The impact of the COVID-19 pandemic has been harsh on many sectors of the economy, and this includes the mortgage industry. However, with vaccinations now underway across the country, the industry’s 2021 forecast is excitedly optimistic. At the same time, the housing industry may stabilize yet remain strong.
Specifically, Fannie Mae expects the volume of purchase loans to reach $1.66 trillion in 2021 and the volume of refinance loans to top $1.18 trillion. Both of these figures are up dramatically from the 2021 projections that Fannie Mae released in November 2020. While these improved projections can be attributed to the vaccine, they also may be driven by the fact that the interest rate for a 30-year fixed-rate mortgage is expected to average around 2.7 percent in the next year. This projection is also slightly lower than the projection that was issued in November 2020.
The housing market is also expected to remain solid, but its volume may be slightly slower than its recent peak. This is because Fannie Mae anticipates homebuilders to have an opportunity to catch up on outstanding projects. The December 2020 projection for the new year is 1.44 million new home starts.
Fannie Mae’s optimism for the mortgage and housing industries for 2021 is not unique. For example, Redfin is a reputable brokerage firm, and it anticipates sales to climb as much as 10 percent higher in 2021. If Redfin’s projection is accurate, the total number of new housing starts and home sales will exceed 2006’s totals.
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