Real Estate News

Fannie Mae economist foresees interest rate hike from Fed

Published: 11 Jul 2017

Predicting the Federal Reserve's next moves seems to be an understandable priority for some, especially given the recent rate increases and chances for more. One of the factors that can reportedly influence the Fed's decisions is the U.S. employment report and the related affect on the economy in general.

Although there may be more information pending before economists can tell for sure, Housing Wire reported on some of the different expert opinions regarding the likely moves for the Reserve. The varied opinion still seemed to show the current tension between growing employment, on the one hand, and high demand for housing. 

Duncan's predictions
In recent months, the Reserve has raised rates far more frequently than the past, and there has been speculation that more will come before the end of the year. Among the quoted experts in the Housing Wire piece was Doug Duncan, Chief Economist for Fannie Mae, who seemed confident that the rate raises would indeed appear relatively soon, before 2018 and in December, specifically.

Duncan has also spoken about the housing market in particular. In a Fannie Mae release, he referred to the June growth levels seen in the group's Fannie Mae Home Purchase Sentiment Index. The statement said that 30 percent of Americans believe that it is currently a good time to buy a home, and the net share of those who believe it's a good time to sell increased as well.

"The June HPSI reading matches the previous record set in February and reflects the trend toward a sellers' market that respondents indicated last month," Duncan said. "Consumers are also growing more optimistic about their ability to get a mortgage, and lenders expect credit standards to ease further going forward, as shown in our Mortgage Lender Sentiment Survey."

At the same time, there were some negative indicators, such as a decline in the net share of people not worried about unemployment.

Notes from the Fed's report
Duncan's comments don't come in a vacuum, but instead appear after the recent words in the Board of Governors of the Federal Reserve System July 7 Monetary Policy Report. This document said that the fate of the federal funds rate is "uncertain," suggesting that a wealth of factors and rate of change can dictate how difficult it is to respond.

The report also contained other notes of financial interest, such as the inflation rate as of May (1.4 percent) and the first quarter's GDP rate increase (around 1.5 percent).