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Special Reports
Emerging Markets
Fannie: AH's Investor Appeal
BATON ROUGE -- The housing market will remain strong, even though interest rates
will inch upwards, Fannie Mae's chief economist David Berson stated at a mortgage conference sponsored by Hibernia
National Bank here. Consequently, and due to increased investor interest, affordable housing and lending to emerging
markets will follow suit and increase as well.
"The good news is the housing market will remain relatively strong, but refinancing
activity is poised to drop dramatically in 2004 because interest rates will be higher," he said.
He predicts that as the increase of "lifetime lows" in interest rates
to the current average of 5 5/8% or 5%, by the end of 2004 are expected to increase up to about 6.5%, which still
will be historically low.
"But they will prove to be a restraint on refinancing," he said.
His positive forecast on the national level stems from his belief that higher
rates will be compensated by a better job market and stronger income growth that will lead to "a very good
year" in housing sales. The 30-year, fixed-rate loan, he said, will remain the product of choice for most
buyers.
Applauding the recent $7.5 billion Fannie-Hibernia affordable housing initiative
that focuses primarily in Louisiana where Hibernia is a leading mortgage lender and in Texas, Mr. Berson noted,
how looking at the big picture, "In Louisiana the economy will pick up," although growth in this area
"will lag behind the country."
In contrast, he added, growth in Texas will be faster than the national average,
while Dallas "may be slightly sluggish compared to other parts of Texas because of its reliance on the telecommunications
industry, but overall the forecast looks good."
Only days before the aforementioned mortgage conference, praising itself as Louisiana's
largest mortgage lender, Hibernia launched a new commitment to increasing homeownership rates among the underserved,
especially in Louisiana's local communities.
In cooperation with Fannie Mae, the bank launched its "2004 Home Grow"
initiative, committing to invest $7.5 billion in mortgages for first-time homebuyers, minorities, immigrants and
residents of underserved neighborhoods across the country during the next five years.
The initiative was launched following the success of the "2002 Home Grow"
initiative, a $5 billion offering that made homeownership possible to 42,000 low-income families (of whom 65% were
first-time homebuyers) in Louisiana and Texas within 18 months.
"To reach this new, more ambitious goal, we have our work cut out for us,"
said Paul M. Peters, Hibernia's mortgage banking president. "We need to get the word out to potential homebuyers
who may qualify for these programs. With interest rates at all-time lows, and these mortgage programs, homes are
more affordable than ever."
"Low downpayment mortgages, increased credit flexibility and special underwriting
for teachers, health care and safety workers provide low- and moderate-income working families a chance to live
the American Dream," said Fannie's vice president for single-family marketing, Gwen Muse-Evans.
"Low downpayment mortgages, increased credit flexibility and special underwriting
for teachers, health care and safety workers provide low- and moderate-income working families a chance to live
the American Dream," said Fannie's vice president for single-family marketing, Gwen Muse-Evans.
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