Fannie Mae lowers origination forecasts through 2027

Fannie Mae lowered loan forecasts for the next two years and also said interest rates will creep higher by the end of 2027, according to its monthly housing outlook. 

The government-sponsored enterprise now expects single-family production volume to finish at $2.35 trillion this year, it said in its June report. The new number came in below the mark Fannie Mae set last month when it predicted activity of over $2.36 trillion for the current year. 

Both purchase and refinance volumes were revised downward, with the former to end 2026 at $1.45 trillion compared to $1.46 trillion a month ago. Meanwhile, with mortgage rates likely to remain above 6% for the foreseeable future, anticipated refinance numbers will also drop to an approximate total of $892 billion after Fannie Mae targeted $900 billion worth of production for full year 2026. 

Mortgage rates, however, were unchanged, with the outlook for the 30-year fixed average remaining at 6.3%. 

The more subdued forecast comes after a month-long period that failed to produce a resolution to the Iran War, which began in late February and threw additional uncertainty into what had already been a hard-to-predict housing market. On Thursday, President Trump said he called off planned strikes on Iran and hinted at a potential resolution this weekend. 

The war contributed to rising consumer prices, which pushed up mortgage rates, halting early-year momentum for the spring buying season. The 30-year average increased to 6.52% this week, according to Freddie Mac's weekly market survey. It had briefly fallen below 6% prior to war declaration. 

"If not for the war-related spike in inflation, the average 30-year fixed mortgage rate could well be in the mid-to-upper 5s," said Bankrate principal analyst Ted Rossman in a media statement this week.

For housing and mortgage businesses, the question marks spell neither boom nor bust in the making, with many consumers, including potential homebuyers, holding out on major purchase decisions. 

"We're in a waiting zone. There's a lot of uncertainty around the interest rate climate," said John Geertsema, managing principal at financial services consulting firm Capco. 

What's in store for 2027

While Fannie Mae made no changes to its current-year rate forecast, it upped predictions for the 30-year fixed to an average of 6.3% in 2027, with lingering questions around inflation and the Middle East conflict in the backdrop. 

The GSE also reduced its 2027 originations forecast from a month ago, although volumes will increase year over year. Total production should end next year at $2.47 trillion compared to last month's forecast of $2.49 trillion. 

A pullback in both purchases and refis brought down Fannie Mae's predictions. Purchase volumes were lowered to $1.57 trillion from $1.59 trillion in its May report. Refinances will end 2027 at $891 billion, with Fannie Mae bringing the number down from $901 billion in May.