Forecast 2014: The Future of Financing

Turbulence in mortgage-lending activity is having a number of interesting effects on the real estate market. MSN.com reports that currently, refinancing is the dominant activity but as interest rates continue to rise the numbers seem to be dwindling at a steady pace. The increase in rates is discouraging homeowners from refinancing, slowing down business for lenders, effectively forcing many out of the business. How will this effect prospective buyers and homes sales in 2014? It means there will be fewer lenders to choose from when the time comes to apply for a loan on your new property. Implicating the law of supply and demand here, fewer lenders could mean a rise in the cost of refinancing and purchasing.

Another game changer coming into practice at the start of the new year is the new qualified-mortgage rule which will require lenders to take a closer look at applicants’ financial information to determine their ability to pay off their loan.  Despite this tightening of financial investigations, home loans are predicted to lead the activity in 2014, which is of course good news for the real estate market as increased home loans means increased sales!

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