Fannie Lowers Home Sale and Origination Expectations For 2022/23

Fannie Mae’s Economic and Strategic Research (ESR) Group has downwardly revised its full-year 2022 real GDP expectations, along with anticipated home sales and mortgage originations, according to the group’s latest forecast. They now expect full-year real GDP to grow at a reduced rate of 1.3%, a 0.8% decrease from their previous prediction, citing inflation, rising interest rates, and “a slowdown of global economic growth.” The forecast also predicts that Q2 2022 will see growth rebound to 1.6%, a reaction to Q1’s economic contraction of 1.4%. “Financial conditions have tightened significantly, and the economy is slowing faster than previously expected as markets adjust to the Federal Reserve’s tightening guidance,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. Mortgage…

Fannie Mae: Full Effect Of Rising Rates Are “Yet To Be Felt”

In its Economic and Housing Weekly Note, Nathaniel Drake of Fannie’s Economic and Strategic Research Group said that the full effects of rising interest rates have “yet to be felt.” “Especially given that the full effects of the recent rise in mortgage rates have yet to be felt,  we expect existing home sales to continue to decline through 2022,” the note reads. “However, we believe there is still a pool of prospective buyers who were previously outbid but still want to purchase a home, which should help support sales, thus limiting the pace of slowdown in the near term.” Though demand remains elevated, there are signs that the hot housing market is cooling down. Existing home sales fell for the…

Rates Rise To 4.42%

Mortgage rates continued their upward march this week, averaging 4.42%, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 4.42%. A year ago at this time, the 30-year FRM averaged 3.17%. “This week, the 30-year fixed-rate mortgage increased by more than a quarter of a percent as mortgage rates across all loan types continued to move up,” said Sam Khater, Freddie Mac’s Chief Economist. “Rising inflation, escalating geopolitical uncertainty, and the Federal Reserve’s actions are driving rates higher and weakening consumers’ purchasing power. In short, the rise in mortgage rates, combined with continued house price appreciation, is increasing monthly mortgage payments and quickly affecting homebuyers’ ability to keep up with the…

ESR Downgrades 2022 Predictions

Russia’s invasion of Ukraine is rippling through the U.S. economy, according to March commentary from Fannie Mae’s Economic and Strategic Research (ESR) Group. The ESR Group predicts full-year 2022 real GDP growth of 2.3%, down from last month’s projected 2.8%. The group also increased its predictions about the 30-year fixed mortgage, bumping its forecast up to 3.8% in 2022 and 3.9% in 2023. Total home sales are now expected to drop 4.1% in 2022, compared to a 2.4% decline predicted last month. Home purchase loan volume should hold up but refinance activity is expected to plunge to only a third of originations. This should come as no surprise to mortgage professionals who are already seeing huge declines in refi activity.…

2021 Finishes Strong, But Inflationary Concerns Weaken 2022 Projections

The Fannie Mae Economic and Strategic Research (ESR) Group boosted its expectation for full-year 2021 economic growth to 5.5% in its December commentary, up 0.7% from November’s projection. The group cited “stronger-than-anticipated consumer spending and inventory investment data” as the reason for its revised projection. Total home sales are now expected to increase 7.1% in 2021 rather than 5.3%. Total mortgage originations are expected to be $4.5 trillion, up from $4.4 trillion. But it also revised its 2022 expectations, downgrading its 2022 growth forecast from 3.7% to 3.2%. Though recent data appears strong, the group noted it “likely reflects a pull-forward of activity from the first half of 2022 and is unlikely to be sustained.” Inflation is the primary reason…