Freddie Mac has released its U.S. Economic and Housing Market Outlook for October showing the expansion of the Federal Reserve's Maturity Extension Program is sparking a further pick-up in housing activity. Therefore, Freddie Mac is revisiting its economic and housing market projections for the remainder of this year and for 2013.
- Housing contributed 0.3 percentage points to the first-half 2012 real GDP growth of 1.7 percent (annualized) and will likely add a similar boost during the second half of the year after being a net drag on GDP from 2006-2010.
- Projecting 7 million borrowers refinancing in 2012 resulting in an aggregate of $15 billion in mortgage payment savings over the first 12 months after the refinance, a substantial infusion of funds to help strengthen savings and consumption spending by owners.
- Expecting single-family origination volume to come in close to $2 trillion in 2012, about a 30 percent rise from 2011, and then drop by 15 to 20 percent in 2013 as refinance 'burnout' and somewhat higher mortgage rates during the latter half of next year lead to less refinance activity.
- Anticipate a favorable interest-rate environment to remain through the end of this year and into next with the 30-year fixed-rate mortgage averaging around 3.50 percent.
"The housing sector's performance since the Great Recession has been unlike any other recovery over the last 65 years," says Frank Nothaft, vice president and chief economist, Freddie Mac. "However, now we're seeing housing resuming its traditional role of leading the recovery charge and once again being the bright spot in the economy. With QE3 in motion we should see even more pick-up in housing activity thereby providing greater benefits to the overall economy and consumers looking to refinance or purchase a home."
Watch a short preview video and download the complete October 2012 U.S. Economic and Housing Market Outlook. Freddie Mac compiles data on major economic and housing and mortgage market indicators and offers forecasts based on those indicators.