One quarter into the new year and mortgage giants Fannie Mae and Freddie Mac each predict a slowdown in the market as mortgage originations are predicted to decrease in 2021. According to Inman, Fannie Mae has revised its 2021 forecast to estimate that mortgage originations will drop from $4.5 trillion last year to $3.9 trillion. Freddie Mac’s likewise expects originations to decline from 2020 to $3.5 trillion in 2021.
It’s not because of lack of interest. While demand remains high, as has been widely reported, supply is low. As we’ve seen, this imbalance is likely to push prices even higher than recent records, which will continue to create natural roadblocks for some buyers.
Additionally, after record lows, the inevitable rise in mortgage rates will slow the frenzy. Inman also notes that Fannie and Freddie also forecasted that much of the decline would result from refinances as purchase mortgage originations could increase 14.5 percent compared to 2020.
Read Inman’s full report here.