13 trillion. This amount is up from the $2.12 trillion projection originally predicted in August of this year, and is a 3.7 percent rise over the $2.05 trillion reported for 2018. The revised forecast takes into account a strong housing market and continued economic growth.
The rise in estimated mortgage originations is due to factors such as strong housing market conditions and low unemployment rates. In particular, this growth can be attributed to the more than 1.1 million purchase loans and refinances that are expected in 2019. Refinances are expected to make up 37 percent of originations, according to Fannie Mae, with purchase loans accounting for 63 percent. This marks an increase from the 62 percent purchase share in 2018.
Fannie Mae also predicts that the loan balance mix will shift a bit, with the average loan balance increasing from $250,000 in 2018 to $255,000 in 2019. They estimate that the median loan balance will also rise slightly to $215,000. Additionally, loan-to-value ratio (LTV) percentages are expected to remain relatively unchanged in 2019, with the average estimated at 73 percent.
Fannie Mae’s chief economist, Doug Duncan, commented on the forecast, saying that despite the expected growth, the mortgage market will likely remain somewhat flat next year. He cited slower housing price appreciation and an expected pullback from investors as possible contributors to this leveling off.
This forecast comes at a time of some uncertainty in the housing market, including higher mortgage rates and more stringent qualification guidelines. Duncan noted that this could result in some potential buyers being unable to secure a mortgage or having to settle for a less favorable loan option.
Despite this, Fannie Mae remains optimistic about the outlook for 2019. The estimated origination volume, combined with the steady increase in purchase loans, suggests that the housing market is still healthy. With strong economic growth and a favorable lending environment, Fannie Mae expects the mortgage market to remain buoyant for the foreseeable future.
This article was contributed on Sep 27, 2023
