According to Freddie Mac’s August Forecast, mortgage originations will reach $2 trillion in 2019 driven by a surge of homeowners refinancing into a lower mortgage rate along with strong homebuyer demand.
The Mortgage Bankers Association and Fannie Mae were projecting a $1.6 trillion origination market this year, but according to Freddie in this report, the organization is now expecting $2 trillion – a 25 percent improvement.
“Despite fears of an economic slowdown, the U.S. labor market stands firm,” Freddie Mac Chief Economist Sam Khater said in the report. “Specifically, jobless claims are near historic lows. This strong labor market, along with mortgage rates at three-year lows and consumer confidence holding strong, will set the stage for continued improvement in the housing market heading into the fall.”
Forecast highlights include:
- For the full year in 2019, expect GDP growth of 2.2 percent, with trade tensions likely having a visible impact on the second half of the year.
- With enormous downward pressure on long-term interest rates around the world, expect the 30-year fixed-rate mortgage to remain around 3.6 percent on average through the second quarter of 2020.
- The house price forecast remains unchanged and is expected to appreciate 3.4 percent in 2019.
- The single-family housing starts forecast decreased slightly to 870,000 new homes in 2019 and 940,000 in 2020, respectively.
- Given the combination of increased housing demand and a projected upward tick in housing supply, expect home sales to be 5.94 million in 2019, before reaching near-2017 levels in 2020, at 6.04 million.
- With continued low mortgage rates, expect higher annual mortgage origination levels of $2 trillion and $1.8 trillion in 2019 and 2020, respectively.