The low mortgage rates that boosted the housing market during the COVID-19 pandemic will rise later this year, but will do so gradually. Freddie Mac said Thursday in his quarterly worldview… This will give more homeowners one last opportunity to refinance their mortgages.
The gradual hike in rates has prompted Freddie economists to increase their forecasts for mortgage lending this year. They estimate that 2021 will rival last year’s incredible $ 4 trillion in terms of issuance.
Freddie Mac now predicts total mortgage loans in 2021 to be $ 3.9 trillion in 2021, up from my forecast in April $ 3.5 trillion. The government-funded organization now expects total production in 2022 to drop to $ 2.6 trillion.
The average 30-year fixed rate mortgage is expected to be 3.1% in 2021 and up to 3.7% in 2022. In 2020, the 30-year FRM averaged 3.1%, said Sam Hather, chief economist at Freddie Mac.
According to forecasts, the growth in house prices in 2021 will be 12.1%, and in 2022 it will slow down to 5.3%. In 2020, the growth was 11.3%.
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“Despite recent highs in the housing market, recent home mortgage application data indicate a decline in demand,” Hather said. “We expect refinancing activity to decline as higher mortgage rates weaken activity.”
Freddie Mac economists estimate that purchases will grow to $ 1.8 trillion in 2021 and $ 1.9 trillion in 2022, up from $ 1.5 trillion in 2020. The number of refinancing sources is projected to reach $ 2.2 trillion this year, up from the April forecast. $ 1.8 trillion refi…
Refi volume will fall as rates gradually rise, Hather said, before falling to an expected $ 713 billion in 2020. For Refis, 2020 has been a successful year with record highs of $ 2.6 trillion.
Latest employment report from U.S. Department of Labor showed that while the US economy added 850,000 non-farm jobs in June, that’s still down by 6.8 million jobs since February 2020. However, the number of vacancies rose to a record high of 9.2 million.
The single-family market remains robust, with US home prices rising 17% year-on-year in the May release of the report. Freddie Mac House Price Index (FMHPI) – Highest house price in 12 months height in FMHPI history since 1975. That’s higher than the mid-2000s house price boom and higher than the inflation years in the late 1970s and early 1980s, Hather said.
“As the economy continues to recover, the housing market remains strong, even as certain obstacles have begun to slow sales across the country,” Hather said. “It should be noted that the high rise in house prices was supported by increased demand due to low mortgage rates, disposable after-tax income that increased during the current recession, and a severe housing shortage relative to our population.”