Goldman Expects Jump In Mortgage Refis, Blames “Burned Out” Borrowers

Jon Alternative Media, Blogosphere, Economy, Fiscal Policies, Real Estate

Due to the “new lower path for mortgage rates” Goldman is raising their estimate for 2016 MBS Issuance to $1.3 trillion from $1.2 trillion and raising their 2017 MBS issuance estimate to $1.3 trillion from $1.1 trillion. Goldman’s team cut their 10-Yr US TSY estimate to 2% from 2.4% ahead of an expected refinancing blitz.
All of this follows “the decision” out of the UK and Goldman’s credit group fears the “burned-out” borrower (which consists of 65% of the whole borrower pool) and those borrowers who are “sensitive to a change in rates” will seek to refinance their mortgages as the Fed raises rates (though that action is debatable as Jeff Gundlach said in June).

Goldman expects refinancing volumes to increase as rates remain lower for longer in advance of an inevitable Fed rate hike:

This post was published at Zero Hedge on Jul 5, 2016.