theMReport.com Your trusted source for mortgage banking news
Freddie Mac’s September Forecast reveals that mortgage originations will reach $2.1 trillion in 2019, mostly due to the surge of refinancing into a lower mortgage rate and strong homebuyer demand.
Mortgage originations have grown from $1.6 trillion last year to 2.1 trillion in 2019. Originations, however, are expected to fall back down in 2020 to $1.8 trillion.
“Despite fears of an economic slowdown, the housing market continues to be a bright spot in the economy,” said Sam Khater, Freddie Mac’s Chief Economist. “While mortgage rates have ticked up in recent weeks, they remain lower than they were a year ago which will help boost sales headed into the fall.”
Freddie Mac also forecasts GDP growth of 2.2%, as trade tensions will have a “visible impact” in the second half of the year. The GSE also calls for the 30-year fixed rate mortgage to remain below 4% for the remainder of the year.
“Strong consumer confidence should bolster consumer spending, helping to maintain positive economic growth. However, consumer spending will not offset the deceleration in government spending, business investment, and net exports,” Freddie Mac states in the report.
Freddie Mac forecasts for a third interest rate cut this year by the Federal Reserve, and another to follow in 2020. Freddie Mac says the Federal Funds rate should stabilize at 1.6% in 2020.
The Fed announced its second rate cut last month, lowering its benchmark rate to a target range of 1.75% to 2%.
Despite the rate cut, which had been anticipated since the rate cut earlier this year, Reuters reports that seven of 17 policymakers projected one more quarter-point rate cut in 2019, signaling divisions in the Fed.
Home prices are expected to appreciate 3.4% in 2019, which is line with long-term growth, and forecasts call for single-family housing to be unchanged at 870,000 new in 2019 and 940,000 in 2020.
Freddie Mac, though, said the combination of increased housing demand and a projected rise in housing supply could push home sales higher to 5.98 million in 2019, before reaching 2017 levels of 6.03 million.
