GSEs Lift 2019 Mortgage Origination Outlook

By Sam Garcia

Economists at both of the secondary housing finance agencies have lifted their expectations for residential loan originations this year. Forecasts for both purchase-money financing and refinances increased.

Fannie Mae Monday released its Housing Forecast: June 2019 indicating that total mortgage production from all U.S. lenders is expected to reach $1.680 trillion by the time 2019 concludes. The Washington-based firm improved its outlook from a month earlier, when it predicted aggregate home lending would come to $1.655 trillion this year.

Fannie raised its purchase outlook to $1.186 trillion from $1.183 trillion expected in May, while the refinance forecast was lifted to $0.494 trillion from $0.471 trillion.

“We expect housing to add to growth for the foreseeable future, and our projection of a 1.0 percent year-over-year increase in home sales in 2019 remains unchanged,” Fannie Mae Chief Economist Doug Duncan explained in the report. “Moderating home price appreciation and attractive mortgage rates continue to support affordability, particularly as home builders are now paying more attention to the entry-level portion of the housing market.”

Over in McLean, Virginia, Fannie’s secondary cousin Freddie Mac predicted in its June 2019 Economic & Housing Market Forecast that the nation’s home lending volume will be $1.774 trillion during all of 2019, also an improvement from last month when the forecast was $1.733 trillion.

Freddie pushed up expected purchase production to $1.190 trillion from $1.164 trillion predicted last month. The refinance forecast rose to $0.584 trillion from $0.569 trillion.

“Strengthening homebuilder confidence, an increase in the level of housing permits, and low mortgage rates are expected to translate into stronger housing starts and increased home sales,” Freddie’s report stated. “Our annual forecast for housing starts has increased to 1.26 million and 1.35 million in 2019 and 2020, respectively. We anticipate home sales to reverse the 2018 slump and come in stronger at 6.03 million in 2019 before surpassing 2017 levels and increasing to 6.19 million in 2020.”

 

Sam Garcia

Sam Garcia is a 20-year mortgage news veteran who founded Mortgage Daily and served as its editor for two decades. Reach Sam at SamGarciaEmail@gmail.com