Magazine article Mortgage Banking

Fannie's Forecast Sees Low Rates Ahead and Jump in Housing Starts

Magazine article Mortgage Banking

Fannie's Forecast Sees Low Rates Ahead and Jump in Housing Starts

Article excerpt

Washington, D.C.-based Fannie Mae released its 2016 forecast, and it calls for only a modest rise in mortgage interest rates, ending the year at around 4.2 percent for 30-year fixed-rate mortgages. On the other hand, the large secondary market player expects a big jump in single-family housing starts, rising by 17 percent over last year.

Commenting on the forecast, Fannie Mae Chief Economist Doug Duncan said, "Despite our expectation of only a small rise in mortgage rates, home-price and income dynamics should inhibit home purchase affordability. In addition, continued rent increases will hinder renters' ability to save for down payments."

The group is calling for total home sales, both new and existing, to rise by just 3.7 percent in 2016 over last year. Fannie expects home sales to rise by 4.2 percent in 2017 over this year's level.

Fannie Mae forecasts total single-family originations will drop to $1,396 trillion this year from $1,673 trillion in 2015. …

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