Mortgage originations to top $2T the next two years: Freddie Mac
Freddie Mac is now forecasting back-to-back years of $2 trillion in mortgage loan originations rather than a drop-off in 2020.
Originations have not topped $2 trillion in consecutive years since the end of the housing boom.
Housing is expected to remain strong in the near future even as the U.S. faces a likely economic downturn, Freddie Mac said.
"Economic growth has slowed significantly across the globe, but the slowdown has been more muted domestically," Freddie Mac Chief Economist Sam Khater said in a press release.
"In the United States, the slowdown has been caused by a contraction in manufacturing and a decline in business investment, partly due to weakening business confidence and uncertainty around the lack of a trade deal with China. However, the housing market remains on solid ground with housing starts, building permits, existing-home sales and new-home sales all outperforming the broader economy."
The 2019 purchase mortgage forecast was increased to $1.22 trillion from September's $1.17 trillion. Khater currently forecasts $789 billion in refi originations this year, compared with $919 billion the prior month.
For next year, Khater predicts $2.05 trillion in volume, of which $1.27 trillion is purchase business and $785 billion comes from refis.
This marks a change from September's forecast for a $1.82 trillion year in 2020, made up of $1.22 trillion of purchase loans and $603 billion of refinancing.
The Mortgage Bankers Association projects 2020 volume of $1.89 trillion, although Chief Economist Mike Fratantoni said at the group's annual convention that if rates were 100 basis points lower than the expected 3.7%, originations could be as high as $2.08 trillion.
The latest forecast from Fannie Mae predicts there will be $1.86 trillion in originations in 2020, with $1.29 billion of purchase loans and $566 billion in refis.