The GSE predicts a level of refinance activity for this year that would eclipse the refi wave of 2012
Fannie Mae is projecting a wave of refinances this year, according to its latest economic outlook.
Fannie has revised upward its forecast for refi originations, as well as for new and existing home sales.
“The outlook now calls for $1.8 trillion in refinance activity in 2020, a level that would eclipse the refinance wave of 2012,” the GSE said.
“Housing appears to be providing some support to the overall economy, very much in line with our long-stated view that the slower growth of supply compared to demand would likely limit any downside risk to the housing sector,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “While housing took a big hit this quarter, we believe the further reduction of mortgage rates, persistently low levels of supply, and strong buyer sentiment compared to seller sentiment should continue to provide support to home prices and new construction.”
Duncan said that it remained to be seen whether homebuyer confidence would remain strong. He said it remained to be seen “whether the recent multi-week spike in purchase mortgage activity is driven more by a short-term shift in the timing of purchase decisions or by remote working and social distancing measures sparking a longer-term change in housing preferences, which could sustainably elevate housing sales.”
Fannie Mae’s latest forecast calls for a near-term pickup in purchases, followed by a “modest pullback in sales” in Q4, then steady growth in 2021.
“We also expect the extremely low mortgage-rate environment to contribute to historically high levels of refinancing activity as household balance sheets and incomes improve,” he said.
