Fannie, Freddie say housing market could see slight hiccup

Fannie Mae projects that mortgage originations will fall in 2021

National /
Apr.April 20, 2021 02:00 PM
Freddie Mac’s economists said the slowdown will be caused by a hike in mortgage rates and limits on housing supply. (iStock)

Freddie Mac’s economists said the slowdown will be caused by a hike in mortgage rates and limits on housing supply. (iStock)

The red-hot housing market could be heading for a slight slowdown, according to Fannie Mae and Freddie Mac.

Fannie Mae projects that mortgage originations will fall to $4 trillion this year from $4.5 trillion in 2020, Inman reported. Next year, the agency expects originations will drop even further to just below $3 trillion.

Freddie Mac, meanwhile, expects total originations to fall to $3.5 trillion in 2021. Most of this will be felt in refinancings, according to the agency.

Freddie Mac’s economists said the slowdown will be caused by a hike in mortgage rates and limits on housing supply, which may eventually lead to a slowdown in home prices. Those are projected to rise 6.6 percent this year before slowing to 4.4 percent in 2022, according to Freddie Mac.

“As the economy continues to improve, we expect conditions to remain generally favorable for the housing and mortgage market,” Freddie Mac chief economist Sam Khater said. “Higher mortgage rates have the potential, however, to dampen the robust demand we’ve been experiencing.”

The housing giants are bullish on the U.S. economy. Fannie Mae expects real GDP growth to be 6.8 percent, including 9.1 percent in the second quarter, as more people are vaccinated and states and cities ease restrictions.

[Inman] — Keith Larsen


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