Mortgage-backed securities providing new housing funds
The popularity of mortgage-backed securities is providing a new source of funds for the housing market, according to the Federal Home Loan Mortgage Corporation (Freddie Mac).
It reports that mortgage sales have grown from $50.7 billion in 1977 to $163 billion in '83 and trading of mortgage-backed securities has expanded from $131 billion in 1981 to $506 billion in '83. Even so, notes economist Kevin Villani, home buyers must still obtain a mortgage loan from their local lender.
The money will be plentiful, but mortgage interest rates will still be high, Mr. Villani says, since the overall capital markets from which the mortgage-backed securities are drawn will still have rising rates. He predicts long-term, fixed-rate mortgages to exceed 15 percent next year.