Fannie Revises Economic Forecast Down, But Mortgage Outlook Up

Like its fellow government-sponsored enterprise Freddie Mac, Fannie Mae has a pessimistic outlook on U.S. economic growth following underwhelming first-quarter numbers in 2015, though mortgage market optimism remains thanks to low interest rates.

Fannie Mae expects the economy to grow, but not as fast as had been previously expected, the government-sponsored enterprise said in a forecast released Thursday. Fannie's economic and strategic research group expects 2.3% growth in GDP during 2015, a negative revision of 50 percentage points to its forecast numbers. Fannie expects low oil prices to be a drag on manufacturing, exports and energy-related industry.

"Last year we saw a strong second quarter rebound from a weak first quarter. We expect the same pattern this year, but a more muted bounceback," said Fannie Mae chief economist Doug Duncan in a statement accompanying the revised economic findings.

Still, that didn't mean the news was all bad.

"Purchase mortgage applications have moved up consistently for a couple of months, and while refinance applications have recently pulled back, the actual volume of both purchase and refinance originations earlier in the year came in stronger than we had projected," Duncan's statement continued.

"As a result, we have raised our mortgage origination forecast to $1.46 trillion for the year."

For reprint and licensing requests for this article, click here.
Secondary markets Housing GSEs Originations
MORE FROM NATIONAL MORTGAGE NEWS