Fannie Mae now expects $2.6 trillion in mortgage origination this year, down from its original projection of $2.8 trillion.

Fannie Mae lowered its projections of mortgage originations and home sales for 2022 as mortgage rates continue to climb. Fannie Mae’s Economic and Strategic Research (ESR) Group revised its projected mortgage origination volume to $2.6 trillion in 2022 and $2.2 trillion in 2023. In May, Fannie Mae dropped its mortgage origination volume projection for 2022 to $2.7 trillion and $2.25 trillion for 2023, down from the respective $2.8 trillion and $2.41 trillion projected the previous month.  The GSE’s projections for refinance originations this year remain at $797 billion, unchanged from last month. Fannie Mae estimates that with rates at 5.23%, per the agency’s 30-year fixed rate survey reading, less than 2% of all outstanding loan balances have a refinance rate incentive of at least 50 basis points. Since that reading, rates have climbed on conventional mortgages north of 6%. In 2023, Fannie expects refinance originations to go up by $24 billion or 4.8% of the entire originations volume as mortgage rates are predicted to stabilize that year. Higher mortgage rates are the housing market’s “primary constraint,” the agency said in a statement. Total home sales are expected to fall 13.5% to 5.96 million units in 2022, sliding down even further from its 11.1% projected decline in May. About 5.29 million homes are expected to sell in 2023, down from the prior forecast of 5.42 million.  Consumers are feeling the sudden rise in interest rates as employment growth slows and stock market valuations fall, said Doug Duncan, Fannie Mae’s senior vice president and chief economist. “Nowhere is this more evident than in housing affordability measures, with the prospective monthly payment on a typical new mortgage climbing dramatically.” 

Source: HousingWire