February 07, 2012Fed Actions Drive Mortgage Rate Expectations
WASHINGTON, DC – The majority of Americans continue to expect no change in mortgage rates over the next 12 months, according to results from Fannie Mae’s January 2012 National Housing Survey. At the same time, their expectations for home prices have improved for the fourth month in a row, with respondents expecting prices to go up by 1.0 percent, on average, during the year. Consumer sentiment is improving from its depressed level last summer, with current attitudes very similar to those of a year ago. Forty-four percent of respondents expect their personal financial situation to improve, up from 40 percent a month ago, and 30 percent of Americans believe the economy is on the right track, up from 22 percent last month and up for the third straight month since November 2011.
“Consumer sentiment has continued to rebound to the level witnessed around a year ago since hitting a setback last summer. The strengthening employment picture last Friday provides encouragement that the improving trend in consumer confidence will continue and will at some point be reflected in a firming up of consumer spending,” said Doug Duncan, vice president and chief economist of Fannie Mae. “That rebound may be slow in coming as consumers still seem to be deleveraging and aren't yet fully confident of their household finances.”
“The Federal Reserve’s pledge to keep interest rates low beyond 2014, extending their prior time frame of mid-2013 announced in the summer, appears to have been reflected in the rising share of consumers expecting the rate to remain near record low levels for another year,” Duncan stated. “At the same time, consumers expect home prices to rise over the next year, extending the streak of rising home price expectations to four months. If the employment market continues to strengthen, it is unlikely that the Fed will be able to keep its low interest pledge for long, and a more meaningful housing recovery may not be far behind if consumers are faced with the prospect of rising mortgage rates and home prices amid increased job security.”
Homeownership and Renting
The Economy and Household Finances
The most detailed consumer attitudinal survey of its kind, the Fannie Mae National Housing Survey polled 1,000 Americans via live telephone interview to assess their attitudes toward owning and renting a home, mortgage rates, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts (findings are compared to the same survey conducted monthly beginning June 2010). Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future.
For detailed findings from the January 2012 survey, as well as technical notes on survey methodology and the questions asked of respondents associated with each monthly indicator, please visit the Fannie Mae Monthly National Housing Survey site. Also available on the site are quarterly survey results, which provide a detailed assessment of combined data results from three monthly studies. The January 2012 Fannie Mae National Housing Survey was conducted between January 9, 2012 and January 27, 2012. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.
Fannie Mae exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. Our job is to help those who house America.
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