Freddie Mac: Here’s what to expect from the housing market in 2020 and beyond Mortgage rates should stay low, leading to another big year for refi’s.
November 27, 2019, 3:22 pm By Ben Lane
Just over a year ago, mortgage rates nearly hit 5%, levels that hadn’t been seen since the
early part of this decade. But as we get ready to move into a new decade,
mortgage rates are more than a full percentage point lower than that, comfortably
back in the 3-4% range.
And according to a new forecast from Freddie Mac, mortgage rates should stay that low for the rest of this year and well beyond that.
In Freddie Mac’s newest housing market forecast, the company’s economic and housing research group states that they expect mortgage rates to remain around 3.8% for the rest of 2019 and stay at that level for all of 2020 and 2021.
As other recent forecasts and mortgage market data has shown, this year’s unexpectedly low mortgage rates have driven a rise in refinances, as well as a surge in home purchases.
A recent forecast from the Mortgage Bankers Association shows that 2019 is expected to be the best year for refis since 2016, and the best year for purchase mortgages since 2006.
Freddie Mac agrees and expects the good times to keep rolling. In its latest forecast, the government-sponsored enterprise expects there to be $846 billion in refinance originations this year, and $834 billion more in refis next year.
Both of those figures would be more than $300 billion more in refis than there were in 2018.
On the purchase side, Freddie Mac expects there to be $1.255 trillion in purchase originations this year. And the GSE expects those figures to rise in both 2020 and 2021.
According to Freddie Mac, it expects there to be $1.299 trillion in purchase originations in 2020 and $1.369 trillion in purchase originations in 2021.
Overall home sales are also expected to rise in each of the next two years. According to Freddie Mac, it expects to see 6 million home sales in 2019, 6.1 million home sales in 2020, and 6.2 million in 2021.
Despite home sales and purchase originations projected to rise over the next few years, Freddie Mac currently expects 2021 to see a decline in total mortgage volume from 2020’s expected level due to a decline in refis.
The GSE’s forecast expects to see just $429 billion in refis in 2021, perhaps a function of there simply not being that many people left who have not refinanced their mortgage by then, especially if mortgage rates stay as low as they are currently expected to.
Overall, Freddie Mac expects there to be $2.101 trillion in total mortgage originations in 2019, $2.132 trillion in originations in 2020, and $1.798 trillion in 2021.
The GSE also expects home price growth to slow over the next few years, with annual growth rates of 3.2%, 2.9% and 2.1% in 2019, 2020 and 2021, respectively.
“The economy has seen increased volatility in November as hopes for a favorable resolution to the trade dispute have recently waned,” said Sam Khater, Freddie Mac’s chief economist.
“However, given low interest rates, modest inflation and a solid labor market, the U.S. housing market continues to stand firm, and, our forecast is for the housing market to maintain momentum over the next two years.”
Area Real Estate News & Market Trends
You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!
July 31, 2017
Receive the Latest Local Market Stats
Curious about local real estate? So are we! Every month we review trends in our real estate market and consider the number of homes on the market in each price tier, the amount of time particular homes have been listed for sale, specific neighborhood trends, the median price and square footage of each home sold and so much more. We’d love to invite you to do the same!
Get Local Market Reports Sent Directly to You
You can sign up here to receive your own market report, delivered as often as you like! It contains current information on pending, active and just sold properties so you can see actual homes in your neighborhood. You can review your area on a larger scale, as well, by refining your search to include properties across the city or county. As you notice price and size trends, please contact us for clarification or to have any questions answered.
We can definitely fill you in on details that are not listed on the report and help you determine the best home for you. If you are wondering if now is the time to sell, please try out our INSTANT home value tool. You’ll get an estimate on the value of your property in today’s market. Either way, we hope to hear from you soon as you get to know our neighborhoods and local real estate market better.