgages also continues to be limited by weak inventory of homes for sale and elevated home prices.
A lack of financial sophistication leads borrowers to overpay for a mortgage, according to new research. Analysts at the Urban Institute suggest that federal agencies could help address the issue.