Freddie Mac's April Outlook Paints A Rosy Picture For Housing

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The Federal Savings Bank shares news on Feddie Mac's April outlook for housing.

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The April 2015 outlook called for a spring surge in mortgage applications, buoyed by renewed consumer confidence and expanding inventory levels.

Despite an uneven first quarter of 2015, government-sponsored enterprise Freddie Mac released a relatively positive Economic and Housing Outlook for April which intrigued The Federal Savings Bank, a Midwest lender.

One week after the March jobs report from the Bureau of Labor Statistics confirmed the unemployment rate had held steady at 5.5 percent, Freddie's latest monthly survey offered a cautiously optimistic prognosis for the residential real estate landscape. The April outlook called for an uptick in activity as the second quarter got underway, coinciding with a typically busier spring home buying season.

Among the positives, Freddie's report referenced a steadily strengthening U.S. dollar, continued labor market stability and a still-accommodative monetary policy from the Federal Reserve, which has held interest rates at attractively low levels for house hunters. The April 2015 outlook called for a spring surge in mortgage applications, buoyed by renewed consumer confidence and expanding inventory levels.

"For the remainder of the year we should see a resumption of solid economic growth and acceleration in housing activity," read part of the GSE's release. "The positive momentum should continue throughout the summer and into early fall, when the specter of rising interest rates will dominate the discussion."

Activity to pick up, regardless of Fed timeline
The report did note the prevailing expectation that the Fed will trigger an adjustment to the key funds rate sometime in 2015, causing a subsequent bump in borrowing costs. But that hike likely won't take place until the second half of the year, at earliest, meaning prospective home buyers wouldn't feel its impact if they moved soon. If anything, the impending movement could promote even heavier springtime sales activity than usual.

Furthermore, there's an expectation among economists - both at Freddie Mac and elsewhere - that even when the central bank does move to tighten its policy, the initial increase will be minimal, so as not to disrupt the economy's recent momentum.

For opportunistic homebuyers, the upcoming six-month window remains important, even if the immediate ramifications of a Fed rate adjustment might be overstated. There are already signs that eligible applicants are taking action. The Mortgage Bankers Association's latest weekly survey revealed a 7 percent uptick in purchase application volume from the end of March through the beginning of April - a surge that coincided with the benchmark 30-year fixed interest rate remaining stable.

Whether the central bank decides to tweak policy this summer or later, the spring months leading up to that decision figure to be heavy on home sales activity.

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Giorgio Urbano Ferrero
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