Looking ahead, Goldman strategist Marty Young expects slightly higher mortgage rates and a strong housing market for 2020:
- Expect mortgage rates to increase by 25bp in 2020, ending the year at 4.0%.
- Look for single family housing starts to increase by 5% in 2020 vs. 2019.
- Expect the Case-Shiller US house price index to grow by 3% in 2020.
- Expect 30% of outstanding conventional 30-year mortgage borrowers to still be in-the-money for refinancing in 2020Q4.
- Look for mortgage spreads to move sideways and for IG spreads to widen by 20bp in 2020H1.
- Expect Federal Reserve MBS holdings to decline by an additional $220bn in 2020.
- Expect non-QM issuance to grow again to $30bn in 2020.
And here are some of the pivotal charts recapping the housing market from the perspective of Goldman Sachs:
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