Mortgage originations for the next two years will be higher than previously expected as lower interest rates at the end of 2018 will lead to more refinance volume, Freddie Mac said.
There will be $1.681 trillion in mortgage originations in 2019 and $1.679 trillion in 2020, Freddie Mac's January economic forecast said. In November, it projected $1.62 trillion for 2019 and $1.6 trillion for 2020.
"Despite the weakening of the housing market in 2018,
Refinance volume for this year will make up $450 billion, or 27% of the total. That is an increase from the 25% share in the November forecast.
For 2020, the revision is even starker, with the share increasing to 24% from the 15% projection Khater made in November.
There was an estimated $1.65 trillion of originations last year, with $1.16 trillion of purchase loans and $490 billion of refis, according to the January forecast.
Conventional mortgage volume should increase to $1.29 trillion this year and $1.32 trillion next year from $1.26 trillion in 2018.
The average for the 30-year fixed-rate mortgage will be 4.6% for the first quarter, rising to 4.8% for the rest of this year. In 2020, it increases to 4.9% in the second and third quarters and then 5% for the fourth quarter.
Total home sales are expected to increase to 6.09 million during 2019 and 6.14 million in 2020, up from 5.98 million last year.
Meanwhile home price appreciation should continue to slow, going to 4.1% in 2019 and 2.1% in 2020 from 7.2% in 2017 and 4.7% in 2018.
