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Freddie Mac (OTCQB: FMCC) said today that the current downturn in the housing market will continue due to reduced demand.
In a new quarterly forecast, the company’s chief economist indicated that mortgage interest rates that doubled last year were a key factor.
“The wind was blowing with mortgage rates rising at the fastest rate in 40 years,” said Sam Khater, chief economist at Freddie Mac.
“Continued high inflation and rising interest rates due to high mortgage rates have created economic problems that have prevented many consumers from making home buying decisions.”
“As housing activity continues to decline, we expect a gradual increase in the supply of homes for sale compared to last year’s historically low levels,” Khater continued. House prices will fall next year due to reduced demand and increased supply.”
Specific Results Include:
- 30-year fixed mortgage (FRM) is expected to average 5.4% in 2022 and 6.4% in 2023. 30-year FRM in 2021 averaged 3.0 %.
- House price growth will slow to an average of 6.7% in 2022 and -0.2% in 2023. In 2021, the rate of house price growth was 17.8%.
- Home sales are expected to reach 5.8 million in 2022 and decline to 5.1 million by 2023. In 2021, home sales totaled 6.9 million.
- Home mortgage loans are expected to reach $1.9 trillion in 2022 and $1.6 trillion in 2023. New mortgage loans totaled $2 trillion in 2021.
- Refinancing output is projected to continue to decline to $747 billion in 2022 and $310 billion in 2023. Startups will be valued at $2.8 trillion in 2021.
- Overall, annual mortgage lending is projected to exceed $4.8 trillion in 2021, $2.6 trillion in 2022, and $1.9 trillion in 2023.
Freddie Mac provides mortgage capital to lenders to help millions of families and individuals build homes.
Established by Congress in 1970, we made housing affordable and accessible to rural homebuyers and renters. We’re building a better housing finance system for homebuyers, renters, lenders, investors, and taxpayers.
Reference Source: Street Insider
