Mortgage rates have
Fannie Mae, a government-sponsored enterprise that backs a sizable number of home loans in the United States, cut its total origination estimate for the year to $2.47 trillion from $2.53 trillion, reflecting lower projections for home-purchases that eclipsed higher estimates for
That means originators may be contending with less volume at the same time a slight rise in refinancing potentially introduces new prepayment risk for servicers. Mortgage companies that service loan payments typically make less money when loans in their portfolios refinance.
"Housing remains clearly on the downtrend," Fannie Mae Chief Economist Doug Duncan said in a press release.
That's largely because although the average
"A strong 'lock-in' effect for consumers remains: Many existing homeowners are likely reluctant to move due to having a current mortgage with a rate well below current market rates," Fannie said.
Refi activity is low compared to the extraordinary boom period when borrowers who could qualify rushed to get record-low rates available during the pandemic, according to Fannie. More specifically, refinancing is down 80% compared to its pandemic-high in the third quarter of 2020, according to Fannie Mae's index.
Meanwhile,
Fannie's forecast typically falls in the mid-range of those the industry closely follows, the other two coming from the Mortgage Bankers Association and Freddie Mac. Neither of the other two had updated their forecasts at the time of this writing. The MBA