Signs that willing sellers are returning

Having fallen briefly following the announcement of QE3, MBS yields and mortgage interest rates were rising again in the final weeks of October. Of course, the bigger picture remains that mortgage interest rates are extremely low. Moreover, last month brought more evidence that this is helping to stimulate activity among mortgage-dependent buyers, with the Fed’s Senior Loan Officer Survey reporting another big rise in mortgage demand. On the supply side, the visible inventory continued to drop. But there have been some signs that willing sellers are slowly returning, with more households viewing this as a good time to sell. The upshot is that supply may not tighten much further.