Housing Crisis to Persist Past 2008
Many have been wondering whether they should refinance or take out a second mortgage in order to lower their mortgage payments. Predictions range wildly regarding just how long the housing slump will persist.
The government has an answer according to Bloomberg:
Fannie Mae Chief Executive Officer Daniel Mudd said the housing slump will last beyond next year, dragging down home prices and increasing credit losses.
“We don’t think we hit a bottom until the end of ‘08 and then we have some period of time to work our way back up again,” Mudd said today in an interview in Washington.
The outlook from Fannie Mae, the largest source of money for U.S. home loans, is more bearish than that of the National Association of Realtors, which this month predicted new home sales will stop falling in the first quarter of 2008. Pessimism about the housing market is growing as prices fall and demand declines. Purchases of new homes in the U.S. dropped more than forecast in August and prices plunged by the most in almost four decades, the Commerce Department said today in Washington.
U.S. home prices will fall 2 percent to 4 percent this year, and “more next year,” Mudd said.
Should those predictions prove correct, it would be best to lock in a rate now as rates will continue to climb as lenders close.
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