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2020 may just turn out to be a classic year for mortgage originations, feels Fannie Mae. Refinancings, riding on the back of low mortgage rates along with unexpectedly high activity in new and existing homes may see to this. Fannie Mae believes that mortgage originations in ‘20’ are likely to be close to $3.87 trillion, beating any number Fannie has tracked for the last 32 years.
Doug Duncan, Fannie Mae’s Chief Economist stated in a press release that “As expected, the pace of economic recovery is slowing, but housing remains highly supportive. The Federal Reserve has made clear that it has no intention of raising interest rates in the near future, and, as mortgage spreads continue compressing, households are seizing the opportunity to refinance their existing mortgages.”
Duncan also put more faith in the economic recovery, suggesting that real GDP contraction should be near 2.6% and not 3.1% predicted a month ago. If the fresh prediction of $1.07 trillion in mortgage origination comes through in Q3, it will be back-to-back quarters of plus-trillion productions.
Refinance volume is expected to be in excess of $659 billion dollars for Q3. This is 45% higher than that predicted last month. Q4 refis could touch $440 billion, again, 45% over that predicted last month.