Freddie Mac reduced its origination forecast for 2020 to under $2 trillion, now projecting $184 billion less in refinance volume compared with its November outlook.
However, modest increases in home prices and home sales will lead to increased purchase mortgage volume on a year-over-year basis both in 2020 and 2021.
The government-sponsored enterprise now calls for $1.98 trillion in loan originations in 2020 — down from $2.11 trillion this year — and $1.85 trillion in 2021. However, in November, Freddie Mac projected an increase in 2020's originations to $2.13 trillion from $2.1 trillion for 2019.
Refinance volume for 2020 now projects to be $650 billion; in the November forecast, Freddie Mac predicted $834 billion.
Home sales are expected to increase from 6 million in 2019 to 6.2 million next year and to 6.3 million for 2021. House price growth will continue to decelerate with annual rates of 3.2%, 2.8% and 2.1% in 2019, 2020 and 2021, respectively.
Rates are expected to remain steady at an average of 3.8% for
"A more accommodative monetary policy stance and robust labor market helped the U.S. housing market regain its footing in 2019," Sam Khater, Freddie Mac's chief economist, said in a press release. "Improved sentiment, lower financial market volatility and trade headwinds are setting up a favorable economic environment for continued real estate market growth in 2020."
Purchase volume will increase to $1.33 trillion in 2020 from $1.26 trillion in 2019. The December estimate is approximately $30 billion higher than November's. For 2021, purchase originations should near $1.38 trillion.
Fannie Mae went in the opposite direction in
