According to a report issued by Freddie Mac last week, economists at the government sponsored enterprise expect housing to remain strong in 2000, although slightly weaker than in 1999 and 1998.
"With the Federal Reserve tightening credit and costs for all kinds of borrowing climbing, much has been debated about what it means for housing, a principal economic engine," the report said.
According to the report, today's mortgage rates, as compared to a year or so ago, have only marginally affected mortgage applications. Applications for mortgages, according to a major trade organization, in the week ended May 12, were down 11% from one year ago.
Freddie Mac has been surveying the mortgage market for more than 25 years, and the highest rate ever recorded in its weekly survey is 18.63% - way back in October 1981. Despite interest costs that high, families continued to purchase homes. However, housing starts were near a 20-year low point of about 800,000 units.
The report also stated that the average mortgage cost of buying a typical house has gone up since reaching the historic low point on the Freddie Mac survey of 6.49 percent in October 1998. The latest Freddie Mac mortgage rate survey (week ending May 26) result showed the 30-year fixed-rate mortgage at 8.62%.
Freddie Mac economists also predict that adjustable-rate mortgages will represent about twice as many closed mortgages in 2000 as they did in 1999.
"The mortgage market remains vibrant and while slightly more expensive than in the past 18 months, mortgage rates are low historically," the report concluded.