Anticipation of a rate increase ahead of the Federal reserve’s next meeting has caused an increase in mortgage applications, but such a move will have little lasting impact on the industry, according to one veteran.
“I don’t think the expected rate increase will have a big impact on originator business; it’s been foreshadowed for the past six years, it’s the most talked about, most overblown story,” Marc Israel, president and chief counsel for MiT national Land Services, told Mortgage Professional America. “It could lead to a slight decline at first but it won’t have a lasting effect.”
Mortgage applications increased 1.2% week-over-week for the week ending December 4, according to the Mortgage Bankers Association due, in large part, to buyers wanting to get ahead of an expected rate increase later this month.
And while originators will enjoy a slight uptick in business ahead of the decision, Israel doesn’t expect the opposite to hold true following it.
“I’d compare the rate increase to TRID; it could lead to short-term declines, but I think the market reaction has largely already been baked in,” Israel said.
The Fed’s next meeting is scheduled for December 15-16.
Most recent polling data points to a 70% chance the central bank will increase its benchmark rate, according to Bloomberg, which cites the stronger-than-expected U.S. labor data released earlier this month.