Five Predictions from Freddie Mac for 2016
Here are five predictions for 2016 from the mortgage giant:
- The 30-year fixed-rate mortgage will likely average below 4.5 percent for 2016 on an annualized basis.
- Mortgage rates will gradually move higher posing an affordability challenge. But expect a strengthening labor market and pent-up demand to carry momentum into 2016.
- Home prices will likely moderate slightly to 4.4 percent in 2016, driven in part by the reduction in home buyer affordability and reduced demand as a result of Fed tightening.
- But industry activity will grow in 2016 despite monetary tightening. Expect total housing starts to increase 16 percent year-over-year and total home sales to increase 3 percent.
- While home purchases will increase next year, higher interest rates will reduce the refinance volume pushing overall mortgage originations lower in 2016 than in 2015.