Freddie Mac forecasts that the 30-year fixed rate will decline 3.4% in 2020 — down from 4.0% in 2019.

Freddie Mac’s most recent quarterly forecast report acknowledges the recent strides toward a housing market rebound but remains cautious regarding the uncertain nature of the economy’s long-term outlook. The forecast by the government-sponsored enterprise, calls for rates on home loans to continue dropping, home price growth to soften and home sales to fall, although Freddie sees a rebound in the latter before too long. Sam Khater, Freddie’s chief economist, said that forward progress will continue to hinge on new developments on the coronavirus front. “While the housing market undoubtedly has felt the effects of COVID-19, we are encouraged by recent homebuyer demand, as well as rates that should remain at record lows for the foreseeable future.” Khater said. “However, beyond the initial rebound in the housing market, the economic and housing outlook will be heavily impacted by the prospects for a vaccine, fiscal policy and the underlying organic recovery of the economy which, in combination, make the outlook highly uncertain.” Freddie Mac looks for the 30-year fixed rate to decline to a yearly average of 3.4% in 2020 — down from 4.0% in 2019 — before ebbing again to 3.2% the following year. The low rate environment will likely keep refinance originations at high levels throughout 2020, much as it did through the year’s first half. As such, refi originations are projected to reach $1.872 trillion in 2020 before decreasing to $1.279 trillion in 2021.

Source: Scotsman Guide