Whereâ€™s Operation Twist?
With Operation Twist having gone into effect on September 21st, many have remarked on how there has not been an immediate impact on the mortgage industry thus far. However, experts comment that we shouldn’t be looking at Operation Twist as an immediate solution, but a long term one.
Since Operation Twist’s aim is to keep interest rates low, it will have a long-term effect on originations, which is currently sustaining the mortgage market through an increase of refinance activity. Due to this activity, earlier consensus projections for this year have gone up from $1 trillion to $1.2 trillion.
Although these low rates haven’t been enough to motivate an influx of purchases lately, most borrowers are hesitant to enter the market due to other economic factors, such as the uncertainty about where our economy is heading. However, once these concerns melt away, and Operation Twist keeps interest rates low through 2013, the demand for purchases should increase exponentially. It is predicted that the current refinance market should carry us into 2012, but the purchasing market should increase during 2012 as well and carry the market into 2013.